site.btaFinance Ministry Has Received 800+ Project Proposals from 261 of All 265 Municipalities in Bulgaria to Be Included in 2024 State Budget

The Finance Ministry has received over 800 projects from 261 of all 265 municipalities in Bulgaria, to be included as an annex in the 2024 draft state budget, Finance Minister Asen Vassilev said here Thursday. He was speaking at a forum that brought together central and local government representatives and businesses, organized by the 24 Chasa daily.

The projects were submitted after the Ministry sent letters to all municipalities asking them to submit investment projects for which they would need funding from the state budget.

“The municipalities are prepared with projects and it is good that things which have been waiting for many years, will start to be implemented,” the Finance Minister added.

His Ministry has said that there is a clear distribution of projects among the 265 municipalities according to criteria that will also be set in the State Budget Bill for 2024. The number of projects that each municipality can submit will not be limited. Project cost caps have been set depending on the category of the municipality.
“From then on, the responsibility is yours to arrange your projects, in compliance with the project caps. We won’t interfere. Each mayor can decide whether they wants to repair water pipes, to fix streets, parks, community centers, to build sports halls: you know best the needs of your town,” Vassilev said as he addressed the mayors at the forum.

He said that all the projects that have been received and meet the conditions will be forwarded to Parliament as an annex to the budget bill. “The reason for entering so quickly into this process is Parliament's desire to approve a list of projects and not just a financial programme,” he said.

The Finance Minister was adamant that his Ministry is not discriminating among the municipalities and all received the project proposals request letter at the same time.

He said the criteria were absolutely objective, and the possibility to add projects to the programme at a later stage, by March, gives the municipalities enough time to prepare.

Vassilev argued against allowing municipalities to get 2% of the personal tax incomes (of 10%) as an additional source of funding, explaining that “it will open wider the gap” between the small and large municipalities. “The average salary in Sofia is BGN 2,700, elsewhere in the country it is BGN 2,000, and there are municipalities with an average salary around the minimum, BGN 1,000-1,100. This will mechanically reinforce the current trend for people to want to move to Sofia because of the high wages. Sofia will receive a huge amount of money [from the personal income tax] and will continue to develop, and most of the small municipalities will be unable to catch up.”

The Minister said that if Bulgaria wants to pursue an adequate regional policy, it should give more chances to smaller municipalities to develop.

“The project caps in the programme we have launched are aimed to ensure that smaller municipalities, disproportionate to population, get resources,” he added.

He also said that the Finance Ministry is having a "very good conversation about decentralization" with the National Association of Municipalities in Bulgaria (NAOMB) from 2021.

Realistic property tax assessments

Assen Vassilev was adamant that "it is very important not to cheat in property tax assessments". "Using a tax assessment from 2007 is cheating; tax assessments should be realistic. Then municipalities can decide what percentage or per mille of the property tax value to collect as taxes. If municipalities want to keep property taxes unchanged as tax values go up, they can simply reduce the percentage of tax they collect," Vassilev said. 

He said this is a local policy and the central government neither gets any revenue from this nor can force municipalities to do anything. "But it is very important that we use the real values if we want to lighten [the economy]. This in no way mandates mayors to raise taxes, nor will it happen from January 1, 2024," Minister Vassilev said.