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Local Self-Government in Hungary: The Impact of Crisis

Chapter
Part of the The Urban Book Series book series (UBS)

Abstract

The economic crisis affected local self-government much more severely in Hungary than in the other OECD Member countries. The basic characteristics of the Hungarian local self-government system are that it provides local public services and is the basic institutional framework for urban governance. State support is the most important financial source of local public services. Before 2008, the amount of state support, together with other municipal revenues, was not sufficient for financing all local government tasks. The municipalities complemented the missing amount from external sources. The financial problems of the Hungarian local self-governments were not caused by the economic crisis; it only increased these problems: the economic crisis had a considerable negative effect on the financing possibilities of the Hungarian local self-governments. The dramatic increase in the volume of local self-government debt started in 2006 and was primarily caused by the issue of local self-government bonds. This study deals with the related legal background, the economic effects, the reforms for solution and the consequences. The purpose of this chapter thus is to present the legal background of the Hungarian local self-government system, to point out the impact of the economic crisis on Hungarian local self-government, to underline the reforms and the results. The chapter highlights the weaknesses of the local self-government’s economy, and the methods which were applied in Hungary in order to fend off the negative impacts of the crises. The related funds (e.g. state subsidies and own revenues) were not sufficient to carry out the duties of local self-government; therefore, the debts increased significantly since they were formed about twenty-five years ago. Accordingly, serious financial problems occurred, which deepened significantly due to the economic crisis. This phenomenon shows that effective supervision and monitoring is needed, real local autonomy based on appropriate regulation is required, in order to guarantee the fulfilment of local tasks.

Keywords

Financial crisis Local self-government reform Urban governance Hungary 

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Copyright information

© Springer International Publishing Switzerland 2017

Authors and Affiliations

  1. 1.University of PécsPecsHungary

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