I.

Administrative structure

Romania is divided into 41 counties (judete), as well as the municipality of

Bucharest, which has separate status. Below the counties, there are three other categories
of local authority: approximately 2,800 communes (with populations up to 5,000), 280
towns (orase) (with populations of approximately 5,000–20,000) and 86 municipalities.
In the Ceausescu era the counties were administered by appointees of the central
government, whose responsibility was solely to Bucharest. The Iliescu government
attempted to reshape local government, but most sources agree that the result was to
further remove authority from the countryside. Much of Romania is deeply rural, with
almost no contact between localities or with the central government. The Iliescu
government stopped the Ceausescu "systemization" plan and, in 1990, passed legislation
intended to return land to individual peasant control. Indications were, however, that
enactment of those provisions was spotty, suggesting that much of the countryside
remained in a sort of administrative limbo, no longer tightly controlled by the center but
not yet self-governing.
Finland is divided into local authorities where the autonomy of residents is
safeguarded in the constitution. The decision-making power of local authorities is
exercised by a council elected by the residents. Provisions on said councils, and on
referenda and the right of residents otherwise to participate in and influence the
administration of their local authority, are laid down in the Local Government Act. Local
authorities are looking to promote the welfare of their residents and sustainable
development in their areas. There are 416 municipalities in Finland. Differences between
Finnish municipalities are huge from the point of population, size, and economical
factors. The status of municipal administration, local government, has been guaranteed by
the national Constitution of Finland. A regulation defining the role of municipal
administration says that the self-government of municipalities is a part of Finnish
governmental system. The municipal administration has a very strong position to defend
its role as a basic unit of government. The municipalities have the right to levy and
collect taxes, and they have a representative democracy.

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 II. Functions of local authorities

1. The local council

The Finnish local council is responsible for the operations and finances of the
local authority.
The council decides:
1) the main operational and financial objectives;
2) the principles for arranging the administration;
3) financial principles, financing and investment, and approve the budget; (1.2.2002/81)
4) the general principles for the charges to be collected for services and other
performances;
5) the operational and financial targets to be set for a municipal enterprise;
6) whether to provide a guarantee or other security for another party’s debt;
7) elect members to municipal organs, unless otherwise provided hereinafter;
8) the principles for the financial remunerations of elected officials;
9) elect auditors;
10) approve the financial statements and decide whether to grant release from liability;
11) decide on other matters provided and appointed for decision by the council.
The council may also set up:
1) committees working under the municipal board to handle functions of a permanent
character;
2) boards of management to handle a municipal enterprise or other institution or function.
The relevant provisions on the organ concerned shall apply to divisions of
municipal boards or boards of management and sub-committees of committees. The
municipal board and, by virtue of a council decision, some other organ may set up
commissions to deal with a specific function.

The council approve administrative regulations containing the

necessary stipulations on

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at least the following:
1) assembly of organs;
2) calling in deputy members;
3) functions of the chairmen of organs;
4) temporary chairmen of meetings;
5) presence and right to speak of representatives of municipal boards and
municipal
managers at meetings of other organs;
6) presence and right to speak of persons other than members at meetings of
organs;
7) proposals;
8) drafting, scrutiny and public availability for inspection of minutes;
9) signing of documents;
10) charges collected for copies of documents and the provision of access to
information according to the stipulations in Section 34 (23.6.2005/496) of the
Act on the Openness of Government Activities 621/1999).
11) information;
12) procedures when a matter is referred to a higher organ;
13) financial management of a local authority; and
14) auditing the administration and finances.
The local council in Romania is comprised of elected representatives. The number
of local council members is established by order of the prefect according to population
and may range between eleven and thirty-five. The only exception to this is the council of
Bucharest, which is comprised of sixty five elected councilors.
According to the Law on Local Public Administration, if a village is part of a
commune but does not have an elected representative in the local council of the
commune, it is represented by a delegate elected by the village assembly in the presence
of the mayor or deputy mayor of the commune. The council is obliged to invite the
delegate to any discussions regarding the village; however, the vote of the delegate is
advisory only.
The local council of a commune or town is responsible for all matters of local
interest not delegated by law to other public authorities and is charged with the following
rights and duties:

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• to elect the deputy mayors;
• to approve the council’s statues, based on guidelines elaborated by the government;
• to approve studies, projections and socioeconomic development;
• to establish, on proposal of the mayor, the public administration’s organization and
staff;
• to approve the formulation and execution of the local budget, credit transfers, use of
budgetary reserves, loans and closing accounts;
• to establish local taxes and duties and special duties for a limited period in accordance
with the law;
• to administer the public and private domains and municipal companies of the commune
or town;
• to found institutions and economic agents of local interest;
• to decide on the concession of public services to trading companies;
• to establish regulations for self-managed public companies or trading companies;
• to appoint and dismiss the administrative boards of municipal companies and council
members to trading companies of local interest established with integral state capital;
• to review quarterly reports of state representatives sitting on the boards of local trading
companies;
• to ensure the functioning of the administration’s communal services, local transport,
municipal networks and of institutions addressing education, sanitation, culture and
youth;
• to implement public works;
• to ensure public service delivery in a timely manner;
• to create recreational facilities and ensure the provision of opportunities for scientific,
cultural, artistic, sporting and other activities;
• to restore and protect the environment and to preserve historic and architectural
monuments, parks and natural reservations;
• to implement social security programs;
• to ensure free trade and fair competition and stimulate free initiative;
• to organize fairs, markets, cattle markets, parks and entertainment;
• to establish local charity institutions;

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• to ensure the maintenance of public order and the observance of the fundamental rights
and freedoms of the citizenry;
• to confer the title of honorary citizen on Romanians or foreigners of special merit;
• to collaborate with other local councils or economic agents at home and abroad to
address common interests;
• to exercise other powers established by law or by the statutes of the town or commune.
The local council meets regularly for monthly sessions as determined by the
mayor. Extraordinary sessions are convened whenever necessary, upon the mayor’s
request or at the request of at least one-third of the council members. The agenda is
announced to the inhabitants in the local press or by other means. The local council
adopts decisions by a simple majority vote of the members present at the meeting, except
when a council order stipulates otherwise. A majority vote of two-thirds of the council
members is required on decisions regarding the local budget, the establishment of local
duties and taxes, administration of public domains, organization and urban development
of localities and association with other councils or economic agents in the country and
abroad. Matters regarding private individuals always must be decided by secret ballot;
other issues to be decided by secret ballot may be established at the council’s discretion.

2. The municipal manager or mayor

Local authorities of Finland have a municipal manager or a mayor who directs

their administration, financial management and other operations subordinate to the
municipal board. Municipal managers or mayors are elected by the council. The
municipal manager have a civil service relationship with the local authority and the
mayor shall be considered a municipal elected official. The mayor act as chairman of the
municipal board. If the office of the municipal manager is filled when the mayor’s term
begins, the council shall decide on transferring the municipal manager to another office
or contract of employment suitable to him or her. A municipal manager with fixed term
contracts shall be transferred to another office or contract of employment for the
remainder of the term. A municipal manager transferred to another office or contract of

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employment shall be entitled to benefits belonging to the new post in a form that are not
less advantageous than the corresponding benefits that he or she received in the office of
municipal manager. Municipal managers can be elected for an indefinite or a fixed
period. Mayors may be elected for a period not exceeding a council term. The term of the
mayor shall continue until a new mayor or municipal manager is elected. If no-one
obtains over half of the votes cast in the election for municipal manager or mayor, a new
election shall be held between the two candidates who received most votes. In this
election, the person receiving most votes shall be elected. The election for mayor shall be
held before the election of the municipal board. The municipal manager or the mayor
shall be entitled to speak on behalf of the municipal board and to obtain information from
municipal authorities and view documents, unless the provisions regarding confidentiality
require otherwise.
Romania’s local authorities at the communal or municipal level are the local
council, as the deliberating authority, and the mayor, as the executive authority; both are
elected in accordance with the Law on Local Elections for a term of four years.
Generally, each commune or town has one mayor and one deputy mayor. However,
county capitals and the districts of Bucharest have two deputy mayors each, while the
municipality of Bucharest as a whole has a general mayor and four deputy mayors. As the
heads of local governments, mayors are responsible to the local council for the
functioning of the administration. In addition, the mayor represents the commune or the
town in interactions with natural or legal persons of the country and abroad, as well as in
court.
The mayor (and the general mayor in Bucharest) has the following rights and
duties:
• to ensure the observance of the fundamental rights and freedoms of citizens, the
Constitution, national laws, decrees of the Romanian president, government decisions,
documents issued by ministries and other official boards of central administration, and
county council decisions;
• to execute local council decisions and inform the prefect if he or she finds a decision to
be ultra vires or otherwise improper;

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• to propose referendums to the local council, organize such public consultations at the
request of the council and take measures concerning the organization of public meetings;
• to forward reports on the economic and social status of the commune or town to the
council;
• to formulate a draft budget and final closing accounts and submit them for approval to
the local council;
• to fulfill the office of principal accountant of credits;
• to exercise the rights and ensure the fulfillment of all obligations that are incumbent
upon
the commune or town as a civil legal person;
• to take measures to prevent or reduce the consequences of catastrophes, epidemics and
other threats to health and property in cooperation with specialized state bodies;
• to coordinate and supervise the activities of public security guards, custodians and
caretakers;
• to monitor the hygiene and sanitation of public premises and of food products for sale to
the population;
• to ensure the elaboration of local urban regulations and plans;
• to elaborate the draft framework for local personnel and submit it for approval to the
local council, setting forth the organizational structure, the number of employees and
their salaries; to appoint the staff of local public services, excluding the secretary; and to
monitor their activities;
• to supervise the inventory and administration of assets belonging to the commune or
town;
• to exercise any other powers granted by the local council.

III. Municipal services

The public sector is considered necessary for traditional and societal tasks in the
future as well: securing the basic services, securing the equality of citizens, executing
justice and legality surveillance. The primary goal of local governments is to provide
services to the community. The main industrial and commercial public services are

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sewerage and water supply, electric power and gas distribution, central heating
distribution, communication networks and local transportation. The main administrative
public services are educational (schools, colleges, nursery schools, kindergartens, etc.),
cultural and sport activities and road maintenance.
In Finland municipalities have co-operated to organize and arrange the required
services. They have had the possibility to organize their services through market
mechanisms, whereby the role of the municipality has changed from a producer to an
active services coordinator or supervisor (public utilities, outsourcing, voucher
experiments, etc.). On the whole, the number of cooperation models and the amount of
cooperation increased in the 1990s, especially in municipal welfare service production.
However, traditional joint authorities set up by two or more municipalities to perform
specific tasks on a permanent basis have been the most typical examples municipal
cooperation. Hospital districts and educational districts have been the most prominent
joint authorities in service production. On the other hand, much more active cooperation
and networking has been required from municipalities. In other words, they have been
required to network with other municipalities, the third sector, and private sector
organizations in municipal service production.
Increasing the size of municipalities has also been under active discussion as a
solution to the problems of municipal service production. Municipalities have been
considered too small to take care of all municipal services: through municipal mergers
the pressures on service production could be alleviated. As the states subsidies to
municipal service production are cut down and the necessity to strengthen international
competitiveness is strongly emphasized, the responsibility for the costs is being passed to
municipalities. Municipal mergers have also been considered a solution to this type of
development. Regarding the structure of municipal administration, many think that the
number and size of municipalities have changed too slowly.
In Romania county councils provide public services for:
• small communities within the county that cannot afford to have their own specialized
departments (such as issuing building permits, land use planning, operating landfills
shared by several communities, et cetera);
• county infrastructure (such as the construction and maintenance of county roads).

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 Private companies provide public services on a contractual basis. In 1990, state-
owned service providers were reorganized as public service operators and service
provider companies according to Law No. 15/1990. In 1997, these companies became
private companies, with the central/ local authority as a shareholder (Government
Ordinance No. 30/16 June 1997). If the central/ local authority chooses to sell its shares,
the revenues are distributed as follows: twenty percent to the central budget, twenty
percent to the government’s Special Development Fund and sixty percent to the company
to cover debts and penalties from the reorganization process, current capital investment
funding, etc.
After 1992, local councils made decisions on the means of future service
provision, with the vast majority retaining traditional, large service-providing
departments for services such as water distribution, central heating, garbage collection,
landfill management and social housing. After 1994, new laws provided the possibility
for the creation of state-owned companies subordinate to the local councils. The formerly
large service divisions split into specialized companies. These companies are contracted
by the municipalities to provide such services, which are paid for directly by the
consumers (individuals or associations). The local council remains the primary
shareholder in water and heating supply companies and consequently is responsible for
approving company budgets and subsidizing thermal energy and water. However, both
electricity and natural gas distribution remain national monopolies, as do state-owned
enterprises like Romanian Water.
The relationship between local councils and public service-providers as well as
private and state-owned companies is generally contractual in nature. In many cities,
however, there is no competition for services, and public service-providers are still
subordinated to the local councils. There is no strict rule regarding the subordination of
companies to the local or county council. In some cases, water supply companies are
subordinated to the local council, in other cases to the county council (for example,
Brasov). Central heating supply companies are usually responsible to the local council, as
they tend to operate in a specific municipal area. Some Romanian local governments
have privatized certain public services.

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 IV. Municipal finances

Budget and financial plans for Finnish local governments

By the end of each year, councils shall approve a budget for the local authority for
the next calendar year. When approving the budget, the council shall also approve a
financial plan for three or more years (planning period). The budget year shall be the first
year covered by the plan.
Operational and financial targets for the local authority shall be approved in the
budget and financial plan. These shall be compiled so as to safeguard the preconditions
for performing the local authority’s functions.
If the balance sheet of the current year is not estimated to show accumulated
surplus, the financial plan must be in balance or show a surplus during the planning
period of maximum four years. If the deficit of the balance sheet cannot be covered
during the planning period, decisions shall be made in connection with the preparation of
the financial plan, on specified actions (action plan) to cover the deficit during a coverage
period (coverage obligation) separately agreed upon by the council.
Budgets shall include the appropriations and income estimates required for the
operational targets and indicate how the need for funding will be met. Appropriations and
income estimates may be stated gross or net. Budgets shall have a section dealing with
operational finances and an income statement, and a section on investments and funding.
Local authorities shall follow their budget in their operations and financial management.
Any amendments to the budget shall be decided on by the council.
Decisions on taxes
At the latest when the budget is approved, the council shall decide on percentages
for income tax and property tax in the local authority, and on the basis for other taxes.
Financial statements

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 The financial year of local authorities shall be the calendar year. Financial
statements on each financial year shall be drawn up by the end of March of the following
year, submitted to the auditors for inspection, and after audit placed before the council by
the end of June of the same year.
The financial statements shall comprise a balance sheet, an income statement, a
statement of source and application of funds and notes on them and a budget review and a
report on operations.
The annual accounts shall give a true and fair view of the result of the operations
and financial position of the local authority. The necessary additional information shall
be presented in the notes.
A local authority having governing authority, as referred to in the Accounting
Act, in some other body required to keep accounts shall include a consolidated balance
sheet and notes thereon in its financial statements. The Accounting Act shall be observed,
as applicable, in compiling this consolidated balance sheet. Financial statements shall be
signed by the members of the municipal board and the municipal manager or the mayor.
Budget and financial plans for the Romanian local government
Pending the entry into force of Law no. 189 local government finance October 22,
1998, the main source of revenue to local government in Romania is consisted of
transfers from the central budget: 50 -70%. Under the new law, local budgets income tax
forms, taxes, other income and revenues with special destination and the rates and
amounts deducted from certain income of the state budget. The main source of income is
a tax on wages, the operating units have to transfer to the state budget 50%, 40% to the
budget of territorial administrative units in which they operate and reach 10% to the
county budget. This division of income tax from the time his collection started, was one
of the most important directions of local public finance reform. Thus, local government
gained an important and stable source of revenue collected by central government
mechanisms for tax collection. However, through this mechanism, the areas affected by
mass unemployment and resources are lacking for local governments.
Amounts transferred from the state budget to local budgets are distributed
according to law, the rate of 25% to the budget of the county, the rest divided into
communes, towns and municipalities, by the county council, after consultation with

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mayors and with specialized technical assistance from the general office of public
finances and financial control of the state, according to the agreed allocation criteria.
Local taxes are established by local councils and the county within the limits and under
the law (very tight conditions that leave their public policies to stimulate any activity) and
include self-employed income tax, tax on buildings and land, taxes on vehicles, tax on
rental property, etc..
Local budgets are prepared by the mayor and are sent for approval to local
government councils. A major contribution in setting the budget, in particular on the
estimates of revenue, however, have the financial administration, subordinated to the
Ministry of Finance. Councils do not have their own resources and logistical expertise to
overcome the advice from central authority.
The process of setting budgets is complex and requires massive intervention from
the central authority - until May 15, municipalities shall provide general offices of public
finance and financial control of the state, local budgets balance - until June 1, these
bodies should make local budgets and send them to the Ministry of Finance - Until July
1, Ministry of Finance communicates general offices of public finance and financial
control of the state the amounts broken down by state budget limits and their allocation
criteria on administrative-territorial units, the completion of local budgets - up to 20 July,
municipalities submit to the general office of public finance and financial control of the
state the new proposals for the budget project - Until August 1 these bodies must submit
to the Ministry of Finance draft local budgets throughout the county.
A constant issue in Romania is delaying specific budget preparation and budget
vote, both locally and nationally. When this happens, public institutions operate on a
monthly budget of 1 / 12 of the previous year budget. As in recent years inflation has
never been less than 30%, those delays have caused significant temporary reduction in
resources, have encouraged investment and expenditure staple hasty and led consequently
to an increase in inefficiency.
Budget deficits are prohibited by law, even if there are savings from the previous
year. Conversely, the excess return in one form or another from the central budget and
can not be used next year. This makes the multi-annual strategic planning to be very
slow. However, some expenses may be incurred and the surplus of special purpose

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revenue from the end of the previous year surplus, that can be derived from the sale of
commercial premises, from donations and sponsorship, exhibition fairs in charge of
sports fee, charge civil defense, the grazing fee.

V. Conclusions

The same as in Romania, the 1990s in Finland meant many reforms that affected
the regional administration. For the Romanian people these reforms meant the change of
a communist regime with a democratic one, with new rules and with new ways of
organizing the local administration. In Finland most of the efforts that came after the
1990s reforms were to clarify the roles of different actors in regional administration.
Meanwhile in Romania the most important task was to make all people aware of the
changes and make the system work on new rules. This type of reform, that made the
system start from zero takes more years than reforming an existing system.
The regional development in Finland since 1990s is a totally different one from
the one in Romania, because in Finland every region has its own autonomy and can
administrate its own territory without being dependent to the central government.
In Romania this dependence of local government to central government it’s still an
important issue because the political factor gets involved. Money from national budget
are distributed by interest or by political color. The party that is governing will try to
distribute a lot more money to the counties were they won the elections, and the other
counties must struggle to gain some money.
The 1990s reforms established in Finland new ways of economic and employment
development. The new administrative structure unified the regions and municipalities and
made them collaborate into producing the society welfare.
1990s reforms in Romania meant new type of elections, new type of management
and so on. Nothing shouldn’t look the same as in the communist regime, all should have
been changed for a democratic regime. So the differences between Finland and Romania
are even much more visible if we take in to account that Romania started its public
administration system as we know it today only after 1989, and Finland only reformed
the existing system.

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 The new ways of local governance that involve cooperation between
municipalities starts to be seen even in Romania, after being launched the European
Union Program LEADER, that makes municipalities work together in accessing
European Union money. This kind of program is a boost for decentralization in Romania,
because municipalities don’t rely on the state to give them money, they can work
together, create some projects and than try to access the European Union funds by
themselves. This type of cooperation is something common in Finland, because it is a
unique system in which the municipalities are very autonomous. The municipalities are
looking for new forms of service production and cooperation in order to enable equal
services to their citizens.
A complex phenomenon in the activities of public services is the relation between
the mayor or the manager of the city and the local political decision-makers. Between
political decision makers and the decision they make is an important connection because,
by making a certain decision one can show the power he has in decision-making. The
decisions are the result of the battle for power between the local political decision-
makers. The role of the mayor is to mediate the battle and try to figure out what is good
for society. One thing that can be seen in Romanian as well as in Finland is the battle
between parties. But in Romania, if the mayor and the majority in the local council are
from the same party, than all the issue and problems that the mayor and its councilors
think are good, are going to be voted. The political factor in local administration, like in
public administration in general is very important, because if you are on the right side
than you are good.
The differences between the two countries are in some ways big. One cause can
be the system change, and the reforms that were applied. On the other hand, the gap
between an ex-communist country and developed country can be seen in the way the two
countries see development.

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References:

1. Law no. 215 from April, 23 2001(republished) of Local Public Administration,

Issuer: The Romanian Parliament;
2. Pekka Juntunen, Janna Leinonen (eds.), Exploring Finnish Local and Regional
Administration – Some current perspectives, University of Lapland Publications in the
Social Sciences, Rovaniemi, 2007;
3. Pena Coman, Eugen Crai, Monica Radulescu, Gabriella Stanciulescu, Local
Government in Central and Eastern Europe, Chapter VIII, Local Government in
Romania;
4. The Association of Finnish Local and Regional Authorities, The Finnish Local
Government Act, Helsinki, 2007;
5. Virgil Stoica (editor), Cine conduce Iaşiul?(Who administrates Iasi?), Editura
Fundaţiei AXIS, Iaşi, 2003.

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