Hungarian Local Governments Research Articles

The participatory budgeting and the collaborative governance movement at the Hungarian local government level

This paper aims to provide a comprehensive analysis of participatory budgeting (PB) practices in Hungary by exploring the experiences of three local governments. The research specifically investigates the environmental conditions conducive to PB adoption, internal organizational factors influencing its success and the short- and long-term outcomes of the process. Although in well-developed democracies attributed with active local communities has a long tradition in participation and cooperation between government and citizens, the Hungarian context offers a unique examination of participatory budgeting (PB) due to the developing civil sector and historical mistrust between government and civil society. However, in the context of increasing governmental centralization, local initiatives advocating for citizen-driven budgets are emerging. This research explores the feasibility of implementing participatory budgeting in this challenging environment. The interplay of a fledgling civil sector, entrenched scepticism, and centralization provides a distinctive backdrop for understanding PB dynamics in Hungary.

The Transformation of the Financial Autonomy of Local Governments

Ensuring a broad degree of financial autonomy is a fundamental issue for local government. In the context of the administrative modernization of recent years, several legislative measures have been taken which have directly or indirectly limited the financial and economic autonomy of local governments in Hungary. The paper gives a brief overview of the development of the Hungarian local government system in 1990, comparing the initial regulation with the standards of the European Charter of Local Self-Government. It discusses, then, the restructuring of the system in 2011, and lists the legal institutions which, in the author’s view, have led to restrictions on local government management. The paper covers the introduction of the task-financing system, the establishment of district offices, the restructuring of the role of county governments, and the constitutional and other legal obstacles to municipal borrowing.

Cui prodest? Why local governance came to a deadlock in Hungary

Abstract More than thirty years after Hungary’s transition to democracy and the change of territorial governance model, the time is now right to assess the outcome. This paper is primarily an assessment, concluding that the deadlock of the Hungarian local government system can be explained not only by the centralisation efforts of the governing and opposition political elites or the continuous decline of the budgetary position, but also by the indifference of local society. The fact is that the Hungarian local governments were not protected from being squeezed out of a significant part of public services, from a narrowing of their room to manoeuvre and from their authority position being weakened, by the general constitutional provisions introduced in 1990. An important proposition of this paper is that (local) society, although still more trusting of local governments than the central government according to various surveys, has not been able to become an ‘ally’ of local governments. The question rightly posed in the title of the paper is, whose interest is the local government system, who finds the values of self ‑governance important? The paper seeks (based mainly on academic literature and on its own and secondary analyses) the reasons/changes that have led to the stalemate of Hungarian local governments despite their initially strong mandate.

Public Perception of the Hungarian Local Government Reform

Following a change of government in 2010, the Hungarian local government system underwent a period of significant transformation. The question of how it is viewed and the effects it may have are currently being debated. The centralising effort of the government had already become clear beyond a shadow of a doubt before the adoption of the Cardinal Act or the Fundamental Law (2011) itself. This was followed by the steps of the local government reform, which transferred many local government powers to the state. Municipalities lost influence over local public education institutions, municipal hospitals and many other areas. In this situation, where there was a significant loss of influence by local elites, it became an interesting question to what extent this changed society’s relationship with local government. Our comprehensive research has conducted a number of quantitative and qualitative studies to answer this question. Between 2016 and 2018, our research group had the opportunity to conduct four empirical studies to assess knowledge, attitudes and opinions related to local government. This paper presents and interprets the results of this research, and an important area of public attitudes towards local government, in particular with regard to the division of responsibilities between the state and municipalities.

The Development History and Economic Characteristics of the Hungarian Local Tax System from the Change of the Regime until the Pandemic

The objective of the study is to present Hungarian local tax regulations from the change of the regime, in transition term until the period of COVID-19, with special attention in the light of changes in the legal system and their economic effects. We have divided the past three decades into three periods and, within these, we have examined local taxation item by item. In addition to the period from the change of the regime and the EU accession period, as well as the interval from EU integration to the state financial reforms of 2010, the study also pays special attention to the legislative changes introduced because of the pandemic. We are looking to answer how the local tax regulations affected the revenues of local governments and what kind of tax-mix developed in the decades following the change of the regime. The main conclusion of the study is that the changes in the local tax system have been significant since 2010, as some types of tax were phased out, while new tax types with an open list appeared. The analysis of the legal dynamics of the short period following the pandemic led to the conclusion that Hungarian local governments’ room to maneuver decreased because of the measures affecting the local tax system, and the decision-making was mainly justified by the economic conditions caused by the pandemic.

Experiences od open and closed list local taxes in Hungary with special regard to the effects of the COVID19 pandemic

Local taxes account for a significant share of the revenue of Hungarian local governments. In the system developed after the transition to democracy in 1990, local governments were granted the right to set a tax on a closed list, which was supplemented in 2015 by a right to set a tax on an open list. In the case of traditional local taxes, the tax capacity of local government differs greatly, that generates a significant issue in the self-government system. In addition, we can see differences within local taxes, as the role of the business tax is much stronger than other taxes. Dealing with the different resource-generating capabilities that are essential to provide public tasks of the same quality is a systemic regulatory problem. With the introduction of the settlement tax in 2015, Hungarian self-government expected to be able to increase their own revenues and thus their financial independence. But it soon became apparent that in practice there were several regulatory obstacles to achieving this, so the hopes diminished. By now, it has also become clear that the settlement tax did not introduce a significant change in this area, even more, it has damaged the previous revenue structure. The measures adopted during the pandemic in the past year and a half required new regulatory solutions, that also affected the system of local taxes.

The language of discrimination: assessing attention discrimination by Hungarian local governments

In our study we assess the responsiveness of Hungarian local governments to requests for information by Roma and non-Roma clients, relying on a nationwide correspondence study. Our paper has both methodological and substantive relevance. The methodological novelty is that we treat discrimination as a classification problem and study to what extent emails written to Roma and non-Roma clients can be distinguished, which in turn serves as a metric of discrimination in general. We show that it is possible to detect discrimination in textual data in an automated way without human coding, and that machine learning (ML) may detect features of discrimination that human coders may not recognize. To the best of our knowledge, our study is the first attempt to assess discrimination using ML techniques. From a substantive point of view, our study focuses on linguistic features the algorithm detects behind the discrimination. Our models worked significantly better compared to random classification (the accuracy of the best of our models was 61%), confirming the differential treatment of Roma clients. The most important predictors showed that the answers sent to ostensibly Roma clients are not only shorter, but their tone is less polite and more reserved, supporting the idea of attention discrimination, in line with the results of Bartos et al. (2016). A higher level of attention discrimination is detectable against male senders, and in smaller settlements. Also, our results can be interpreted as digital discrimination in the sense in which Edelman and Luca (2014) use this term.

Role of Hungarian Local Governance in Responding to COVID-19 Crisis

This paper analyses and points out the preventive and protective measures undertaken by Hungarian local authorities to halt the spread of the COVID-19 crisis and ensure the safety of citizens. It is conducted in an empirical, qualitative manner. In doing so it covers Hungarian legislation and official documents from central and local authorities. Firstly, the paper gives a comprehensive overview of the Hungarian local government system by highlighting the types and powers of local authorities. Secondly, it discusses the specific preventive and protective measures introduced by the different local authorities within their competencies and then explores some challenges and opportunities faced by Hungarian local authorities. This paper determines the importance of local governance for an efficient response to COVID-19 in Hungary despite limited resources and powers. Accordingly, the state’s long-term investment in local government and improvement is primordial.

Pokušaji centralizacije u procesu transformacije mađarskog sistema lokalne samouprave

Following a change of government in 2010, the Hungarian local government system underwent a period of significant transformation. The question of how it is viewed and the effects it may have are currently being debated. However, the fact that 2011 saw a reform of a more than a 20-year-old unyielding system seems difficult to argue with. Laced with the democratic ideal of self-government, the Hungarian regime change of 1989 resulted in a fragmented local government system with a considerable degree of management authority. The local government model opted for by Hungary, which can indeed be dubbed as the champion of decentralisation, could function uninterruptedly until 2010 with minor adjustments. The centralising effort of the government had already become clear beyond a shadow of a doubt before the adoption of the Cardinal Act or the Fundamental Law (2011) itself. The reorganisation of territorial public administration was the first series of measures which allowed to make inferences about the public administration system and the forthcoming centralisation of local governments.

Fiscal Distress of Hungarian Local Governments in the Light of the Debt Consolidation and the Reorganisation of the Municipal System

The consolidation of the debt of the municipalities and the reorganisation of their tasks and funding were significant reforms of the Hungarian public sector. In this study, we examined the differences in the financial parameters of the period of 2005-2008 among the local governments which took part in the debt consolidation and which are remained out. We applied logistic regression on a sample of 230 local governments. The study also aims to examine how the reorganisation of the tasks and funding affects the differences between the two groups. Our results confirm that there were significant differences in their own revenues and operating balance. In the post-consolidation period, we found that the two groups are converged to each other, so the changes in the operation of the local governments reduced the previously existing differences. Besides that, our results show that the local governments of the sample improved their financial conditions, generally.

Hardening the budget constraint: Institutional reform in the financial management of Hungarian local governments

AbstractKornai (2014) described the problems of municipal indebtedness in Hungary and analysed the process of bailout carried out between 2011 and 2014. In the same period, the central government also reformed the local government system, which included serious limitations of their financial independence. This study re-examines the state of the soft budget constraint (SBC) of Hungarian local governments. To start, the general theoretical framework of SBC is introduced. Then, the budget constraint on the Hungarian local governments before the bailout is described briefly, followed by an assessment of the corresponding measures which were expected to offset the negative messages of the completed bailout and to harden the budget constraint. The study concludes that the central government decided to harden the budget constraint through the introduction of new hierarchical mechanisms, while the development of fiscal discipline stopped. On the one hand, this resulted in the consolidation of municipal budgets, but on the other, it was accompanied by a serious limitation of local autonomy, projects and borrowing in general, while the central government employs specific administrative tools to show favour to some settlements according to its (political) interests.

Management reforms in the Polish and Hungarian local government

The study aims to compare management reforms in the Hungarian and Polish local government structures which were introduced at the beginning of the transformation of the socio-political system and during the first two decades of the 21st century. The analyses show that local governments in both countries have implemented solutions derived from different management paradigms, which are in many respects contradictory. In the process of implementing management reforms in the local governments of the two countries there have been both convergent and divergent trends. The public administration reforms in Hungary after 2010 reflect a coherent vision of a strong and centralized state and are intended to ensure effective resolution of social problems. The market and civil society have been given a subordinate role. As far as the Polish local government model is concerned, currently it is difficult to indicate one organizational model constituting a coherent whole.

Beneficiaries and cost bearers: evidence on political clientelism from Hungary

ABSTRACT Previous research has found that there is no uniform budget constraint for local governments: politically favoured local governments receive additional funds and are subject to less fiscal discipline. If so, the fair distribution between beneficiaries and cost bearers of the local fiscal policy is not realised. The paper focuses on this phenomenon in the light of political clientelism. We conduct an analysis regarding the Hungarian local government system between 2006 and 2018 to capture the political patterns in local fiscal policy and central granting policy. Local governments in opposition were underfinanced in terms of discretionary and EU funds, and since 2012 they have also had limited access to credit markets to obtain additional funds. Favoured municipalities enjoy more funds and can deliver more projects to their citizens – at the expense of unfavoured ones. The latter struggle to establish a fair distribution of the burdens between beneficiary generations.

„Pénzetlen utas nem tud messze menni” – A helyi önkormányzatok költségvetési kiadásai 1993–2010 között, majd 2010 után


 
 
 
 A forrásszabályozási rendszer bevételi struktúrájának ismerete önmagában nem alkalmas arra, hogy kellő és átfogó képet kaphassunk a helyi önkormányzatok közel húsz éven át működő feladatellátási tapasztalatairól. A költségvetések bevételi oldala megmutatja számunkra, hogy milyen pénzügyi eszközök álltak rendelkezésre, miből gazdálkodhattak az önkormányzatok, de ehhez hozzá kell illeszteni azt a feladatkört, amelyet finanszírozni kellett. A bevételi struktúrát és annak hiányosságait egy korábbi tanulmányomban már bemutattam, így most azt kiegészítve a kiadási oldal részletes elemzésére törekszem. Már csak azért is, mert a kiadási szerkezet nagyban befolyásolja a helyi pénzügyi autonómia fokát is. A tanulmány célja, hogy 1993 és 2010 között bemutassa a helyi önkormányzatok közfeladat-ellátási körét, majd reagáljon a 2010 után tapasztalható változásokra, a helyi költségvetés kiadási szerkezetének alakulására.
 
 
 

Fiscal Equalization among the Hungarian Local Governments – Autonomy v. Equity

Fiscal Equalization among the Hungarian Local Governments – Autonomy v. Equity

Sustainability and Control Issues of the Financial Management of Local Governments – Through Hungary’s Example

Abstract The rules and control mechanisms pertaining to the financial management of local governments enhance the sustainability of their budgets, that is, they have an operational risk mitigating effect. This paper presents the Hungarian system of self-government, and its fiscal rules, which have undergone a major reform since 2011, and the system of duties and financing have been aligned. The paper evaluates the reform process that commenced in 2011, and the effectiveness of budgetary regulations. The second half of the paper presents the control system of Hungarian local governments, the strengthening of which also has promoted the sustainability of financial management.

Civil-Society Organizations’ Capacity Building in the Local Governmental Sector: Is It Working? A Case Study

AbstractThe role that a strong civil society plays in socio-economic development is a subject of major scholarly attention today. Many benefits from having a strong civil society are reported in the literature. There is, however, no generally accepted view regarding how capacity-building efforts can help to develop a strong civil society, especially in the Central and Eastern European countries.The purpose of this qualitative study is to understand the causal mechanisms existing between capacity-building efforts, a strengthened civil society and socioeconomic development. This case study suggests that a Hungarian local government did appear to strengthen associational activities in its community. Using process tracing, the research identifies specific factors that lead this village to take these uncommon steps, and it assesses the implications for civic life.

Impact of Leaders : The Impact of the Engagement of Local Government Leaders’ on the Effectiveness of Participatory Planning as Found in the Local Community Academy Program (2014–2015)

The relevance of the above quotation from an excellent author and economist, adapted to present day Hungarian local governments, is unquestionable. At the beginning of the 21st century, in a globalizing world, the demand for the direct inclusion of independent social groups and individuals and the maintenance of the communities within geographical localities have become a primary issue as opposed to the conditions under the alienating, technocratic, impersonalizing and centralized political regimes of the Europe of the second half of the past century. For this reason, the importance of the role of local leadership is magnified.The program included training for the local governments in the convergence regions, and had three pillars. The first pillar includes 6 post graduate e-learning training programs studied by approximately twenty thousand public officers. The second pillar is the network of the so-called Local Community Academies, comprising the elaboration of strategic methodologies by local participants to be recommended to local governments. The third pillar supported the traditional classroom training for three hundred local government employees.The program of the Local Community Academies (LCA) aimed to support the social inclusion, and the ability of strategy-making. This study aims to answer the following research question: “How did the engagement and involvement of local government leaders, affect participatory planning during implementation of the LCA program?” The relevant research method is an empirical analysis of survey data and final reports.

Local government finances in Hungary: From the culprit of fiscal slippages to a source of stability?

While in the decade prior to 2010 Hungarian local governments had been a notorious contributor to budgetary slippages and growing public indebtedness, the sector’s balance has subsequently turned to positive in the context of a wide-ranging centralisation effort and the corresponding revamp in subnational financing arrangements. The fiscal indicators therefore, prima facie, point to a transformation of a regular sinner into a source of stability. Based on a detailed account of the recent reform steps and the preliminary assessment of their first impacts, this study argues that it is too early to conclude that the observed positive developments are the structural results of the measures taken over the last five years. The enacted institutional streamlining, the new debt authorisation rule and the increased tapping of the local tax potential should all have a lasting positive impact on public finances. Nonetheless, the intended efficiency gains due to economies of scale in service provision are not yet apparent, insofar as no reduction has been achieved in the headcount of the concerned branches. Moreover, the observed non-differentiation in the debt assumption may raise the spectre of moral hazard for the municipalities in the longer run.

Települési környezetvédelem Magyarországon: Egy kutatás előfeltevései

Az alábbi cikk a Nemzeti Kutatási, Fejlesztési és Innovációs Hivatal által támogatott, Helyi önkormányzati szerepek és eszközök az ökológiai fenntarthatóság megvalósításában címet viselő, alapvetően jogtudományi (de emellett szociológiai és politológiai) megközelítésű kutatás bevezető tanulmánya. Célja rögzíteni az interdiszciplináris kutatás hipotéziseit és várható eredményeit. Úgy véljük, hogy a helyi cselekvési szintnek az ökológiai fenntarthatóság elérésében játszott szerepe nélkülözhetetlen, habár nem egyedüli, és nem is az elsődleges tényező. Ha az önkormányzatok túl sok feladatot és hatáskört kapnak, akkor azokat nem tudják megfelelően ellátni, illetve a környezetpolitika, környezetjog egészének hatékonysága gyenge (hiszen számos probléma nem közelíthető meg helyi szinten). Ha túl kevés feladatuk, illetve hatáskörük van, akkor amellett, hogy csorbul a helyi önkormányzáshoz való jog, a környezetpolitika, illetve környezetjog összességében megint nem lesz eléggé hatékony. Egyensúlyt kell tehát találni valahol, ami a változó lehetőségek és kihívások függvényében nem egy statikus egyensúly, hanem csakis dinamikus egyensúly lehet, folyamatos súlypontváltoztatással. Abból indulunk ki, hogy környezeti fenntarthatósági szempontból jelenleg is számos változás indokolt, melyek részben intézményi, strukturális jellegűek. Úgy véljük, hogy a helyi közösségek igényei, érdekei és elvárásai sem hagyhatók figyelmen kívül, ezért a kérdéskör értelmezése során több aktor szempontjaival és cselekvéseivel kell számolni.