Annex D. Responsibilities across levels of government
In federal countries, the sovereignty is shared between the federal government and federated states which have their own constitution, parliament and government, and large competences, while federal governments have in general exclusive and listed competences such as foreign policy, defence, money, criminal justice system, etc. In most federal countries, local governments are “creations” of the federated states. Falling directly under their jurisdiction, their responsibilities are defined by state constitutions and laws, and they often differ from one state to another. In quasi-federation (Spain) and “hybrid countries”, devolved nations (United Kingdom) or regions (Italy) can define, through primary and/or secondary legislative powers, the local government functioning. In unitary countries, the sovereignty is not shared. The assignment of responsibilities is generally defined by national laws.
National or regional regulations provide more or less details on local governments’ responsibilities, as they often refer to the general clause of competence or “subsidiarity principle”, especially for the municipal level, which gives local authorities an explicit freedom to act in the best interests at local level. In this case, laws rarely limit and specify local responsibilities but enumerate broad functions instead, except if a particular responsibility is devolved by law to another government level. Laws can also define whether a subnational responsibility is an own/exclusive local function, a delegated task on behalf of the central government or another subnational government (SNG) or a shared responsibility with another institutional government level. In addition, some subnational responsibilities can be mandatory while others are optional. As a result, the breakdown of competences between central/federal government and SNGs as well as across SNG levels is particularly complex, leading sometimes to competing and overlapping competences and a lack of visibility and accountability concerning public policies. For each sector and sub-sector, one or more levels of government (central government, state or region, intermediary government and municipal level) may intervene and exercise one or more key functions: regulating, operating, financing and reporting (Table D.1).
Source: Authors’ elaboration.
Subnational government responsibilities and spending power
The assignment of responsibilities to SNGs does not mean that SNGs have full autonomy in exercising them. Firstly, because responsibilities can be defined as shared or delegated. Secondly, because there may be a gap between the principles and the operational reality: competent SNGs may not have the means to cope with the financial costs (unfunded mandates), or may no longer have (in case of financial crisis). Thirdly, this situation comes most of the time from the fact that SNGs do not have full autonomy and decision-making authority in their fields of responsibility, functioning sometimes more as agencies funded and regulated by the central government rather than as independent policy makers.
In order to gauge true spending power, a set of institutional indicators has been established by the OECD Network on Fiscal Relations across Levels of Government, based on a detailed assessment of institutional, regulatory and administrative control central government exerts over various SNGs policy areas (Steffen Bach, Hansjörg Blöchliger and Dominik Wallau, 2009).
Five categories related to major facets of autonomy have been distinguished (Bach et al, 2009):
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Policy autonomy: To what extent do SNGs exert control over main policy objectives and main aspects of service delivery? To what extent are SNGs obliged to provide certain services e.g. through constitutional provisions or central government legislation?
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Budget autonomy: To what extent do SNGs exert control over the budget e.g. is expenditure autonomy limited by earmarked grants or expenditure limits? Do fiscal rules specifically limit fiscal autonomy in a certain policy area?
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Input autonomy: To what extent do SNGs exert control over the civil service and other input-side aspects of a service? To what extent can SNGs negotiate and shape wages and the wage structure of civil servants? To what extent are SNGs free to tender or contract out services?
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Output autonomy: To what extent do SNGs exert control over service standards such as the level and quality of public services delivered? To what extent can SNGs define output criteria?
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Monitoring and evaluation autonomy: To what extent do SNGs exert control over evaluation, monitoring and benchmarking? To which government level are service providers reporting?