Serhiy Solomaha
Myrhorod Mayor
Conversation of Iryna Dudka, PLEDDG Regional Coordinator in Poltava Oblast with Myrhorod Mayor, Serhiy Solomaha, regarding the first results of fiscal decentralization, the search for additional resources and Myrhorod’s development prospects.
– Amendments to the Budget and Tax Codes are the first positive signs of fiscal decentralization. How important are these changes to Myrhorod?
The first effects of fiscal decentralization were already felt in Myrhorod last year, and we are very pleased that these positive trends continue.
This year, the performance rate of the city’s budget reached 129.6 percent in Q1, which compares to 6 682 400 UAH in excess revenues. This was possible due to an increase in PIT rate, lifting of under-market land use fees and the introduction of indexation for regulatory and pecuniary land valuation, as well as an increase in the excise tax rates both for manufacturers of excisable goods and their distributors.
Municipal revenues also increased quite seriously through residential property taxes. For example, in the first three months last year, the city budget collected 8 500 UAH through this tax and 1 180 900 UAH over the same period this year!
Naturally, along with higher revenues comes increased responsibility. After all, decentralization is about transferring the resources and functions to the local level. To some extent, it balances out. Thus, the transfer of powers previously funded from the state budget to the local level that includes collection of fees for the provision of other administrative services helped increase local revenues by 56 000 UAH in Q1.
I’m not going to overburden you with the figures any longer; I just want to note that local authorities finally became the element of public administration that have the financial resources to practically do their job. The resources are far from what we desire, but funding will always be lacking. However, the important thing is that now local authorities through their action or inaction directly affect municipal budget revenues.
Naturally, there are still many problems left unsolved. Primarily, these are the issues to be addressed by the legislators and coordinated efforts of central authorities. But my sincere message for the pessimists is as follows: there is no need to manipulate public opinion and look for opportunities to criticize. Let’s work together. Don’t we share a desire to see our country economically strong?
– At the same time, economic stability of a country should start with economic well-being of every individual and their families. To look confidently into the future, everyone needs a job. Unfortunately, Poltava region is among those regions where unemployment is quite sizable. In which way can Myrhorod address these issues?
I hope that we have left the most difficult issues behind. The labor market situation in Myrhorod has improved, judging from 830 vacancies announced by local companies, which is 34.3% more than during the same period last year. Therefore, with the assistance of local employment services, as many as 737 people found jobs, which resulted in a similar percent-wise increase against last year’s indicators. Around three hundred people were engaged in public and other types of temporary work and almost two hundred unemployed people were covered with vocational training.
Problems arose last year regarding employment of persons relocated from the area of anti-terrorist operation and the annexed territory of Crimea. Established cooperation with charitable organizations seriously helped with solving the issue and made it possible to support and help these people.
Myrhorod became the first city in Ukraine where we developed and implemented the project supported by UNDP. This pilot project was aimed at employing internally displaced persons as social workers. To this end, the project granted irrevocable financial assistance amounting to 72 000 UAH; 25 percent of the cost was co-funded from the city budget. Another project was also supported by UNDP and was aimed at creation of an integrated IDP assistance center. The IDPs themselves became case managers, engaged in information support for IDPs. Irrevocable financial assistance amounting to 338 thousand UAH was allocated to implement the above project.
– Helping each other tackle common problems means not being indifferent. In Ukraine, the idea of participatory budget is gaining in popularity, which also means that people cannot be indifferent. Do you plan to try this approach?
We are not just planning it, we actually have put it into practice! The first manifestation of the use of participatory budgeting was adoption of the program of municipal support to the local residents’ initiatives in 2016. This program provides for measures to involve the public in the processes of formation, implementation and development of various forms of cooperation between government and community as well as conducting public opinion survey research. This year, the municipal budget allocated funds amounting to 100 000 UAH to finance the program, which, for the first time, allowed local residents to participate in solving local problems through a call for proposals and ideas. As a result, eleven out of eighteen proposals received financial support from the local budget.
– Technical assistance projects are one of the most important financial sources emerging in Ukraine in recent years. We have already mentioned UNDP as one of them. What other projects have local government managed to attract?
Overall, the city takes part in nearly 20 different international projects. Myrhorod comes second after Kyiv as the city which managed to attract two NEFCO loans to cover the needs of the public sector. With the help of inexpensive credit facilities, we made thermal insulation for two elementary schools – No.12 “Firefly” and No. 5 “Lady Bug” and two schools (Shevchenko and Helicon) in the amount of UAH 2.6 mln. The city implemented an infrastructure project to improve the city street lighting equipment by installing energy saving lamps.
A large-scale project titled “Local alternative energy sources: Myrhorod” aiming at transitioning from natural gas-powered boilers to alternative energy was introduced for the first time in Ukraine’s history. It includes fuel production, storage and delivery to the boiler. The project is worth USD 2 million.
Besides, Myrhorod is involved in many international projects, one of which is GIZ “Energy efficiency in communities” project. Through this project, the city constantly receives advice, takes part in trainings and implements energy saving projects. Together with GIZ, we installed solar panels to light up pedestrian crossings.
In 2015, Myrhorod joined the EU/UNDP “Local Community Oriented Development” project, which is aimed at creating favorable conditions for active development of condominium associations. The project’s cost was approximately UAH 3.5 mln. In 2016, the project continues its work with the same approximate cost.
The city joined the Swiss-Ukrainian DESPRO project “Decentralization Support in Ukraine”, which is aimed at improving water supply in the city and reduce water losses in the supply networks. The project cost is about UAH 3 mln.
There also was one interesting cooperation experience with the Kyiv Cyclists Association project “Development of cycling for the benefit of the community”, supported by the European Cyclists Federation. The initial results of the project confirmed the status of Myrhorod as the most bicycle-friendly city of Ukraine. Earlier this year, the Concept of development of cycling and cycling infrastructure improvement in Myrhorod 2020 was developed and approved in close cooperation with the community and the city.
This year our city launched yet another very interesting project “Partnership for Local Economic Development and Governance” (PLEDDG Project), which is implemented with support from the Government of Canada. Over the next 5 years, PLEDDG will help its partner cities address a number of key issues. This includes drafting of municipal development strategies and its implementation, assistance to small and medium-size enterprises, promoting government transparency and better dialogue between local authorities and business community. The project stands out among similar international technical assistance programs, as it covers not only one but many extremely important areas for city development. It features a thoughtful combination of theoretical and practical parts, involvement of local authorities, council members and residents, as well as experts from Ukraine, Canada and Poland. As the Project has partnered with 16 cities in four regions of Ukraine, I think there will be an opportunity to regularly exchange best practices and achievements in the field of modern governance of municipal territories.
– What would be your priority in the use of the resources that the city has already received as a result of fiscal decentralization?
First of all, these resources will be used to finance the costs associated with the additional burden on the local budget, namely funding of vocational schools, deficit of educational grants, the difference in tariffs, under-market transportation service rates and expenditures crucial for the life of the local community in the housing and utilities sector, beautification, repair and construction of roads, social welfare, pre-school and school education and local economic development.
We have already started implementation of an important infrastructure project, which is aimed at reconstructing an old bridge in the city center. The project is funded by the State Regional Development Fund and has a total cost of UAH 19 mln.
As you can see, there are many issues that are typical for our time and our cities and are top of the agenda of city government and council members. But for all the similarities, Myrhorod has its own special features that allow the city to be unique – to be a face of Poltava and Ukraine. So, our main task is not to lose those chances that we have. Instead, we should be able to maximize their use for the benefit of local residents.