FOR SEVERAL months now mayors of the wider Nicosia area have been warning that their municipalities were fast running out of money. The drastic reduction of the state subsidy to local authorities, combined with the establishment of six new municipalities meant a smaller amount was distributed among more recipients.
Inevitably, the over-staffed and inefficient municipalities of Nicosia cannot make ends meet; things are slightly better for the municipalities of coastal towns as they have revenue from tourism. Some mayors warned that they would not be able to meet their financial obligations in a few months, while the Ayios Dhometios mayor warned yesterday that his municipality would not be able to pay its 79 workers at the end of this month.
The president of the Union of Municipalities, Alexis Galanos, has been trying to draw attention to the cash shortage for a couple of months now, but his warnings have fallen on deaf ears. “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 told the Sunday Mail last week.
Both the government and the political parties have been ignoring the warnings. Interior Minister Eleni Mavrou at least responded on a morning radio show yesterday saying that the government could not afford to give more financial help to the municipalities. It is incredible that the political parties which, together, created the ridiculously high number of municipalities, so there could be more mayors, more councillors and more jobs for their supporters, do not want to know, now, about the consequences of their decisions. Deputies will probably be the first to criticise a municipal council if it sacked workers.
The answer to the problem is to reduce the number of municipalities by 50 to 70 per cent, but as this will not happen in the foreseeable future, local authorities must find new ways of generating cash. Unfortunately, the only way to do this is through the imposition of new taxes, which will not make mayors and councillors very popular among their voters. The alternative is to cut wages and jobs because state funding might be further reduced over the next two years.
A combination of taxation, wage reductions and job cuts is the only way for the municipalities to remain viable, while also limiting dependence on central government, which, as paymaster, has excessive power over local authorities and makes a mockery of the idea of local democracy. The decision of 2002 - supported by all the parties – to abolish the professional tax collected by municipalities and compensate them with more state money was a big mistake. That revenue was lost and the government now refuses to pay the equivalent amount (about €10 million) to municipalities.
This is why it is essential for local authorities to use the current financial problems to become more independent of the state. If it means cutting jobs and imposing taxes, it must be done, because the state funding situation will be worse next year.