World Bank2013-07-032013-07-032004-01-27https://hdl.handle.net/10986/14359Municipalities play a large role in the Bulgarian public sector. They provide primary and secondary education. They own and operate about one-third of the hospitals in the country. Until 2003, they administered all the major social assistance programs (except pensions and unemployment insurance). The municipalities of larger cities own (wholly or partially) the water companies operating within their territories. Throughout the 1990's and into the first years of the present decade, problems in the structure of intergovernmental relations undermined efforts to achieve efficiency in public service provision and generate savings for investment in public utilities. Persistent deficits and bailouts undermined fiscal stability at both the central and local levels. A fundamental reform in intergovernmental fiscal relations went into effect in 2003. This has addressed many, although not all, of these problems. This report evaluates the reform, identifies major remaining issues, and recommends means to resolve them. The report is structured as follows: After the Introduction, which discusses existing government boundaries, functions, regulation, and revenues, Section 1 parses the issues regarding unfounded mandates, arrears, and fiscal autonomy; incentives to overstaffing; arbitrary disparities in per capita revenues; and infrastructure decline. Section 2 analyzes the 2003 Reform. Section 3 examines what remains to be done immediately and in the long-term.en-USCC BY 3.0 IGOINTERGOVERNMENTAL FISCAL RELATIONSINTERGOVERNMENTAL TAX RELATIONSINTERGOVERNMENTAL TRANSFER OF FUNDSUNFUNDED MANDATESARREARAGESMUNICIPAL MANAGEMENTPUBLIC EXPENDITURES FOR EDUCATIONPUBLIC EXPENDITURES FOR HEALTHPUBLIC EXPENDITURES FOR PUBLIC WORKSPUBLIC EXPENDITURES FOR WAGESBUDGET CONTROLSUBSIDY PAYMENTSINCENTIVE PAYMENTSSTAFFINGPUBLIC SERVICE DELIVERYPER CAPITA INCOMESOCIAL ASSISTANCE PROGRAMSREVENUE SHARINGGOVERNMENT ROLESCHOOL MANAGEMENTSCHOOL ENROLLMENTREGULATORY CONSTRAINTSINFRASTRUCTURE FINANCINGINFRASTRUCTURAL CONSTRAINTSENVIRONMENTAL PROTECTIONEUROPEAN UNION MEMBERSHIPDELEGATION OF AUTHORITYAUTONOMOUS MANAGEMENT ACCOUNTABILITYACCOUNTINGADMINISTRATIVE COSTSAUTONOMYBONDSBORROWINGCAPITAL BUDGETINGCAPITAL EXPENDITURESCAPITAL GRANTSCITIESCORPORATE INCOME TAXCORPORATE INCOME TAXESCREDIT MARKETSCREDITWORTHINESSDEBTDEBT RELIEFDEBT SERVICEDEFICIT FINANCINGDEFICITSFINANCIAL MANAGEMENTFISCAL CONDITIONSFISCAL DECENTRALIZATIONFISCAL REFORMGOVERNMENT REFORMHOUSINGINCOME SUPPORTINSURANCEINTERGOVERNMENTAL FISCAL RELATIONSINTERGOVERNMENTAL RELATIONSINTERGOVERNMENTAL TRANSFERSLEGAL FRAMEWORKLOCAL GOVERNMENTLOCAL GOVERNMENT FINANCELOCAL GOVERNMENTSLOCAL SPENDINGLOCAL TAXESMATCHING GRANTSMUNICIPAL CREDITMUNICIPAL DEBTMUNICIPAL FINANCEMUNICIPAL GOVERNMENTSMUNICIPAL INFRASTRUCTUREMUNICIPAL SERVICESMUNICIPALITIESOPERATING COSTSPENSIONSPRIVATE CONCESSIONAIRESPROFITABILITYPROPERTY TAXESPUBLIC ENTERPRISESPUBLIC EXPENDITUREPUBLIC SECTORPUBLIC SERVICEPUBLIC SERVICE PROVISIONPUBLIC SERVICESPUBLIC UTILITIESPUBLIC WORKSRETIREMENTREVENUE AVAILABILITYROADSSAVINGSSEWAGESEWERAGE SERVICESSOCIAL WELFARESOLID WASTE COLLECTIONSTREETSTAXTAX ADMINISTRATIONTAX RATESTAX SHARINGTAXATIONTRAFFIC MANAGEMENTTRANSPORTUNFUNDED MANDATESWAGESWATER SUPPLYWorld Bank10.1596/14359