Local authorities in Romania disturbed by 2019 budget, risk hard landing in investment projects

The local authorities in Romania are severely hit by the 2019 budget draft that transfers to them most social spending without giving them the financial tools to support such a burden. If the budget passes in this form, many local authorities risk a severe cut in investment in order to support the new social spending.

Mayors across Romania are already calculating the scale of their losses in term of local budgets. In fact, the biggest problem is the transfer of almost all social spending, like those with orphanages or persons with disabilities, from the central government to the local authorities.

Gheorghe Falca, the mayor of Romanian western city of Arad, said on Friday that the impact of the new measures on local authorities’ budgets is close to EUR 1 billion this year.

The mayor of Bistrita, Ovidiu Cretu, says that his city lost RON 32 million last year due to another government measure ant that it will also lose RON 26 million this year, and this means the cut of all investment.

“I cannot make any investments! We did not invest any RON last year from our own money, only from transfers, from reserves, from what we had in the budget surplus and this year Bistriţa will have no RON for investment, “Cretu said, cited by Mediafax.

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The Center for the Rights of Children with Disabilities warned on Friday that the Ministry of Finance has not allocated funds for people with disabilities in the draft budget, stressing that the document shows that this spending is transferred into the responsibility of the local authorities but they will not be able to afford it.

According to the Center, more than 57,000 children in the special protection system (orphanages) in Romania will remain without money for several types of services, such as placement to relatives up to the fourth degree or to other families.

In the same time, more than 18,000 adults with disabilities from residential centers remain without funding from the central budget, representing accommodation, food, hygiene, specialized medical care, recovery or even current care.

More than 41,000 children with severe disabilities also remain without money from the central budget for salaries and allowances.

Running out of revenue sources, the government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.

The government also imposed special taxes of 2 percent of turnover on energy firms and 3 percent on telecom companies.