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Municipalities in fight for survival
FOR THE past couple of months austerity-hit municipalities have been making desperate appeals, warning they will be forced to suspend services soon, or shut down altogether, if they do not receive some kind of funding from the state.
The latest plea for help to the government and parliament came on Wednesday, following a meeting of the Union of Municipalities.
“All municipalities are at risk of closure, maybe some less than others, but the general message is SOS,” union chairman and Famagusta Mayor Alexis Galanos said.
First the government and then parliament, cut funding by some €20 million altogether from approximately €90 million in total. The remainder - around €70 million - must be shared among the 30 municipalities, six of which were only created in the past couple of years.
Speaking to the Sunday Mail, Galanos said that despite pledges from the government, meetings with the finance ministry have been cancelled and the funding issue left unsettled.
“We’ll be in for a surprise when the municipalities start sacking people or closing down because they cannot stand on their own two feet no matter how many savings they make,” Galanos said.
Beyond state assistance, municipalities also get an annual levy for refuse collection, which they can only raise by up to 14 per cent per year.
The property tax paid by residents to municipalities goes to the state, while the professional tax which municipalities once collected was scrapped in 2002 with the state pledging that the government would reimburse municipalities for the loss of that revenue.
“The agreement was that municipalities would receive what they lost plus 6.0 per cent interest,” Galanos said.
That would have been €10 million this year, but this too has fallen victim to the cuts.
Galanos suggested bringing back the professional tax or allowing local authorities to raise money from other forms of taxation.
Lazaros Savvides, the mayor of Strovolos which is Nicosia district’s largest municipality and Cyprus’ second largest after Limassol, echoed Galanos’ concerns.
He said the majority of municipalities, in Nicosia at least, are having serious cash flow problems.
“If they don’t get additional funding they will have a serious problem functioning properly,” he said.
It appears some municipalities are in better shape than others, as regards cash flow at least, but if the credit squeeze continues there is a strong possibility that services will be reduced to the absolute minimum.
Not to mention the complete halt of development projects.
“Strovolos municipality has no problem whatsoever. We have the capacity this year to cover all the gaps without borrowing but certainly our development budget has been seriously affected,” Savvides said.
However, the general consensus is that 30 municipalities are too many.
Lellos Demetriades, who served as Nicosia mayor for 30 years between 1971 and 2001, had invited a UN expert before 1986 to give his view on the matter.
The expert more or less said that it would not be right to split the capital into six or seven municipalities - one for each development board as they were called at the time.
The proposal was for one municipal council with 12 members, six of which would act as representatives of each development board.
But that apparently did not fly with the politicians who thought it would be putting too much power in the hands of the mayor of Nicosia as he would be directly voted by the people.
Demetriades however is not totally against having a few separate municipalities to better deal with the residents’ immediate issues.
“I saw that many municipalities developed due to the activity of a particular mayor or council,” Demetriades said.
Demetriades, a popular figure among the capital’s residents pointed out that, in his days at least, local authorities never made ends meet from what they collected.
He said no important projects in Nicosia were done with money from the budget.
“I ‘stole’ money from wherever I could find it,” he said jokingly of public and private funds he managed to secure for projects like Laiki Yitonia and Famagusta Gate.
Savvides, the Strovolos mayor, agrees that smaller municipalities find it harder to respond to their obligations and suggests that concentrating services, as a start, would resolve some of the problems.
“Now its municipal services and then it’s the political level, which is joining municipal councils,” he said.
The union has drafted a series of measures to cut costs and consolidate their finances, but that is something they must see with the government, currently too busy dealing with the island’s bailout.
“I believe 30 municipalities are too many for this island. I believe 30 mayors are too many. I believe many things can be done to have savings,” Galanos said.