Following the progressive local government traditions of our country, as well as the basic requirements of the European Charter on local governments, Parliament recognizes and protects the rights of the local communities to self-government.

Local self-government makes it possible, that the local community of electors - directly, and/or through its elected local government - manage the public affairs of local interest independently and democratically.

Supporting the self-organizing independence of local communities, Parliament assists the creation of the conditions necessary to self-government, it promotes the democratic decentralization of public authority.

In order to realize these goals, Parliament enacts the following Act:

Chapter I

General Rules of Local Government

Municipal Rights

Section 1

(1) The local government of the village, the town, the capital city and its districts as well as that of the county (hereinafter: local government) acts independently in the public affairs of local interest, belonging to its sphere of duties and jurisdiction (hereinafter: local public affair).

(2) Local public affairs are connected to providing the population with the services of public utilities, to the local exercise of public power in a self-governmental way, as well as to the local creation of the organizational, personal and material conditions thereof.

(3) The local government may - within the framework of the Act - regulate independently, and in individual cases direct freely, the local public affairs coming within its scope of duties and jurisdiction. Its decision may be overruled by the Constitutional Court and by the courts, and exclusively in case of breaches of law.

(4) The local government may - through the elected local body of representatives, or with the decision of local plebiscite - undertake independently and voluntarily the solution of any local public affair, which is not referred by a legal rule to the jurisdiction of another organ. In the local affairs undertaken voluntarily, the municipality may do anything that does not infringe a legal rule. The solution of the local public affairs, undertaken voluntarily, may not endanger the performance of municipal duties and jurisdiction, prescribed compulsorily by the Act.

(5) An Act may also determine compulsory spheres of duties and jurisdiction for the local government. Simultaneously with the definition of the spheres of duties and jurisdiction, to be performed compulsorily, Parliament will ensure the financial conditions necessary for their being carried out; it shall decide on the extent and method of the budgetary contribution.

(6) Within the framework of the Act, the local government:

a) may independently develop its organization and order of operation, may create symbols of local government, may establish municipal decorations/medals and municipal titles/awards of recognition;

b) disposes independently of its municipal property, allocates independently its revenues; it provides from its unified budget for the carrying out of the municipal duties, whether undertaken voluntarily, or compulsory. It may pursue entrepreneurial activity on its own responsibility. Local-governments of settlements, being in a disadvantageous situation through no fault of their own, are entitled to a supplementary state subsidy;

c) it may freely associate with another local government, it may organize/join territorial, as well as national organizations of interest representation, for the representation and protection of its interests; within its range of duties and jurisdiction it my cooperate with local governments abroad, it may join international organizations of local governments.

Section 2

(1) The local government implements the principle of the sovereignty of the people; in local public affairs it expresses and realizes the local public will democratically creating, a wide range of publicity.

(2) The following may pass a municipal decision: the body of representatives of the local government - under its authorization, its committee, the body of the partial local government, the body of the local minority government, the mayor and the local plebiscite. As an exception, an Act may assign municipal duties and jurisdiction to the mayor, to the Lord Mayor, the chairman of the general assembly of the county.

(3) The local government may express its opinion and may take an initiative in matters not belonging to its range of duties and jurisdiction but which concern the local community. The organ with the jurisdiction to decide shall give - within the deadline set by statutory provision - a reply (decision) on the merits to the local government.

Section 3

The rights of local government, and the lawful exercise of the jurisdiction of the local government, are protected by the Constitutional Court and by the court.

Section 4

The rights of local government provided by Sections 1 to 3 are equal in respect of each local government.

Section 5

The community of residents having suffrage within the settlement (hereinafter: voters) are entitled to the local rights of local government. The voters exercise their collective rights to self-government through their representatives elected to the body of local government, and by participating in the local plebiscite.

Range of Duties and Jurisdictions

Section 6

(1) The village, the town, the capital and its districts (hereinafter: local government of the settlement), and the local government of the county may have different ranges of duty and jurisdiction:

a) the local governments may undertake different ranges of duties and jurisdiction, depending on local needs and capacity;

b) an Act may assign more compulsory ranges of duties and jurisdiction to a local government with a grater population and capacity, in comparison with other local governments. The local government of a settlement with a smaller population - if it can provide therefor itself, or in common with its association - may undertake in its field of action voluntarily the organization of (public) services prescribed compulsorily for the local government of a settlement with a greater population, and/or for the local government of the counties. In such a case it may claim for its budget that the provision of funds proportionate to the assumed task be ensured.

(2) The scope of duties and jurisdiction, undertaken voluntarily by, or prescribed obligatorily for the local government, cover a wide range of local public affairs. An Act may - as an exception - refer a local public affair to the sphere of duties and jurisdiction of another organization.

(3) There is no dependence between the local governments of the county and the regional governments; they cooperate on the basis of mutual interests.

Section 7

(1) An Act, or on the basis of the authorization by an Act, a government decree may - by way of exception - vest the mayor, the Lord Mayor, the chairman of the general assembly of the county, with the jurisdiction of a state administrative authority. An Act, or a government decree may assign state administration duties, and/or an authority's jurisdiction to the notary, the notary-in-chief and - by way of an exception - also to the administrator of the office of the body of representatives.

(2) In cases prescribed by an Act or on the basis of authorization by an Act, by a government decree, the mayor, the Lord Mayor, the chairman of the general assembly of the county, participate in the local direction and execution of national tasks of state administration, in cases of national defence, civil defence, and the averting of catastrophes.

(3) If the mayor, Lord Mayor, the chairman of the general assembly of the county act in their own sphere of duties of state administration under subsections (1) and (2), and/or within the jurisdiction of authority of state administration, the body of representatives may not direct him, and may not overrule his decision.

Chapter II

The Local Government of the Settlement

Duties, Jurisdiction, Organs of the Local Government of the Settlement

Section 8

(1) Within the scope of the local public services, the tasks of the local government of the settlement are, particularly: development of the settlement, settlement planning, protection of the built, and of the natural environment, housing management, water resources planning and drainage (of rain water), canalization and sewerage, maintenance of the public cemetery, maintenance of the local public roads and public areas, local mass transit, public sanitation and ensuring the cleanliness of the settlement; providing for the local fire protection, and for the local duties of public security; participation in the local supply of energy, in the solution of employment; provision or kindergartens, primary education and instruction, health and social provision, as well as looking after (other) duties concerning children and youth; ensuring the provision of community space/forum; support of public education, scientific and artistic activities, of sports; ensuring the enforcement of the rights of national and ethnic minorities; promotion of the community conditions of a healthy way of life.

(2) In respect of the tasks included in subsection (1), the local government of the settlement decides itself - on the basis of the needs and depending on the financial means of the population - which duties it will provide for, to what extent, and in what way.

(3) An Act may require a local government of the settlement to provide certain public services and for the provision of local duties of public authority. These obligations may also be established differently, depending on the size of the settlement, population number, and other criteria.

(4) The local government of the settlement shall provide for safe drinking water, kindergarten education, primary school instruction and education, for the basic health and social welfare provisions, for public lighting, for the maintenance of local public roads and public cemetery; it is also obliged to ensure the enforcement of the rights of national and ethnic minorities.

(5) Within the range of its tasks, the local government of the settlement supports the activities of the self-organizing communities of the populations and cooperates with these communities. The body of representatives shall determine in its organizational and operational by-laws, the representatives of which self-organizing communities are entitled, within the sphere of their activities, to a right of consultation at the meetings of the body of representatives and its committee.

Section 9

(1) The local government is a legal entity. The municipal tasks and jurisdiction are those of the body of representatives. The body of representatives is represented by the mayor.

(2) The duties of the local government are performed by the body of representatives and its organs: the mayor, the committees of the body of representatives, the body of the partial local government, the office of the body of representatives.

(3) The body of representatives may transfer certain of its powers to the mayor, to its committees, to the body of partial local government, to the body of the self-government of the local minority. It may give instructions for the exercise of these powers, it may repeal these powers. The transferred powers cannot be further transferred.

(4) The body of representatives may establish municipal institutions, enterprises, other organizations (hereinafter together: institution) with the purpose of providing public services belonging to its range of tasks, and may appoint their leaders/managers. After 31 December, 1993 no more enterprises may be established; the body of representatives may set up an economic association or may initiate the organizing of a cooperative, both for the purpose of economic undertaking.

Section 10

The following may not be transferred from the powers of the body of representativs:

a) the passing of decrees;

b) the formation of its organization, and the determination of its operation, furthermore, the elections, appointments and assignments referred to its jurisdiction by an Act;

c) calling of a local plebiscite, determining of the municipal symbols, decorations and honorary titles, as well as the regulation of their use, the granting of the title of honorary freeman;

d) determination of the economic programme, of the budget, decision on the adoption of the report on their implementation, levying of local taxes, approval of the plan of the settlement's organization, borrowing in excess of the limit set by the body of representatives; the issue of bonds, furthermore, receiving and handing over of community endowments, and of foundation resources;

e) establishing municipal associations, joining an association, or an organization of interest representation;

f) agreement on co-operation with a foreign municipality, joining an international organization of local governments;

g) foundation of an institution;

h) naming public domain, erecting memorials;

i) initiating proceedings with the Constitutional Court;

j) electing lay members of the courts;

k) taking a position concerning the reorganization, termination, areas of provision and services of a municipal institution of the county, if these services also concern the settlement;

l) giving of opinion in matters where the law prescribes consultation with the local government concerned regarding its position;

m) whatever is referred by an Act to the non-transferable jurisdiction of the body of representatives.

Section 11

(1) There is no appeal against the decision of the body of representatives passed in an official matter of local government.

(2) An appeal may be lodged with the body of representatives against an official decision made by the mayor (Lord Mayor) as well as a committee of the body of representatives, the body of partial local government, within municipal jurisdiction.

(3) A review of the decision of the body of representatives, passed on the basis of subsections (1) and (2), may be requested - with reference to breach of law - from the court, within thirty days of announcing the decision. The action must be brought against the local government.

Operation of the Body of Representatives

Section 12

(1) The body of representatives holds sessions as needed, as often as is called for in the organizational and operational regulations but at least six times a year. The session must be called at the motion of a quarter of the representatives of the settlement, or of a committee of the body of representatives.

(2) The chairman of the body of representatives is the mayor, who calls and chairs the sessions of the body of representatives.

(3) The session of the body of representatives is public.

(4) The body of representatives

a) shall hold a session in camera when discussing an election, appointment, dismissal, giving or withdrawing an executive assignment, initiating a disciplinary procedure, imposing of disciplinary punishment/fine and when disccussing a personal matter which requires the taking of positions, if the party concerned does not agree to a public discussion; furthermore, when discussing official matters of the municipality, conflicts of interests, and decoration;

b) may decree a session in camera when discussing the disposition of its property, and the tender invited by it, if a public discussion would infringe any business interests.

(5) The members of the body of representatives, the spokesman for the minority, and the notary, furthermore - if invited - the party concerned and the expert shall participate in the session in camera. An Act may prescribe cases where it is compulsory to invite the party concerned.

(6) The body of representatives passes its decisions (resolution, decree) with open voting. Secret balloting may be held in the matters under subsection (4). The provisions of subsections (3) to (5) also apply to a committee.

(7) The candidate of the national or ethnic minority, who received the most votes at the general election of local representatives and mayors, shall become the local spokesman of his minority. If he is not a member of the body of representatives, he may participate - as a delegate with voice but no vote - in its sessions. His other rights and entitlements are regulated by the Act on the Rights of the National and Ethnic Minorities.

Section 13

The body of representatives shall hold, at least once a year, a public hearing, announced in advance, in which the citizens, and the representatives of organizations with interest in the locality may put questions and make proposals of public interest.

Section 14

(1) The body of representatives has a quorum, if more than half the representatives of the settlement are present in the session. The acceptance of the proposal requires the yes-votes of more than half of the attending representatives of the settlement.

(2) A person who - or whose relative - is personally affected by the matter may be excluded from the decision-making of the body of representatives. A representative of settlement must disclose his being personally affected. The body of representatives shall decide on the exclusion, at the initiative of the representative affected, or at the proposal of any representative of the settlement. The representative of the settlement excluded shall be regarded as being present, for the purpose of a quorum.

Section 15

(1) A qualified majority is necessary for deciding in the matters included in Section 19, subsections a), b), e), f), g), as well as in the matters defined in the organizational and operational regulation, for the exclusion of a representative [Section 14, subsection (2)], as well as for ordering a session in camera, in accordance with Section 12, subsection (4), paragraph b).

(2) The qualified majority requires the votes of more than half of the representatives elected in the settlement.

Section 16

(1) For the settlement of local social conditions not regulated by law, furthermore, where authorized by an Act to carry out same, the body of representatives may pass a municipal decree.

(2) The municipal decree shall be published in the official gazette of the body of representatives, and/or in the locally usual way, as defined in the organizational and operational regulations.

(3) The municipal decree shall be signed by the mayor and the notary. The notary arranges its publication.

Section 17

(1) Minutes shall be prepared of the sessions of the body of representatives. These shall contain the names of the representatives present and of the invitees, the items of agenda discussed, the essence of the discussion, the numerical result of the voting, and the decisions passed. The notary shall look after the preparation of the minutes.

(2) The minutes of the session of the body of representatives shall be signed by the mayor and the notary. The notary shall send the minutes within fifteen days of the session to the head of the metropolitan, or county public administration office.

(3) The voters - with the exception of an in camera session - may inspect the proposals of the body of representatives and the minutes of their sessions. Separate minutes shall be prepared of session held in camera.

Section 18

(1) The body of representatives shall specify the detailed rules of its operation, in its decree on the organizational and operational regulation.

(2) The body of representatives shall set the order of those forums (village, town policy forum, conference for a city-district, country village meeting etc.), which serve the direct information and involvement of the population, of the social organizations, in the preparation of the more important decisions. The body of representatives shall be informed about the stand taken by these forums, and the minority opinions that emerged there.

(3) Before the expiry of its mandate, the body of representatives may pronounce its dissolution with a vote by names, and with a qualified majority. In this case, an interim election shall be called for a date within seventy-five days. The body of representatives shall carry out its duties, and exercise its jurisdiction until the statutory meeting of the new body of representatives, and the mayor until the election of the new mayor. The dissolution of the body of representatives may not be pronounced within six months following the election, and within one year preceding the expiry of its mandate. The costs of interim election are borne by the local government.

The Representative of the Settlement

Section 19

(1) The representative of the settlement represents the interests of his electors with a responsibility undertaken for the entire settlement. He may participate in the preparation of the decisions by the body of representatives, in the organization and supervision of their implementation. The rights and duties of the (various) representatives of the settlement are identical. The representative of the settlement takes an oath at the statutory meeting, or at the session following his election, in accordance with Section 32.

(2) The representative of the settlement:

a) at the session of the body of representatives may request information of the mayor, (deputy-mayor), or of the notary, or of the chairman of the committee, regarding municipal matters, these must be answered, on the merits, at the session, or within fifteen days latest, in writing;

b) at his request, his remarks, submitted also in written form, shall be enclosed to the minutes; and/or his opinion shall be recorded in the minutes at his request;

c) he may participate as a delegate with voice but no vote at the session of any committee. He may propose to the chairman of the committee discussion of any matter within the range of duties of the committee; this must be submitted to the next session of the committee, and the representative of the settlement must be invited to the discussion thereof.

He may initiate a revision by the body of representatives of a decision, taken in a municipal matter by its committee, the mayor, the body of partial local government, by the body of the local minority self-government in a municipal matter transferred by the body of representatives.

d) on the basis of a mandate, he may represent the body of representatives;

e) he may demand of the office of the body of representatives the information and administrative assistance necessary for his work as a representative. In matters of public concern he may initiate a measure, to be taken by the office of the body of representatives; his initiative must be responded to, on the merits, by the office within fifteen days.

f) he is required to participate in the work of the body of representatives.

Section 20

(1) The representative of the settlement must be excused from the performance of work at his work place, for the period of time required for his participation in the work of the body. The resulting loss of income shall be compensated for by the body of representatives, on the basis of which the representative of the settlement is also entitled to social security benefits. The body of representatives may also set a lump sum.

(2) The body of representatives may set a honorarium, or benefits in kind, for the representative of the settlement, for the chairman of the committee, for members of the committee, for the councillor, within the limits of the law.

Section 21

Upon the proposal of the mayor, or of any representative of the settlement, the body of representatives may elect councillors from among the representatives of the settlement. The councillor shall supervise the carrying out of municipal duties assigned by the body of representatives.

Committees of the Body of Representatives

Section 22

(1) The body of representatives determines the organization of its committee; it elects its committees. At settlements with more than two thousand inhabitants, the body of representatives shall elect a financial committee. An act may also order the formation of other committees.

(2) Upon the initiative of its members, who have received a mandate as minority candidates, the body of representatives shall establish a committee dealing with the affairs of the minorities.

Section 23

(1) Within its competence, the committee prepares the decisions of the body of representatives, and organizes and controls the implementation of the decisions. The body of representatives shall determine which proposals shall be submitted by a committee, and which may be submitted together with the position taken by the committee, to the body of representatives.

(2) The body of representatives may vest its committees with the right of (certain) decisions, and it may review the decision made by the committee; through a municipal decree it may establish official jurisdiction for its committee.

(3) Regarding the quorum and decision-making of a committee, the rules applicable to the body of representatives shall apply.

Section 24

(1) The chairman, and more than half of the members of the committee shall be elected from among the representatives of the settlement. The mayor, the deputy mayor, employees of the office of the body of representatives cannot be chairman or member of a committee.

(2) It is reasonable and warranted to elect into the committee a representative of a major organization which provides services within the competence of the committee, or the delegate of a (voluntary) social organization, or another constituent who makes use of the service.

Section 25

(1) The committee shall be convened upon the motion of the mayor.

(2) The mayor may suspend the implementation of a decision made by a committee, or by the body of the partial local government, if it is contrary to the decision of the body of representatives or infringes the interests of the local government. The body of representatives shall resolve the suspended decision at its next session.

Section 26

A person who - or whose relative - is personally affected by a case may be excluded from the decision-making of the committee. The affected party shall report the personal involvement. In case of the chairman the mayor shall decide on the exclusion, while in the case of a member of committee the decision shall be made by the committee.

Section 27

Within its range of duties, the committee shall supervise the work of the office of the body of representatives, in preparing and implementing the decisions made by the body of representatives. Should the committee perceive in the activities of the office a departure from the position taken by the body of representatives, or from its goals, or an infringement of the municipal interest or the omission of not taking a required measure, it may initiate an action to be taken by the mayor.

Section 28

(1) The body of representatives may establish, in its organizational and operational regulation - self-governments for a part of the settlement, from the settlement representatives and other constituents. The head of a body of self-government for a part of settlement is a representative of the settlement.

(2) The body of representatives may transfer certain areas of jurisdictions - in matters concerning that specific part of settlement to the self-government of the part-settlement, and it may put funds at its disposal.

Section 29

The administrative duties of the operation of the committees are carried out by the office of the body of representatives. The body of representatives may set up branch-offices to assist the work of the body of local government of the part-settlement; these may - at the same time - provide client service in the administration of the population's affairs.

The Mayor, the Deputy Mayor, the Notary

Section 30

The body of representatives shall hold its statutory (constituting) meeting within fifteen days of the election. The statutory meeting is chaired by the oldest representative of the settlement, as chairman by seniority.

Section 31

The organizational and operational regulations shall provide for the way of calling and chairing the body of representatives, in case the office of the mayor and deputy mayor are simultaneously vacant, or if they are unable to attend for a long-lasting period.

Section 32

The mayor is a member of the body of representatives; from the viewpoint of the quorum, decision-making, operation of the body of representatives, he shall be regarded as a representative of the settlement. After his election the mayor shall take an oath before the body of representatives.

Section 33

In regard to the mayor, the body of representatives shall exercise the employer's rights, it shall set his salary within the limits of the legal rule. The mayor is responsible for his state administration activities according to the rules of public service.

Section 33/A

(1) The mayor may not be: President of the Republic, member of the Constitutional Court, parliamentary commissionaire of the citizens' rights ("ombudsman"), ombudsman for national and ethnic minority rights; president, vice-president and auditor of the State Audit Office; member of the Government; secretary of state, deputy secretary of state; head of public administration office of the capital or of a county, and the civil servant thereof; managing director and other employee of the State Property Agency; judge, prosecutor, notary public, court bailiff; professional member of the armed forces, of the police organs; the civil servant of a public administration organ, whose range of duties include matters concerning the given local government; mayor, deputy mayor of another local government, or the member of the body of representatives of another local government of settlement; head of an institution with the same local government and/or a civil servant who receives an executive mandate from the body of representatives.

(2) The mayor and his relative may not be member, senior officer of an economic association or co-operative, whose members include the local government, or a budgetary organ or trading-farming organization founded by the local government.

(3) The full-time mayor

a) may not enter into any contractual relationship aimed at performing of work, with the exception of an intellectual activity within the spheres of science, education, proof-reading, editing, art and other activities falling under legal protection, and with the further exception of a mandate as a Member of Parliament;

b) without the consent of the body of representatives, he may not be a member of a supervisory board, of a board of directors, a senior officer of an economic association, officer of a co-operative, member or officer of the curatorium of a foundation.

(4) The mayor shall terminate the reason for the conflict of interests within thirty days of either his election, or of the emergence of the reason for the conflict of interests.

(5) If the mayor does not live up to his obligation under subsection (4), upon the motion of any representative - and with the exception of villages with less than a hundred inhabitants, on the basis of the proposal of a committee with three members, elected from among the representatives - the body of representatives shall establish the presence of circumstances which serve as a basis for the conflict of interests, and it pronounces the existence of a conflict of interests, and/or it may decide on giving its consent, if this is made possible by this Act.

Section 33/B

(1) In case of a series of activities, or omissions of the mayor infringing the law, the body of representatives may - on the basis of its decision passed with qualified majority - start an action against the mayor, to the county, or metropolitan court which has the jurisdiction according to the seat of the local government, for the termination of the office of the mayor. At the same time it may request the suspension of the mayor from this office. The court shall deal with the action on a priority basis.

(2) In the course of the court's proceedings the provisions of Act III of 1952 on the Code of Civil Procedure shall apply, with the difference that no counterclaim, discontinuance and compromise may take place in this action.

Section 34

(1) The body of representatives shall elect a deputy mayor - and may elect deputy mayors - from among its members, upon the proposal of the mayor, with secret ballot, for the duration of the mandate of the body of representatives, for deputizing for the mayor and for assisting in his work.

(2) The deputy mayor fulfils his duties under the direction of the mayor.

Section 35

(1) The mayor fulfils his municipal and state administration duties, and exercises such jurisdictions [Section 7, subsections (1) and (2)] with the assistance of the office of the body of representatives.

(2) The mayor directs the office in accordance with the decisions of the body of representatives, and within his own municipal competence. The mayor

a) shall define the duties of the office, in organizing the work of the local government, in the preparation and implementation of the decisions, taking also into account the proposals of the notary,

b) decides in state administration matters referred to his jurisdiction by law, in matters requiring official power; he may transfer the exercise of certain of his jurisdictions,

c) upon the recommendation of the notary, he submits a proposal to the body of representatives for the determination of the internal organizational division, of the work schedule, as well as the office hours of the office,

d) in matters belonging to his jurisdiction, it regulates the issuing of (office) copies of decisions,

e) exercises other employer's rights in respect of the deputy mayor, the notary, and the heads of municipal institutions.

(3) If the mayor considers the decision of the body of representatives to be injurious to the interests of the local government, he may - in the same matter - initiate a second discussion of the decision, once only. He may submit the initiative within three days following the session, and the body of representatives shall decide within fifteen days of submission.

Section 36

(1) On the basis of a competition, the body of representatives appoints a notary who meets the requirements of qualification established by law. Upon the proposal of the notary, or the notary-in-chief, the body of representatives may nominate in the village - in accordance with rules applicable to the notary - and with other local governments it shall nominate a deputy notary for deputizing for the notary, for carrying out duties defined by the notary. The appointment shall be for an indefinite period of time.

(2) The notary heads the office of the body of representatives. He

a) takes care of the carrying out of the tasks connected with the functioning of the local government;

b) in the matters within his competence he regulates the issuance of (office) copies of decisions; he exercises the employer's rights in respect of the civil servants of the office of the body of representatives. In certain areas, defined by the mayor, the mayor's consent is required for the nomination, for an executive appointment or dismissal, for the recall of the executive appointment, and for issuing rewards.

c) prepares for decision the state administration affairs within the mayor's jurisdiction;

d) decides in official matters transferred (to him) by the mayor;

e) participates with a voice but no vote at the sessions of the body of representatives and of the committee of the body of representatives;

f) decides in matters referred to his jurisdiction.

(3) The notary must notify the body of representatives, the committee and the mayor, if he perceives any infringement of legal provisions in their decisions,

(4) In the office of district-notary, the district-notary appoints, dismisses and rewards the employees of the office, and exercises the employer's rights with the consent of the mayors. The mayors may agree on who should exercise the right of consent. If they cannot agree, then the joint session of the bodies of representatives shall appoint the mayor exercising the right of consent.

(5)

Section 37

(1) In a village with less than three thousand inhabitants, the office of mayor may also be filled as a community (voluntary) mandate. The mayor shall be a full time mayor, if he has been elected as a full-time mayor.

(2) The way of filling the office of mayor may be changed by the body of representatives within the duration of the mandate one time, with the consent of the mayor.

(3) A full-time deputy mayor may be elected in municipalities with more than three thousand inhabitants.

The Office of the Body of Representatives

Section 38

(1) The body of representatives shall set up a unified office - under the name of mayor's office - for carrying out the tasks connected with the functioning of the local government, and with the preparation of state administration matters for decision, and with their implementation.

(2) In the villages belonging to the offices of district-notary, the duties of the mayor's office shall be looked after by the office of the district-notary, with the exception included in subsection (3).

(3) If the seat of the office of district-notary is an incorporated municipality, or a city, the municipal/city notary shall perform the duties of a district-notary with the involvement of the mayor's office.

Office of District-Notary

Section 39

(1) Villages having less than a thousand inhabitants, and adjacent to each other within the county, shall establish and maintain a district-notary's office to perform their administration duties. A village having more than thousand but less than two thousand inhabitants may also be part of the office of district-notary, the seat of the office of a district-notary may also be a settlement having more than two thousand inhabitants.

Failing an agreement to the contrary, the bodies of representatives concerned shall contribute to the costs of the maintenance of the office of district-notary in proportion to the number of inhabitants of the settlements.

(2) Even the body of representatives of a village with fewer than a thousand inhabitants may set up a separate office, if it appoints a notary who meets the requirements of qualification.

(3) The office of district-notary may be joined or left as of the first day of the calendar year. Decision on leaving or joining shall be made at least six months in advance.

Section 40

(1) The bodies of representatives of the settlements concerned shall agree on the formation of an office of district-notary. The district-notary shall be appointed by the joint session of the bodies of representatives. The nomination of the district-notary requires the unanimous decision of all the bodies of representatives belonging to that office of the district-notary, passed with a qualified majority. Decision on issues related to the work of the office of district-notary shall be made, as necessary, at the joint session of the bodies of representatives.

(2) The district-notary shall perform the administrative duties connected with the functioning of the bodies of representatives, the committees and the settlement's representatives, as well as the preparation and implementation of state administration decisions which belong to the jurisdiction of the mayor.

(3) The district-notary, or his representative, is duty-bound to attend the session of each body of representatives and to provide there the necessary information.

(4) The district-notary must report annually to each body of representatives on the work of his office.

(5) The district-notary or his representative shall have office hours for clients, at least one day per week in each village, with a frequency agreed on by the bodies of representatives in the organizational and operational regulation.

(6) The supervision of the operation of the office of district-notary, the coordination of the duties shall be performed jointly by the mayors of the villages concerned.

Chapter III

Associations of Settlement Local Governments

Section 41

(1) The bodies of representatives of settlement local governments are free to form associations, in order to be able to tackle their tasks efficiently and expediently. Such associations may take forms other than those described in Sections 42-44.

The Central Budget may stimulate the establishment and operation of associations with financial incentives.

(2) An association may not violate the municipal rights of those participating therein.

(3) An association is a legal entity. The agreement providing for the establishment of the association shall also designate the seat and representation of the association.

(4) The court shall decide in disputes arising between the bodies of representatives of settlement local governments, in the course of the operation of associations.

Official Administrative Associations

Section 42

(1) Bodies of representatives may agree to create official administrative associations for the expert handling of certain official matters of administration.

(2) The agreement shall contain:

a) names, seats of the participants of association,

b) the description of matters to be dealt with by the association,

c) the way of appointing the head and the employees of the association, how to exercise employer's rights, the proportions in which (joint) costs are shared,

d) rules of joining, and separating from, the association,

e) the system of on-site administration, in the area under the association's jurisdiction.

(3) The agreement shall be sent to the Metropolitan or County Public Administration Office, who may make comments on legality within fifteen days.

Association for the (Joint) Direction of Certain Institutions

Section 43

(1) The bodies of representative concerned may agree on the joint direction/management (foundation, maintenance and development) of one or more institutions, which provide service(s) for two or more villages, or towns and villages. Failing an agreement to the contrary, the bodies of representatives concerned shall contribute to the maintenance of joint institutions in proportion to the population of their respective settlements.

(2) The agreement shall determine the following:

a) range of activities, and of services provided by the joint institution,

b) ratios of financial contributions by the bodies of representative,

c) rights and obligations connected with running the institution, and the manner of exercising or meeting them, respectively,

d) conditions of cancelling the agreement.

(3) In order to fulfill the responsibilities, and to exercise the jurisdictions attached to the joint institution, the bodies of representatives concerned shall set up a committee, in whose membership the settlements will have members in proportion to the population of the settlement. The committee elects its chairman, and determines its own procedural order.

(4) A meeting of the committee must be called if this is suggested jointly by the committee members of any of the participating settlements, or by the head of the institution.

Joint Body of Representatives

Section 44

(1) A settlement body of representatives may form a joint body of representatives with another settlement body of representatives.

(2) In case they established a joint body of representatives, the (founding) bodies shall, partly or completely, consolidate their budgets, shall maintain a joint office, and shall operate their institutions jointly.

(3) In matters solely concerning a given settlement, the body of representatives of the concerned settlement shall decide independently.

(4) At its statutory/constituent meeting, the joint body of representatives shall include the fact of its foundation, its seat and a list of its constituent settlements in a resolution. The joint body of representatives shall decide on its organization and order of work. The meeting of the joint body of representatives shall be called at the initiative of the mayor of any of the participating settlements.

(5) A joint body may also be established in such a way that the settlement bodies of representatives concerned shall elect its members from among the settlement representatives, in the proportion of the population of each settlement.

(6) A joint body of representatives may, provided it meets the conditions stipulated in Section 69, subsections (2)-(4), undertake to organize public services of a regional kind in accordance with these rules.

Chapter IV

Local Referendum, People's Initiative

Section 45

(1) Anyone, who is eligible to vote in the municipal elections, may take part in local referenda and people's initiative.

(2) A local referendum is

a) valid if more than half of the constituents have cast their votes, and

b) successful if more than half of those who voted have given the same answer to the question asked.

(3) Signatures may be collected in respect of local referenda and people's initiatives on copies of a sheet certified (signed and sealed), within three days of delivery, by the notary of the settlement local government (in matters concerning the Capital, by the Metropolitan Notary-in-Chief, while in matters concerning a county, by the County Notary-in-Chief). In the case of initiating a local referendum, each signature collection sheet shall contain, in an identical manner the following:

a) issue (issues) to be put to the referendum,

b) columns required for signature (personal identification mark or personal identification details, legible name and address, signature).

(4) The notary may refuse to certify the signature collection sheet, if no local referendum may be called in respect of the given issue, or if the sheet does not meet the conditions defined in subsection (3), paragraphs a) and b). An objection may be raised against the notary's decision, within three days, to the local court; in Budapest, to the Central District Court of Pest. The court shall decide on the objection within three days of receipt, in non-contentious proceedings.

(5) When certifying the signature collection sheet, the notary shall indicate thereon the number of signatures required on the basis of the municipal decree. Signatures may be collected for a maximum of thirty days, reckoned from the certification of the signature sheets. The signed sheets may be delivered to the mayor on the eighth day following the above period, at the latest.

Section 46

(1) The body of representatives shall call a local referendum on the following issues:

a) initiating the unification of villages and the termination of the unification,

b) initiating the establishment of a new village,

c) establishment of a joint body of representatives, separation from a joint body of representatives, and

d) in matters so determined in the municipal decree.

(2) In the cases under subsection (1), paragraphs a)-c), the constituents of the part-settlement or village concerned may take part in the local referendum.

(3) The body of representatives may order a local referendum:

a) in matters falling within the jurisdiction of the body of representatives,

b) to confirm a municipal decree.

(4) No local referendum may be ordered:

a) to decide on the budget,

b) in respect of a decree levying local taxes and/or their rates,

c) in organizational, operational and personal matters falling within the jurisdiction of the body of representatives, or concerning the declaration of the dissolution of the body of representatives.

Section 47

(1) A local referendum may be initiated with the mayor by:

a) at least one quarter of the settlement representatives,

b) the committee of the body of representatives,

c) the managing body of the local (voluntary) social organization,

d) a number of constituents, defined in the municipal decree; this may not be less than ten per cent of the constituents, and may not be more than twenty-five per cent of the constituents.

(2) The body of representatives must call a local referendum if it has been initiated by the number of constituents as defined in its municipal decree.

(3) The body of representatives shall decide on an initiative aimed at a local referendum at its next session, but within one month, at the latest. The local referendum shall be held within two months of ordering it. A local referendum may be called for one day or for consecutive days.

(4) In a village with a population of less than five hundred, the body of representatives may delegate the local referendum to the competence of the village meeting, on the condition that the decision of the village meeting qualifies as a local referendum decision if more than half of the constituents attend the village meeting.

Section 48

The outcome of a local referendum shall be binding on the body of representatives. In the case of an unsuccessful local referendum, the body of representatives may decide on the matter put to the referendum. No local referendum may be called in respect of the same issue within a year, even if the local referendum was unsuccessful.

Section 49

(1) All matters, in respect of which the body of representatives is competent to decide, may be presented to the body of representatives through a people's initiative.

(2) A number of constituents, as defined in the municipal decree of the body of representatives, which is not less than five per cent and not more than ten per cent of the constituents, may submit a people's initiative to the mayor. The body of representatives shall decide on whether or not to debate the people's initiative at its next meeting, but within a month, at the latest. The body of representatives must debate a people's initiative, which has been put forward by a number of constituents determined by the body of representatives.

Section 50

(1) In organizing a local referendum, the provisions of the Act on the Election of Local Government Representatives and Mayors concerning the registration of constituents, electoral wards, election organs and voting shall duly apply. When calling a local referendum, the body of representatives may deviate from the deadlines and dates prescribed in the Act on the Election of Local Government Representatives and Mayors. The Election Committee shall notify the body of representatives of the outcome of the local referendum.

(2) The body of representatives shall regulate other conditions and the procedural order of local referendums, and of people's initiatives, via a municipal decree.

Section 51

A protest on constitutional grounds may be submitted to the Constitutional Court due to the refusal to order, or organizing a local referendum contrary to law or refusing to debate a local people's initiative in violation of the law.A protest on constitutional grounds may be submitted within fifteen days of the violation of the law.

Chapter V

A Village, Town and Territories Thereof

Section 52

(1) At the initiative of local constituents a new village may be established from a separate settlement part with a population of at least three hundred, which - on the basis of its conditions and circumstances - is able to exercise local government rights, and to perform the tasks set out in Section 8, subsection (4) without the reduction of the standard of services. A condition of forming a new village is, that the financial resources of operation be available both in the remaining and in the new village, without supplementary subsidies.

(2) If the forming of a new village is initiated, the village meeting shall elect a committee of at least three members, in charge of the preparations, from among the settlement representatives living in the given settlement part; if there are not enough settlement representatives, or if they do not accept the appointment, from among other constituents. The committee in charge of preparations shall draw up a proposal in respect of the territory of the new village, the name of the village, based on experts' opinion, the division of property, and property rights and obligations, and the bearing of costs. At the request of the committee in charge of preparations, the head of the county public administration office or another organ may provide professional assistance for the drawing up of the proposal.

(3) The committee in charge of preparations shall inform the population of its proposal. At the proposal of the committee in charge of preparations, the body of representatives shall pass a resolution on the motion to form a new village. The President of the Republic shall decide on an initiative containing a possibly dissenting minority view, and aimed at the forming of (new) village.

(4) The outer territory of the new village is a contiguous territory, connected to the inner territory. Failing an agreement to a different effect, the outer territory of the settlement shall be divided in proportion to the population of the inner territories.

Section 53

Terminating the unification of villages may be initiated under the conditions, and through the procedure, set out in Section 52. In case of the dissolution of the union of villages, failing an agreement to a different effect, the territories of the villages shall remain as they had been prior to the unification of the villages.

Section 54

(1) Based on a local referendum, the bodies of representatives concerned shall, in a resolution, initiate the unification of villages, or of a town and a village built already together, and shall, at the same time, propose a name for the new settlement. The village that has lost its separate identity may retain its name as part of the name of the unified settlement.

(2) In the course of unification, all the rights and obligations of the villages shall devolve upon the new village or town.

Section 55

The body of representatives may, on request, give the local residential community of a given settlement-part local self-government rights, in respect of matters exclusively concerning the given settlement-part. It may not deny the delegation of such jurisdiction concerning excusively the settlement-part to:

a) a settlement-part emerging through unification,

b) inhabited outer areas,

c) a recreational area, the population of which has reached one quarter of the permanent residents of the settlement.

Section 56

(1) The bodies of representatives concerned may agree on the transfer, acceptance, or exchange of parts of their territory.

(2) In the case of the transfer of an inhabited part-territory, the majority support of the constituents living there, declared at a village meeting or through a local plebiscite, is required for the agreement. The transfer of an inhabited part-territory may not be refused if it is initiated by the majority of the constituents living there, through a local plebiscite.

(3) A settlement body of representatives may, with a qualified majority resolution, initiate that Parliament annex the settlement to the territory of another county adjoining its territory. The body of representatives of the county concerned shall take a stand on the acceptance of a settlement intending to join another county.

Section 57

The costs of territorial changes shall be borne by the village or town, for whose benefit the annexation of territories happened. Any territorial change shall take effect as of the first day of the calendar year.

Section 58

The name of a village or town shall be chosen in such a way that it cannot be confused with the name of another place in the country. Following the dissolution of a union of villages, the (emerging) villages shall generally take their names used prior to the union. The expert opinion of an organ competent with regard to geographical names should be sought in respect of new village names, prior to a decision by the population.

Section 59

A large village/incorporated municipality may suggest that it be declared a town, if the use of that title is justified by its advanced state, and its role played in the region. The body of representatives shall submit its initiative to the President of the Republic, through the Minister of the Interior.

Section 60

The jurisdictions of state organs operating in towns, whose jurisdiction also extends to villages, shall be determined in a coordinated way, favourably for the population.

Chapter VI

Town/City of County Rank

Section 61

(1) Parliament may, at the request of the body of representatives, declare a town with a population of more than fifty thousand a town/city of county rank (hereafter city of county rank). A town which is county seat is a city of county rank. A city of county rank functions as a settlement local government, it shall, within its own jurisdiction, also fulfill the responsibilities and exercise the jurisdiction of the county self-government in its territory, with regard to the appropriate differences.

(2) The body of representatives of a city of county rank is the General Assembly.

(3) In a city of county rank, the General Assembly may designate districts, and set up district offices.

(4) The head of a district office of a city of county rank is the alderman who - on the authorization of the mayor of the city of county rank - shall exercise certain official rights of the mayor.

(5) The General Assembly of a city of county rank shall appoint the heads of the district offices, and may, in addition, set up district bodies of representatives from among the representatives elected in the territory of the district.

Section 61/A

The General Assemblies of a city of county rank, and of a county, shall set up a reconciliation committee, for the preparation for and coordination of cooperation in joint responsibilities. The committee shall have ten members; one half of the members shall be elected by the General Assembly of the city of county rank, while the other half shall be elected by the General Assembly of the county. The committee shall work out the detailed rules of its organization and operation. The office of the Chairman of the Committee shall, - as per agreement - be held in turns by the mayor of the city of county rank, and the Chairman of the General Assembly of the county. The reconciliation committee may also involve the representatives of other concerned counties in its work. At the proposal of either party, which must contain also an agenda, the reconciliation committee shall be convened within 15 days.

Chapter VII

The Capital

General Provisions

Section 62

(1) With regard to the special role played by the Capital in the country, and to its peculiar situation, the provisions of this Act shall apply to the local government of the Capital with regard to the differences set out in this Chapter.

(2) The two-tier local government of the Capital (hereinafter "local government system of the Capital") is composed of the local governments of the Capital and of its districts.

(3) The Capital's body of representatives is the General Assembly of the Capital.

(4) District delegates commissioned by the district bodies of representatives attend the meetings of the General Assembly of the Capital, as defined in the organizational and operational rules of the General Assembly of the Capital, with voice but no vote.

(5) In districts mayors are elected, while in the Capital, a Lord Mayor is elected. The General Assembly of the Capital may elect Deputy-Lord Mayors from among its members, by secret ballot.

(6) The office of a metropolitan district body of representatives is headed by the notary, while the office of the General Assembly of the Capital (the Office of the Lord Mayor) is headed by the notary-in-chief. The General Assembly of the Capital may appoint several deputy notaries in accordance with the rules defined in Section 36, subsection (1).

(7) A district body of representatives may set up local self-governments for certain parts/quarters of the city, in accordance with the rules of Section 28. Several district bodies of representatives may also set up - jointly - such a self-government. In formerly independent settlements, consolidated with the Capital on 1 January, 1950, the establishment of such city-part self-governments is compulsory, if a referendum of the constituents concerned, valid and successful according to the rules of local referendums, has voted for the establishment of a city-part self-government.

(8) The General Assembly of the Capital may, via a decree, delegate the election, appointment and mandate [Section 10, paragraph b)] of the heads of its institutions listed in Section 9, subsection (4), to its committee and to the Lord Mayor; the General Assembly of the Capital and the district body of representatives may delegate its jurisdiction defined in Section 10, paragraph l) to its committee.

Division of Local Government Responsibilities and Authority Between the Metropolitan and District Local Governments

Section 63

(1) The Capital and the metropolitan district are settlement local governments with separate responsibilities and authorities, as defined in the Act. A metropolitan district local government shall - within the provisions of the law - perform the tasks and exercise the authority of the local governments independently. A district local government shall, within its territory of operation, provide for kindergarten education, primary school education and teaching, the basic health care and social benefits, and, within its range of responsibilities, for the supply of safe drinking water, the maintenance of local public roads, and the enforcement of the rights of national and ethnic minorities.

(2) The metropolitan local government shall fulfill both the compulsory and voluntarily undertaken local and settlement local government responsibilities and exercise the authority which concern the whole of the Capital, or a part thereof which is larger than a district, or concern/are due to the special role played by the Capital in the country: it has the jurisdiction to issue decrees in respect thereof. The Act establishing local government responsibilities and jurisdiction shall, in accordance with subsection (1), define whether a specific responsibility or jurisdiction in the Capital is that of the Capital or of a district local government.

(3) A district body of representatives, in its territory of operation, or one of the district bodies of representatives, or an association of bodies of representatives may, in respect of several districts, undertake to organize public services which fall within the responsibilities and jurisdiction of the metropolitan self-government, based on an agreement with the bodies of representatives concerned and the General Assembly of the Capital.

(4) The General Assembly may, within its own sphere of responsibilities and authority, and on the basis of an agreement, transfer responsibilities and authority to the district local governments. The General Assembly shall, in proportion to the responsibilities and authority so transferred, provide the financial means necessary for the fulfillment thereof for the district local governments, or their associations.

(5) The conditions of transferring and accepting responsibilities, and the starting date thereof shall be laid down in an agreement; the agreement may also be valid for a limited period of time.

Section 63/A

The responsibilities and authority of the metropolitan local government include the following in particular:

a) define the Capital's development and rehabilitation programme, and its general town planning, create Budapest's town planning rules; declare, in a decree, the architectural surrounding of the Capital that is important and characteristic for townscape or historical reasons, as protected, with special regard to the buildings, structures, and areas declared to be parts of the World Heritage, regulate the conditions of the upkeep, renovation and maintenance of these protected values;

b) perform the tasks related to housing, within the framework of which: draw up a home building and home rehabilitation plan, and coordinate its implementation; determine the system of subsidizing home building, establish the rental zones in respect of homes owned by the local government, decide on the principles of setting rents and granting subsidies for home maintenance, regulate the conditions of obtaining homes owned by the local government and the exchange of homes owned by the local government;

c) provide for the fulfillment of municipal responsibilities related to the prevention of - and dealing with - natural disasters;

d) look after tasks - in areas covering more than one district - related to the supply of water, safe drinking water, gas and central/district heating service, water management, sewage and rainfall drainage, and sewage water treatment, take part in ensuring the Capital's energy supply and its public lighting; provide for the Capital's flood and inland water control, including in particular the maintenance and development of the Capital's flood and inland water control establishments;

e) take care of municipal tasks related to waste treatment, ensure settlement hygiene, provide for the collection, disposal, treatment/neutralization and utilization of solid and liquid communal wastes, designate the deposit areas required for disposal;

f) select areas suitable for the establishment and expansion of public cemeteries, provide for the maintenance and operation of public cemeteries owned by it;

g) perform the Capital's tasks and duties connected with public transport and traffic technology, designate the main traffic routes, and the routes used by mass transit, provide on the territory of Budapest for the operation, maintenance and development of the national public roads, bridges, under- and overpasses and footbridges, other than motorways and auto-stradas, which are owned by the Capital's local government, as well as for the operation, maintenance and development of the roads used by mass transit and owned by the district local governments;

h) regulate, via a decree, the Capital's parking and parking management system, the strictly protected and the protected parking zones, the setting of the applicable parking fees, the utilization of public domain, and the order of public domain, the organization and responsibilities of supervising the public domain;

i) define the Capital's ideas and plans for tourism, set up and operate its tourist organization, in the interest of carrying out the (touristic) tasks;

j) take part in the fulfillment of responsibilities related to the protection of consumers; designate the areas suitable for the establishment of market halls and markets, regulate, via decree - and carry out - the responsibilities related to the maintenance, development and operation of markets and market halls owned by it (partly owned by it);

k) after consulting the district bodies of representatives, name the areas of the city, various public domains touching/affecting several districts, or those bearing persons' names; assign persons' names to a public domain, possibly change the name of such public domain, declare street names to become protected;

l) fulfill municipal responsibilities related to protection against air-pollution and of the quality of water, designate, develop and maintain, in ways set out in its decree, the areas of natural environment and public green belts/parks to be protected for purposes of the Capital's townscape;

m) take part in the solution of employment problems;

n) provide for the following services - within the framework of the obligation to provide - in areas extending over more than one district, or in areas beyond the limits of the Capital: secondary school, specialized/trade education and student dormitory facilities, if the district local-government does not undertake to perform these responsibilities; fulfillment of responsibilities related to arts, general education and public collections; specialized health care provision and specialized social services beyond basic provisions; performance and development of child and youth protection activities; responsibilities related to physical education, sports organization and youth-related tasks; take part in the coordination of public education, cultural, scientific, art, sports, child and youth activities concerning more than one district;

o) take care of the tasks of national and ethnic minority teaching, educational and cultural responsibilities, in areas covering more than one district, or extending beyond the limits of the Capital;

p) operate the Capital's information system.

Associations of the Capital's Local Governments

Section 63/B

(1) The metropolitan district local governments and the Capital local government are free to form associations with each other, or with local governments outside the Capital.

(2) The Capital's local government and the district local governments concerned may set up metropolitan vicinity (agglomerative/metropolitan) associations with local governments outside the Capital, in particular for drawing up plans in respect of the areas in the vicinity of the Capital, the coordination of public transport, water management, the sewage and rainfall water drainage and sewage water treatment responsibilities, the prevention of natural disasters, the protection of the values of the architectural and natural environment, participation in the fulfillment of responsibilities related to energy supply, the coordination of infrastructural projects serving public and communal purposes, and the organization of providing educational, health care, and social benefit services in the vicinity of the Capital.

(3) The provisions relating to the creation and operation of an association, and the bearing of costs, shall be laid down in an agreement.

Rules of Town Planning in the Capital

Section 63/C

(1) In the interest of ensuring a uniform settlement policy in the Capital, the General Assembly shall, after consulting with the Government and the district bodies of representatives, define the Capital's general town planning principles, and the Capital's town development and town rehabilitation programme. There may be designated in the Capital's general town planning concept the area range of public services supplying several districts of the Capital, the locations and access lanes of projects. In such designated areas and lanes, and in respect of such designated projects which provide public services, the notary's authority shall be exercised by the head of the Metropolitan Public Administration Office.

(2) The district body of representatives shall, in accordance with, and within the provisions of, the Capital's general planning concept, define the detailed development programme of the district, for the whole of the district, the basic district plan, the detailed planning concept of the district, and their regulations.

(3) The General Assembly shall set out the requirements which are necessary for the coordination of the Capital's general planning concept, the basic district plans and the detailed planning concepts in a decree. It shall define therein the cases in which the district and metropolitan local governments have the right of consulting and agreement in the planning process, and the cases in which mutual cooperation in providing information, and in planning, is compulsory.

Financial Management of the Metropolitan and District Local Governments

Section 64

(1) Local government receipts shall accrue to the metropolitan and district local governments in proportion to the responsibilities and authority actually fulfilled and exercised by the metropolitan and district local governments.

(2) If the law requires the metropolitan local government to fulfill regional and national responsibilities which exceed the Capital's scope of interests, or economic possibilities, Parliament shall provide the financial means required for the fulfillment thereof, and shall decide on the rate and manner of the central contribution.

(3) The following receipts shall accrue to the metropolitan local government, and the district local governments, independently and directly:

a) normative (trendsetting) central contributions, attached to the fulfillment of responsibilities;

b) earmarked and target subsidies;

c) profits, dividends, interest and rents from their own activities, enterprises and from the yields of local government assets;

d) funds received;

e) fees payable for the utilization of public domain owned by them.

(4) Receipts to be divided between the metropolitan local government and the district local governments:

a) part of the income tax of private individuals due to settlement local governments on the basis of the Act on the State Budget;

b) other central taxes;

c) central contributions related to the permanent population, except for those defined in Section 64/B, paragraph a).

d) receipts from local/municipal taxes.

(5) The division of the receipts listed in subsection (4) between the metropolitan local government and the district local governments shall be determined by the General Assembly of the Capital in a decree, after consulting the district bodies of representatives. At least ten days shall be provided for the consultation.

(6) The General Assembly may introduce a system of target and earmarked subsidies for the districts in its decree. The General Assembly may designate in its decree those development objectives, for whose realization the district bodies of representatives may apply to the General Assembly for target and earmarked subsidies.

(7) The metropolitan and district local governments shall manage their own property independently, and may appoint another organization to manage such property.

Section 64/A

The district local government shall retain as its exclusive revenue all fines for contraventions collected by way of stoppage/garnishment.

Section 64/B

Exclusive receipts of the metropolitan local government are:

a) normative/trendsetting central contributions for administrative and public education responsibilities;

b) part of revenues obtained from the sale of hunting licences, in accordance with agreements concluded with the local governments of the settlements concerned, and determined proportionately to the territories concerned;

c) Fines levied in connection with environmental protection and monument protection, and received by the metropolitan local government, within the sphere defined by law;

d) duties, as defined in a separate Act;

e) central contribution(s) due on the basis of Section 64, subsection (2).

Section 64/C

(1) The General Assembly of the Capital and the district bodies of representatives shall bring down their own annual budgets, in accordance with the rules of the Act on the State Budget.

(2) As long as the General Assembly of the Capital does not make a decision on the division of the resources concerned among the metropolitan local governments, the Hungarian State Treasury shall transfer, following the performance and settlement of the deductions and contributions burdening the benefits of personal nature and other payments incurred, the part due to the local governments from normative central contributions and central taxes assigned, connected to the totality of the number of permanent population [except for Section 64/B, paragraph a)], to the metropolitan local government. The metropolitan local government shall look after the further remittance thereof.

Basic Principles of the Interest Protection of the Metropolitan and District Local Governments

Section 65

(1) The metropolitan local government represents the interests of the capital as a whole. In questions concerning the structure of the districts the opinion of the districts shall also be sought. Before taking a position for the metropolitan local government, the Lord Mayor shall ask the opinion of the district governments concerned, and shall inform thereof the General Assembly and the decision-making organ. A deadline shorter than ten days may only be given for the giving of the opinion by the district in an extremely justified case.

(2) The metropolitan local government shall be involved - ensuring an appropriate deadline - in the preparation of a legal provision, or a governmental decision, which concerns the economic bases, range of duties and authority of the metropolitan and district local governments.

Passing of Decrees by the Metropolitan General Assembly and the District Bodies of Representatives

Section 65/A

(1) It is determined by an Act, whether the general assembly and/or the district body of representatives may pass a decree for the implementation of the provisions thereof.

(2) The General Assembly may authorize the district body of representatives to pass a decree for the execution of a decree made within its range of duties. The district decree thus passed may not exceed the authorization included in the decree of the metropolitan General Assembly. The decree of the district body of representatives may not be at variance with the decree of the General Assembly.

(3) The Lord Mayor shall send the drafts of decrees of the metropolitan General Assembly to the district mayors for information purposes. The district mayor shall send the draft decrees of the district body of representatives to the Lord Mayor for information.

(4) The decree of the district body of representatives - unless published in the official gazette of the local government - shall be sent - for information purposes - to the Lord Mayor after the publication. The mayor shall look after the dispatch.

Alteration of the Division into Districts

Section 66

(1) Within the boundaries of the Capital, the alteration of the division into districts may be initiated with Parliament by the body of representatives of any of the district local governments territorially directly concerned, or by the General Assembly of the local government of the Capital.

(2) The body of representatives of the district local government, or the General Assembly of the local government of the Capital may submit an initiative to Parliament only together with the opinion of the bodies of representatives of the other districts concerned by the alteration, and with the opinion of the General Assembly of the Capital.

(3) In case of an initiative as to the alteration of the division into districts, the body of representatives of the local government of the district concerned shall call a local plebiscite on the issue of the alteration of the division into districts.

(4) If the alteration of the division into districts was initiated by the General Assembly of the Capital, the local plebiscites shall be called by the body of representatives of the districts affected by the planned territorial alteration. In such a case the costs of the local plebiscites shall be borne by the local government of the Capital.

(5) Annexation of a part of the territory of a metropolitan district to another district may be initiated with Parliament by the bodies of representatives of the local governments of the districts concerned, provided the General Assembly of the Capital states its position.

Section 66/A

(1) The body of representatives of a metropolitan district contiguous to the boundaries of the capital may initiate the secession of the district, or of the local government of a town part, from the capital, and its being declared an independent local government, by a local plebiscite.

(2) The body of representatives of a local government of a settlement wishing to join the capital - and contiguous to it - shall call a local plebiscite in its own settlement on the issue of joining.

Section 66/B

If the new division into districts also affects the administrative boundaries of the capital, the initiative, together with the result of the local plebiscite, may be submitted to Parliament only together with the opinion of the General Assembly of the Capital, of the body of representatives of the local government of the settlements concerned, and of the General Assembly of any contiguous county affected by the alteration.

Section 66/C

The right to initiative defined in Sections 66, 66/A and 66/B is also due to the government. In such a case, the local plebiscite shall be called by the local government of the settlement directly affected by the planned territorial alteration. The costs of the plebiscite shall be borne by the government.

Section 66/D

No new division into districts, and no alteration of the boundaries of districts may be initiated by the body of representatives of a local government, within twelve months before the expiry of its mandate.

On the Exercise of the State Administration Duties and Authority of the Lord Mayor of the Capital, and of the Mayor of a District of the Capital, as well as of the Notary-in-chief of the Capital and the District Notary

Section 67

(1) Considering the special situation of the capital, an Act or a government decree may refer certain official matters of state administration to the jurisdiction of the Lord Mayor, instead of the mayor of the district of the capital, and in certain official affairs of state administration it may empower the notary-in-chief with an authority of first instance, with competence for the whole country or the whole of the capital.

(2) The bodies of representatives of the districts of the capital may agree, that they will look after certain categories of official matters via an association covering several districts - or the whole - of the capital.

(3) On the basis of authorization by an Act or a government decree, the General Assembly may make the formation of an association, to cover several districts, or the whole of the Capital, for administering certain official matters of state administration compulsory; it may order the unified and coordinated provision of certain official services (e.g. client service offices, one-turn and short-term processing of cases).

Rules Concerning the Property of the Metropolitan Local Governments

Section 68

(1) The local government of the Capital must transfer property (property part), which got into the ownership of the local government of the Capital, on the basis of Section 107, subsection (2), but belongs to an institution providing a basic grade public service (basic provision), to the use of the competent district local government, except where the district local government cannot undertake the provision of the public service, or if the public service belongs to the scope of duties or authority of the General Assembly of the Capital.

(2) The property (property part), which got into the ownership of the local government of the Capital on the basis of Section 107, subsection (2), but belongs to an institution providing for non-basic grade public service (non-basic provision), shall be transferred by the local government of the capital into the use of the local government of the district, if

a) on the basis of Section 63, subsection (3) that district local government undertakes the providing the non-basic grade service connected to the institution;

b) the metropolitan local government transfers the fulfilling and exercise of the scope of duties and authority of local government to the district local government, on the basis of Section 63, subsection (4),

c) the public service provided in the institution is a compulsory task of the district local government.

(3) The metropolitan local government shall look after the task once again, if the district local government transfers into the use of the metropolitan local government the property (property part) transferred to it, other property or replacing it, which suits the originally designated purpose of the property transferred.

(4) The property (property part), serving the purposes of a compulsory public service, which got into the ownership of the district local government on the basis of Section 107, subsection (2), shall be transferred for the use of, and to the metropolitan local government, if the district local government, as owner, does not, or cannot undertake the public service, or if the public service (properly) belongs to the range of duties and authority of the metropolitan local government.

(5) In case of a property (property part) necessary for the provision of a public service not undertaken by the district local government, as owner, the provisions of subsection (4) shall apply if the metropolitan local government wishes to provide for the public service.

Section 68/A

(1) Property (property part) in the ownership of the metropolitan local government on the basis of Section 107, which does not serve the purpose of fulfilling/exercising the scope of duties and authority of the metropolitan local governments, defined in an Act, and/or does not serve the fulfilling/exercise of the scope of duties and authority defined in an Act - or in a government decree - for the Lord Mayor, the mayor, the notary, the notary-in-chief, the administrator of the office of the body of representatives - provided it is necessary for the fulfilment of the duties of another organ as prescribed in a legal provision - shall be transferred upon the request of the Minister to the use of the organ looking after the task.

(2) The Minister may request the transfer of the use of the property (property part) which is necessary for the functioning of the centrally subordinated organs of state administration, or state institutions, which fulfill the duties of the organs mentioned in Section 107, subsection (2), and/or of their successor organs.

Section 68/B

(1) On the basis of Sections 68 and 68/A the local government as owner shall transfer the right of use without compensation.

(2) In case of a dispute, the metropolitan committee for transfer of property shall decide on the transfer to use.

(3) The property shall be transferred to use for its originally designated purpose.

(4) The public service for whose provision the property served as a condition on 10 July 1991, shall be considered the originally designated purpose of the property.

Section 68/C

(1) The local government acquiring the right of use on the basis of Act XXIV of 1991 on the Metropolitan Local Government and the Local Governments of the Metropolitan Districts, may change the originally designated purpose of the property transferred for use, with the consent of the local government which is the owner. The consent may not be denied, if the user local government continues to ensure the public service corresponding to the originally designated purpose of the property.

(2) The provisions of subsection (1) shall be applied mutatis mutandis, if the property (property part) is used by the organ mentioned in Section 68/A, subsection (2), on the basis of an Act.

Section 68/D

In the Capital, the ownership of the local public roads and their fixtures, of squares and parks may be transferred by the metropolitan and district local governments to each other.

Chapter VIII

The County Local Government

Range of Duties and Authority of the County Local Government

Section 69

(1) The county local government, territorial self-government, must provide for the carrying out of the tasks prescribed by law, to the solution of which the settlement's local government may not be compelled. An Act may make it the binding duty of the county local government to ensure regional public services, which cover the whole territory of the county or a big part thereof. An Act may prescribe, as a binding county duty, the organization of a public service of a regional nature, whose users in the majority do not reside on the territory of the settlement's local government, where the seat of the institution providing the service is located.

(2) With the agreement of the county local government, the local government of the settlement with authority according to the seat of the county institution, which provides for public service of a regional nature, may assume the maintenance, development and direction of the institution from the county local government.

(3) At the request of the settlement's local government with authority according to the seat of the county institution which ensures the regional public service, the county local government transfers the maintenance, development and direction of the institution to the settlement's local government, for a period of at least three years, if in an average of the preceding four years the majority of the users of the institutions service were inhabitants with residence in the settlement.

(4) The transfer and acceptance of the institution providing the public service shall be put in writing.

(5) Within the range of public services prescribed by law as compulsory county duties, the settlement's local government may establish a new district institution, organize a new district service, by itself or in common with its association, as a local government duty assumed voluntarily.

(6) In the cases regulated in subsections (2) and (3) the settlement's local government should receive a revenue subsidy proportionate to the duties taken over, or assumed. The seat settlement may not, over and above the revenue subsidy received from the county local government and/or from the state budget, claim any other supplementary state or county subsidy, and must not refuse to satisfy demands from elsewhere for the public service operated by it.

Section 70

(1) The county's local government shall take on as a binding duty the following; in particular:

a) maintaining secondary schools, special schools and colleges, if this is not undertaken by the settlement's local government ensuring provision in accordance with a separate Act; the collection, safekeeping, scientific processing of the museum-piece relics of nature and society to be found in the county, as well as of historic documents; furthermore, the services of a county library, expert consulting and services in the range of pedagogy and general education; tasks of the county's physical training, sports organization, as well as the assertion of the rights of children and youth;

b) education of children under permanent medical treatment in health care institutions; education, upbringing of and caring for impaired children, who cannot be educated together with the other pupils; special health care exceeding basic care, if this is not undertaken by the settlement's local government which is compelled to provide these in accordance with a separate Act, as well as the specialized provision of child and youth protection; territorial coordination of specialized social services; it looks after, furthermore, certain tasks falling within the scope of specialized provisions;

c) coordination of the duties connected with the protection of the architectural and natural environment, of regional planning, the exploration of the touristic values of the county, setting touristic targets for the county, coordinating the activities of those participating in the performance thereof; it participates, furthermore, in the coordination of the employment tasks and vocational training of the region, and it participates in the development of a regional information system.

(2) If a county institution which fulfills duties as defined in subsection (1), paragraphs a) and b) also provides for a public service belonging to the compulsory range of duties and authority of the settlement's local government or for a public serveice undertaken voluntarily by it, the county local government shall come to an agreement, or may establish an association, for the joint maintenance, development and direction of the institution, at the initiative of the local government of authority according to the seat of the institution.

(3) Within the range of duties, and in the organization set out by a separate Act, coordination of the duties of settlement development, and of the regional development programmes of the government are performed by the counties' regional development council.

(4) In addition to the performance of its legal duties, the county local government may freely undertake a public duty, which is not referred by an Act into the exclusive range of duties and authority of another organ, and whose performance does not violate the interests of the villages and towns located in the county.

Section 71

(1) The county local government manages freely its revenues, on the basis of its own plan and budget; it disposes of the county local government's property so designated by law, and may pursue entrepreneurial activity. In order to perform its duties more successfully its duties it may freely associate with the local government of another county and of any settlement.

(2) The General Assembly of the county local government may pass decrees in its range of duties, and may order county plebiscite in the matters belonging to its authority of decision-making.

Organization of the County Local Government

Section 72

The county local government is a legal entity. Its tasks and authority are performed/exercised by the General Assembly. The county local government is represented by the chairman of the General Assembly.

Section 73

The chairman of the county General Assembly is elected by the county General Assembly from among its members, with secret balloting, for the period of its mandate.

Section 74

(1) Officers of the county general assembly are: the chairman, the vice-chairman (vice-chairmen) elected from among its members, who are elected by the General Assembly, with secret balloting.

(2) The county General Assembly must appoint its financial committee. Additionally, in order to perform certain of its tasks more successfully the county General Assembly, may freely form committees, while ensuring a majority of county representatives elected as councillors, and of other county representatives. The county General Assembly shall elect other members of a committee from among the representatives of the providers and users of the service as well as from among people otherwise interested in the service. The chairman of the committee is a county councillor.

Section 75

(1) The work of the county's bodies and officers is assisted by a county office of the local government; its duty is the professional preparation of the decisions, and the organization and supervision of the execution of the decisions.

(2) The head of the office: the county's notary-in-chief shall be appointed by the county's General Assembly for an indefinite period of time.

(3) The county's General Assembly determines the internal organization and operating rules of the office, and ensures the material conditions of the operation of the office.

Section 76

To issues not regulated in Sections 69 to 75, the provisions relating to the settlement's local governments shall apply, mutatis mutandis, to the organization and operation of the county local government.

Chapter IX

Funding of Local Governments

Section 77

(1) The local government offers public services. It disposes of its own property, and manages its budgetary revenues and expenses independently.

(2) The budget of the local governments is part of the public finances; it is connected thereto with the whole of its cash flow. The local government's budget is distinct from the state budget, but is linked to it with state subsidies and other budgetary ties.

Property of the Local Government

Section 78

(1) The property of the local government consists of its assets and of the property rights of local government; these serve the realization of the aims of the local government.

(2) Primary assets (Section 79), form separate part of the property of the local government, they must be registered separately from other assets. A property summary (of same) must be shown in an inventory attached to the yearly closing accounts.

Section 79

(1) Property of the local government, which serves directly the carrying out of compulsory duties and authority of local government or the enforcement of public rights and powers, may be declared primary assets.

(2) Property belonging to the range of the primary assets is either non-saleable or saleable in a limited way:

a) non-saleable are the local public roads and their structures, the squares, the parks - with the exception included in Section 68/D - and any other real and personal property which is designated as such by an Act, or by the local government;

b) saleable in a limited way are the public utilities, institutions and public buildings, as well as real property and moveables so designated by the local government. Disposition of items of the primary assets saleable in a limited way may be made in accordance with the conditions defined in an Act, or in a decree of the local government.

Section 80

(1) Subject to the discrepancies stipulated in this Act, the local government is entitled to all rights, and is encumbered by all obligations, which are due to the owner, or by which the owner is encumbered. The body of representatives shall determine how to exercise the rights due to the owner.

(2) The local government may make the sale, mortgageing, contribution to an undertaking, or utilization for other purposes of specific asset(s) or part-asset(s), conditional on a local plebiscite by a decree of the local government.

(3) No enterprise by local government may jeopardize the performance of its binding duties. The local government may participate in an enterprise provided its liability therein does not exceed its financial contribution.

(4) Assets contributed by a local government to an association (Sections 43 and 44) shall be registered as the property of the local government, about to associate. Any accrual of property becomes the joint property of the associated local governments, and the relevant rules of the Civil Code regarding co-ownership shall apply thereto.

Revenues of the Local Government

Section 81

(1) The local government shall perform its tasks, resulting from the needs of the local population and from legal provisions, via its own budgetary organ, with the support of other economic organizations, by purchasing services, and/or through other ways. The local government shall select the forms of (financial) management suited to its duties, and it shall - within the framework of fiscal regulations - formulate the rules of interestedness independently.

(2) The local government provides the means of fulfilling its duties from its own revenues, from central taxes assigned, from revenues taken over from other economic organizations, from the normative/trendsetting contributions of the central budget, as well as from subsidies.

Section 82

(1) (The local government's) own revenues are:

a) local taxes/rates assessed and levied by the settlement's local government, in a way laid down in an Act;

b) profits, dividends, interest and rents resulting from its own activities, from undertaking, and from the yield of the property of the local government;

c) duties, in accordance with the contents of a separate Act;

d) transferred funds received

e) a proportion - set in a separate legal provision - of the fines for violating environmental protection and monument protection rules imposed in the territory of the local government, and collected therefrom;

f) revenue from the sale of hunting licences in the administrative territory of the local government;

g) other revenues of the local government.

(2) A part, as determined in a separate Act, of the amounts resulting from the sale by the State Property Agency of non-public utility enterprises founded by the councils, and formerly under the supervision of the councils, shall qualify as (the municipality's) own revenue.

Section 83

Central taxes, assigned in a separate Act by Parliament are the following:

a) a definite part of the income tax of private persons,

b) other divided taxes.

Section 84

(1) Parliament shall assess a normative/trendsetting budgetary contribution, to be proportionate to the population of the settlements, to certain age groups, to those provided for by institutions and on the basis of other indices.

(2) The amount determined in the central budget shall be due directly to local governments, or to the local government fulfilling the duty within the sphere defined by the Act, without any restriction relating to its use, following the performance and settlement of the deductions and contributions burdening the benefits of personal nature and other payments, which were incurred by the local government.

Section 85

(1) Parliament defines the socially priorized targets. The rate and condition of the subsidies by targets are contained in an Act.

(2) The local governments may claim target subsides individually and jointly as well. A local government that meets the conditions is entitled to the target subsidy.

(3) The target subsidy may be used exclusively for the set target.

Section 86

(1) Parliament may grant earmarked subsidies to selected local governments for the realization of certain investment projects with high costs.

(2) The earmarked subsidy may only be spent on the specified target.

Section 87

(1) The settlement's local government which is in a detrimental situation through no fault of its own is entitled to complementary state subsidy in order to protect its independence and viability. Parliament shall decide in the Act on the State Budget the terms and amount of the subsidy.

(2) In case Parlament sets a new task for a local government, it ensures simultaneously the funds necessary to accomplish it.

(3) The amount of the state subsidies defined in Section 84 may not be reduced in the course of the financial year.

Economic Management of the Local Government

Section 88

(1) The local government:

a) may establish a foundation and may undertake commitments in the public interest;

b) may raise loans and issue bonds, though no primary assets of the local government, no standard state contribution - with the exception of liquid credits -, no state contribution, no personal income tax and no revenues received from the state budget for operational purposes may be used to secure these.

c) decides on depositing its resources which are not earmarked for a specific target, with the exception of the state subsidy;

d) decides on the use of other banking services.

(2) The upper limit of the annual undertaking of obligations by the local government creating debt (raising credits, and their accessories, as well as issue of bonds, undertaking guarantee and suretyship, leasing) shall be the corrected own current revenues.

(3) Corrected own current revenues: 70% of the annual forecast for own current revenues reduced by the part of short-term liabilities allocated for the given year (amortization of principal and interest, fee of leasing).

(4) The liquid credit shall not come under the restriction referred to in subsections (2) and (3).

(5) For the purposes of this Section, own current revenues shall be: local taxes, duty revenues of the local government, interest revenues, environmental fine and other specific revenues of the local government.

(6) For the purposes of this Section, short-term liabilities shall be: loan and credit received with a period of expiry not exceeding 1 year, furthermore, the amount due in the given year of the liabilities to be repaid during several years, not including the liabilities guaranteed by undertaking suretyship on behalf of the Government.

(7) For the purposes of this Section, liquid credit is the credit raised and repaid within one year, for the purpose of the continuous operation of public service and state administration duties.

Section 89

(1) The local government shall subsidize its institutions. It may not deduct or offset against the subsidy, income of the institution over and above its compulsory fee-for-service.

(2) The institution shall use the subsidy and its own revenues independently; provided it does not violate its basic duty, it may utilize the real and personal property in its possession/use to increase its revenues.

(3) The local government may support the functioning of institutions maintained by others.

Section 90

(1) The body of representatives is responsible for the safety of the economic management of the local government, while the mayor is responsible for the legality of the economic management.

(2) The consequences of economic operations at a loss must be borne by the local government, the state budget is not liable for its obligations.

(3) At the request of the creditors, the court shall establish the insolvency of the local government.

(4) In order to restore solvency, the local government must suspend funding its duties, with the exception of official and basic services for the population.

Planning, Accounting, Information

Section 91

(1) The local government shall set its economic programme and budget.

(2) The detailed rules of drawing up the budget are set out in the Act on State Finances; the order of financing and the amounts of state subsidies are defined in the Act on State Budget.

(3) The tasks of planning the state budget - as it concerns local governments - are carried out by the Ministry of Finance and by the Ministry of the Interior.

(4) Decisions concerning budget shall be made by Parliament after conciliation with the interest associations of the local governments, taking into consideration their expressed opinion.

Control/Supervision

Section 92

(1) The economic management of the local governments is supervised by the State Audit Office.

(2) The local government looks after the financial supervision of its own institutions. The local government also provides for the internal control of its economic management through a controller with qualification(s) specified in a legal provision.

(3) The financial committee shall among other things, at the local government, and its institutions:

a) give its opinion about the yearly budget proposal, and about the draft of the semi-annual/annual, report on its implementation;

b) monitor the development of the budgetary revenues, with special regard to the municipality's own revenues, to the development of property changes (increase, or decrease), and evaluate the reasons therefor;

c) examine the reasons for raising loan and its economic justification; it may verify the compliance with the regulation of handling cash (on hand), the implementation of the system and regulation of vouchering.

(4) The financial committee shall submit its findings, resulting from its inspection, to the body of representatives without delay. If the body of representatives does not agree with the findings, it shall send the minutes of inspection, together with its comments to the State Audit Office.

Section 92/A

(1) The Body of Representatives of the local governments of counties, towns of county rank, the capital and the districts of the capital shall commission an auditor and shall publish their annual reports on money circulation and accounting balance-sheet with simplified contents defined by the Minister of Finance and the Minister of the Interior, containing the figures of the local governments and their institutions in a consolidated manner, furthermore, their accounts of the remaining balance of cash and their profit and loss accounts in the Gazette of the Ministry of the Interior (Belügyi Közlöny) and in the Companies Gazette (Cégközlöny). The Body of Representatives shall invite a tender, shall assess the bids and the mayor shall commission the auditor within 60 days reckoned from the coming into force of this provision.

(2) If the amount of expenses of a local government exceeded 100 million forints in the previous year and the local government has outstanding loans or raises credit, it shall have the content of subsection (1) annually reviewed by an auditor and publish as of the year of raising the credit until the last year of repayment of the credit inclusive.

Section 92/B

(1) An auditor with "budget" qualification, contained in the list of auditors kept by the Hungarian Chamber of Auditors may be commissioned with auditing and reviewing budget reports.

(2) The mayor, a member of the Body of Representatives, an employee of a budget organ of a local government and the close relatives thereof [Section 685, paragraph b) of the Civil Code] may not be auditors during the existence of their above capacity, and for three years reckoned from the termination thereof.

(3) Auditor's duties may also be fulfilled by an organization entitled to pursue such activities, contained in the list of companies kept by the Hungarian Chamber of Auditors. The natural person performing auditing (registered auditor) shall also be named on the appointment of the auditing organization. In this case the rules determined in subsections (1) and (2) shall apply to the registered natural person (registered auditor).

Section 92/C

(1) The auditor may have access to the books of the local government and may request information from the mayor and the employees of the budget organs of the local government. His duties shall particularly comprise the examination of the invested assets, inventories, liquid assets, receivables and liabilities, the remaining balance of cash and the profits of the local government. The auditor may attend the public and closed meetings of the Body of Representatives with consultative rights. The mayor shall be obliged to invite the auditor to the meetings of the Body of Representatives regarding the subjects coming under his scope of expressing opinion.

(2) Within the sphere of local governments contained in Section 92/A, subsection (1), the auditor shall be obliged to examine the draft by-laws regarding the budget and the annual settlement accounts with consideration to the fact whether they contain real data, and/or comply with the provisions of legal rules or not, he shall, furthermore, analyze the financial situation particularly in respect of assumptions of obligations resulting in debts.

(3) In a separate contract entered into with the auditor, the Body of Representatives may also request the auditor to express his opinion on other proposals with economic effect.

(4) The auditor shall notify the Body of Representatives in writing of his opinion.

(5) Without the written opinion of the auditor, no valid decision may be made on a proposal coming under the sphere of expressing opinion by the auditor.

(6) The auditor shall be obliged to request the mayor to convene the Body of Directors if he learns of the expected considerable reduction of the assets of the local government and of any other f act which may involve the holding responsibility of a local government officer as defined by law. If the mayor fails to convene the meeting of the Body of Representatives, the head of the state administrative office of the capital or the county shall convene the meeting upon the initiative of the auditor. If the Body of Representatives fails to make the necessary decisions, the auditor shall notify the head of the administrative office of the capital and the county accordingly.

Section 92/D

(1) In case the auditor is foreseeably not able to fulfil his duties defined in Section 92/A, subsections (1) and (2), and Section 92/C, subsections (2) and (3) by the deadline laid down in the contract of agency, he is obliged to report it in writing to the local government at least 30 days prior to the expiry of the deadline, or if the obstacle occurred later, within 3 business days reckoned from its occurrence.Following that, the legislature of the local government may, having considered the circumstances, either set a deadline for subsequent fulfilment, or commission a new auditor immediately, without conducting a tender procedure.

(2) In case the auditor fails to fulfil his obligation of reporting, and fails to fulfil his duty by the deadline laid down in the contract, the legislature of the local government shall proceed at the expiry of the deadline according to the contents of subsection (1), at the cost of the auditor in default. It shall simultaneously

a) enforce its claim for damages arising therefrom, pursuant to the general rules of liability under civil law, and

b) initiate the cancellation of his "budgetary" qualification from the register of auditors contained in Section 92/B, subsection (1)

towards an auditor who fails to fulfil his obligation of reporting or the contract without any reason for excuse.

(3) In case the local government fulfils its obligations contained in subsections (1) and (2), the legal consequences related to the failure of satisfying the conditions of financing the normative state contribution defined in the Act on the Budget may not apply to it due to any possible delay.

Chapter X

Local Governments and Central State Organs, the Protection of Local Government Rights

Responsibilities and Authority of Central State Organs in Connection with Local Governments

Section 93

(1) Parliament shall regulate by law the following:

a) legal status, exclusive responsibilities and authority of local governments, responsibilities to be fullfilled compulsorily, types of organs, it has to maintain guarantees of its operation, financial resources, and the basic rules of their financial management;

b) the legal status of local government representatives, the order of their election, their rights and obligations.

(2) At the proposal of the Government, submitted after having consulted the Constitutional Court, Parliament shall dissolve a local body of representatives, the operation of which is contrary to the Constitution [Section 19, subsection (3), paragraph 1. of the Constitution]. If Parliament dissolves a local government body of representatives, it shall simultaneously call a by-election, for a date within 60 days of the dissolution.

(3) Parliament shall decide on the dissolution at its forthcoming session. The mayor of the local government concerned shall be invited to the debate dealing with this item on the agenda. The mayor is entitled to present the position of the body of representatives, in regard to the proposal for dissolution, before a decision is taken thereon.

(4) Parliament shall decide on the regional division of the state, as well as, after having consulted the local governments concerned, on the consolidation and separation of counties, the changing of their borders, names and seats, on declaring a town to be a town of county rank, and the establishment of districts in the Capital.

Section 94

The President of the Republic shall

a)

b) decide, at the initiative of the local governments concerned, on the granting of the title of town/city, as well as on the creation and unification of villages, the dissolution of their union, and the naming of towns and villages;

c)

d) appoint a Commissioner of the Republic for directing the implementation of specific local government and state administration duties for the period until the election of the new body of representatives, if Parliament dissolves a local body of representatives.

Section 95

The Government shall:

a) with the participation of the Minister of the Interior, provide for the supervision of local governments as to legality through the head of the Metropolitan, or County Public Administration Office;

b) present proposals to Parliament in respect of the dissolution of local bodies of representatives operating contrary to the Constitution;

c) lay down, in a decree, the rules of qualification for local public service;

d) direct the carrying out of state administration responsibilities, and provide for the means of their implementation;

e) decide in disputes arising between a state administration organ and a local government, which do not fall within the purview of other legally regulated proceedings.

Section 96

The Minister of the Interior shall:

a) prepare the decisions on regional organization within the jurisdiction of Parliament and the President of the Republic;

b) propose, that the Government submit a proposal concerning the dissolution of a local body of representatives which operates contrary to the Constitution, to Parliament;

c) take part in the preparation of the drafts of statutes, other legal instruments of state administration and of specific state rulings, concerning the responsibilities and authority of local governments, and the activities of mayors, the Lord Mayor, and the Metropolitan and County Public Administration Offices;

d) coordinate the Government responsibilities concerning settlement development related to the operation of local governments, and of the development, planning and financial management related to the operation of county local governments;

e)

Section 97

The Minister shall:

a) set out, in a decree, the specialized rules of attending to the tasks of state administration exercised by mayors, the Lord Mayor, the chairman of the county General Assembly, the notary, the Notary-in-Chief, and the heads of the Metropolitan and County Public Administration Offices, and shall verify their enforcement;

b) regulate, in a decree, the specialized requirements of the operation of institutions maintained by local governments, the qualification requirements in respect of the employees of such institutions, and shall verify the enforcement of such rules;

c) inform the local government of the findings of his verification procedure mentioned in paragraphs a) and b), make proposals for the elimination of shortcomings, may initiate that the body of representatives debate the findings of the verification procedure, and shall, in the case of an infringement of the law, inform the organ which supervises as to legality;

d) inform local governments of central branch-political objectives, their regulatory means, and shall secure for them the information required for fulfilling their branch responsibilities;

e) may request local governments to provide data and information in respect of his branch tasks, and local governments shall satisfy such requests;

f) may provide financial support for a local government, on the grounds and under the terms set out in the Act on the State Budget.

Metropolitan and County Public Administration Offices

Section 98

(1) The Metropolitan or County Public Administration Office (hereinafter "Public Administration Office") is a budgetary organ which performs state administration duties. The operating costs of the Public Administration Offices are provided by Parliament, as in the Chapter entitled "Ministry of the Interior" of the Act on the Budget, separately.

(2) In the Capital and in the counties, the head of the Public Administration Office shall

a) perform verification of legality vis-_ _-vis local governments, local minority, and regional minority self-governments, and may investigate local government decisions taken with deliberation, as to lawfulness only;

b)

c) perform the state administration, jurisdiction and tasks in the sphere of authority as defined by law and delegated by the Government to its authority,

d)

e) based on his experience, gained in the course of supervision as to legality, may initiate with the State Audit Office an investigation of the financial management of a local government;

f) call the meeting of the body of representatives if the mayor fails to act according to the suggestion defined in Section 12, subsection (1), within fifteen days;

g) provide expert/professional assistance in matters falling within his scope of duties and authority, at the request of a local government.

(3) The head of the Public Administration Office shall, within his authory of checking legality, investigate whether

a) the organization, operation, decision-making procedure,

b) decisions (decrees, resolutions),

c) the municipal resolutions adopted by a committee, by a local segment of government, by the mayor, Lord Mayor, or the Chairman of the county General Assembly

of the local government, the local minority or regional minority self-government are in compliance with the legal rules.

(4) The authority of the head of the Public Administration Office to supervise legality, with the exception under subsection (5), shall not extend to those resolutions of the local government, local minority, and regional minority self-government, - or those adopted by organs thereof - on the basis of which

a) a labour dispute, or a dispute arising from the public service legal relationship,

b) court or state administration proceedings as stipulated in a separate legal provision may take place.

(5) The authority of the head of the Public Administration Office to supervise legality shall also extend to the resolutions listed in subsection (4) within the sphere outlined in subsection (3), paragraph a), and in the case of subsection (4), paragraph a) if such resolutions constitute an infringement of the law, for the employee's benefit.

Section 99

(1) Within the scope of supervising legality, the head of the Public Administration Office shall call upon the party concerned to cease the infringement of the law, setting a deadline. The party concerned shall investigate the facts referred to in the above notice, and shall, within the deadline, inform the head of the Public Administration Office of the measures taken on the basis thereof, or of his disagreement.

(2) If no measure is taken within the deadline set, the head of the Public Administration Office may initiate:

a) with the Constitutional Court, the revision and nullification of the local government decree in conflict with the law;

b) revision by court of the resolution infringing the law;

c) the convening of the body of representatives for stopping the offense against the law, and to establish the responsibility of the involved officer of the body of representatives.

(3) Legal proceedings aimed at the stopping the infringement of the law may be instituted against a local government, local minority and regional minority self-government, or the mayor, within thirty days of the expiry of the deadline set. Starting the action has no staying effect in respect of the implementation of the decision, but a suspension of execution may be applied for to the court. If the execution of the decision in conflict with the law were to cause serious prejudice to public interests, or insurmountable damage, the suspension of execution shall be applied for to the court, with the simultaneous notification of the party concerned.

Section 100

Right of Address and Recommendation (Petitioning)

Section 101

(1) The body of representatives may, in any question concerning local government rights, or concerning the duties and authority of the local gorvernment, turn to the head of the state organ which has authority in the given question, directly, or through its interest representation organization, and

a) may request information, data, and the taking of a position concerning professional questions and the interpretation of legal issues (hereinafter together "information");

b) may submit proposals, and initiate the taking of measures;

c) may voice its opinion on the operation of the organ directed by him, as well as on legal provision, means of legal guidance and other decisions, issued by it or may raise objections thereto, and may initiate its alteration or withdrawal.

(2) The organ so addressed shall respond on the merits to the petition within thirty days.

(3) If the information, response or step(s) to be taken does not fall within the authority of the organ contacted, the latter shall, within three days, forward the petition to the organ which does have such authority, and shall simultaneously inform the petitioning local government.

Interest Representation of Local Governments

Section 102

(1) Local governments may create interest representation organizations for the promotion of the collective representation, protection and enforcement of local government rights and interests, and to develop the operations/management of local governments.

(2) National interest representation organizations of local governments shall be consulted regarding the drafts of legal rules and other State decisions concerning local governments. The organ making the central decision shall be informed of the stand of the interest representation organizations.

Chapter X/A

Minority Local Government

Section 102/A

The provisions of this Act shall apply to the operation of minority local governments established on the basis of Act LXXVII of 1993 on the Rights of National and Ethnic Minorities (hereinafter "NEMA") with the differences as set out in this Chapter.

Section 102/B

(1) The body of representatives of a settlement local government shall, based on Section 22 of NEMA, decide on declaring the establishment of a minority local government at its initial meeting, or the minority representatives shall, within three days of the initial meeting, decide on the appointment of a local minority government to be set up in an indirect manner.

(2) More than half of the minority representatives must vote yes in order to declare a local government to be a settlement minority local government.

(3) The body of a minority local government established in an indirect manner, or, failing that elected in a direct manner, shall call its initial meeting within fifteen days of the initial meeting of the body of representatives of the settlement local government. The initial meeting shall be called by the chairman by seniority of the local minority government, or, in the case of a directly elected local minority government, by the chairman of the election committee.

(4) If initiated by the local minority government, the body of representatives of the settlement local government shall approve a decree to be issued on the basis of Section 27, subsection (1) of NEMA, - provided it does not violate the independence of the minority local government -, within ninety days of the initiation.

Section 102/C

(1) The local minority government duties and authority shall be those of the body of the local minority government. The body may delegate its authority to the chairman or the committee.

(2) The body of representatives of a settlement local government may delegate its duties and authority, other than the duties and authority related to official and public utility services, to the body of the local minority government, at the initiative of the latter.

(3) The meeting of the body of the local minority government shall be called and chaired by the chairman. The body shall make its decisions by way passing resolutions.

(4) A qualified majority [Section 15, subsection (2)] is required for:

a) the establishment of the organizational and operational rules of the local minority government;

b) its decision on the planning and utilization of resources made available by the settlement local government;

c) its decision on the utilization of property, separated for its use within the property of the settlement local government;

d) its decision on establishing an institution, or a local minority government association;

e) joining an interest representation organ, entering into an agreement on cooperation with a foreign local government;

f) the election of its chairman and vice-chairman.

(5) Minutes shall be taken of the meeting of the body of the local minority government; these shall be signed by the chairman and a person appointed by the body to authenticate the minutes.

(6) The local minority government shall decide on the following in its resolution regulating its organizational and operational order:

a) the detailed rules of its organization and operation;

b) the utilization of the assets separated for the (use of the) local minority government;

c) the establishment of a local minority government association.

(7) The resolution regulating the organizational and operational order of the local minority government shall be announced in a locally customary manner. The notary shall take care of the announcement.

Section 102/D

(1) The members of the body of a local minority government shall represent the interests of the given local minority in minority matters. The rights and obligations of the various members of a local minority government are identical.

(2) Minority local governments may set up (a) committee(s).

(3) The committee shall be convened at the initiative of the chairman of the local minority government.

Section 102/E

The local minority government shall elect from among its members an (unpaid) volunteer chairman, and a vice-chairman, who will substitute for, and facilite the work of, the chairman. The chairman shall represent the local minority government, and may attend the meeting of the representative body of the settlement local government, with voice but no vote.

Section 102/F

(1) A minority local government is free to associate with another local government, in order to attend to its tasks more efficiently. The terms of association shall be laid down in an agreement.

(2) In the case of forming a joint body of minorities, the bodies of representatives of the neighbouring settlement local governments concerned shall, having regard to the opinion of the joint body of minorities, and as agreed, determine which mayor's office shall assist in the administration of the joint body of minorities.

Chapter XI

Closing Provisions

Section 103

(1) For the purposes of this Act:

a) the right of electing, appointing and commissioning senior officers, which fallis within the jurisdiction of the body of representatives - with the exception of the election of the deputy-mayor, the Deputy Lord Mayor, the Chairman and the Vice-Chairman of the county General Assembly, - includes the right of dismissal and of revoking such commission;

b) other employer's rights shall be construed as all employer's rights other than appointment, managerial promotion, dismissal, revoking of managerial promotion ascertaining, that a conflict of interests exists, instituting disciplinary proceedings, and imposing disciplinary penalty;

c) the right of creating institutions includes the right of terminating and reorganizating of institutions;

d) the employer's right mentioned in Section 36, subsection (2), paragraph d) includes the employer's right in respect of the administrative and blue-collar employees of the office of the body of representatives.

(2) For the purposes of Sections 33/A and 33/B, mayor shall be construed also as the deputy-mayor, the chairman and vice-chairman of the county General Assembly, the Lord Mayor and the deputy of the Lord-Mayor, with the difference that a district mayor in the Capital may be a member of the General Assembly of the Capital.

(3) The Metropolitan and County Public Administration Offices are the legal successors of the Commissioner of the Republic and his office.

(4) The legal successors of the councils, which are being wound up, and of their organs are the local governments.

Section 104

(1) The new body of representatives of the joint council of associated villages (hereinafter "joint council"), existing at the date of the coming into force of this Act, shall decide on the following by 30 November 1990:

a) whether it will maintain its institutions independently, or jointly with another body of representatives;

b) whether it will establish an office of the district-notary (with which villages, and what seat), or will establish an autonomous office, and appoint a notary;

c) whether it will form a joint body of representatives (with which village(s), and what seat).

(2) The associate villages of a joint council shall agree on the division of the existing property, unless they form a joint body of representatives.

(3) The body of representatives of the seat of a joint council may not refuse the settlement becoming the seat of the district notary's office.

Section 105

If the parties concerned fail to come to an agreement, the villages belonging to a district of notary shall be appointed by the head of the County Public Administration Office. The body of representatives may appeal to the Minister of the Interior against an appointment prejudicial to the interests of the population. There is no appeal against the decision of the Minister of the Interior.

Section 106

An institution founded by the joint council and, having served several villages, shall pass into the joint ownership of the villages concerned. If the joint institution can be divided among the villages, the bodies of representatives concerned may agree as to the division, effective 31 December, 1990.

Section 107

(1) Property items to be transferred from state ownership to the ownership of local governments include the following:

a) a specified range of real property, forests and waters designated by law, located in the administrative territory of the local government;

b) state economic organizations, founded by the councils, and operating under the supervision of the councils, which serve - and had been established for - public utility purposes, including metropolitan and county pharmaceutical centres, as well as property of the factories under the Central Budget, and the share of property due to the state in the economic associations created from such organizations;

c) building structures, pipe-lines and conduits; fixtures and equipment of public works which serve the needs of the population within the inner borders of the settlement, with the exception of those owned exclusively by the state;

d) property of educational, cultural, health care, social, sports and other institutions managed or controlled - as owners - by the councils;

e) state-owned rented flats managed by the councils or by the council's property management organs;

f) public buildings and the lands belonging thereto, with the exception of buildings serving central state responsibilities;

g) all funds, securities and other property rights of the councils.

(2) The state-owned real properties, forests and waters, - other than (designated) nature protection areas and buildings, building structures and areas protected as historic monuments, - cash and securities managed by the councils, and by organs and institutions thereof shall, by the force of this Act, be transferred to the ownership of local governments, on the day the Act comes into force.

(3) The Government shall set up county (metropolitan) property transfer committees for the transfer to local government ownership, and for the division between the local governments and companies, of the lands, forests, other real properties, and waters as designated in a separate Act, as well as all areas under nature protection, and buildings, building structures and areas protected as (historic) monuments, the projects/structures of public utilities, and for the transfer of the property of the organizations mentioned in subsection (1), paragraph b); these committees shall decide on the transfer of these items to local government ownership and on how to settle encumbrances (liens, mortgages). The representatives of the national organizations responsible for the protection of the architectural and natural environment shall also participate in the property transfer committees.

(4) Until the transfer of the above property, the property items mentioned in subsection (3) can be sold only with the consent of the property transfer committee, or, in the case of those items protected due to their natural or historic value, with the consent of the competent national authority.

(5) Land owned by the state, which on the day of the promulgation of this Act, belongs to the inner territory of a local government - with the exception of lands to be transferred to exclusive state ownership - shall be transferred to the ownership of the local government, by the decision of the property transfer committee.

(6) The public utility and communal companies that satisfy the needs of several local governments, their building structures, pipes, lines and conduits, fixtures and equipment of the infrastructure between settlements, as well as the local public roads that run between settlements, shall be transferred to the ownership of the county local government or the joint ownership of the settlement local governments concerned, based on the decision of the property transfer committee, unless the local governments concerned agree otherwise.

(7) Local governments may present their property claims to the property transfer committee by 31 March 1995, following which the property claims of local governments can be enforced through court proceedings.

Section 107/A

(1) The electric or gas public utility property due to the local governments of the localities on the basis of Section 107, subsection (1), paragraph c) is part of the assets of the economic association operating the public utilities.

(2) After the property falling on the locality local governments concerned

a) in case of electric public utilities 25% of the state-owned property share of the economic association operating the public utilities,

b) in case of gas public utilities 40% of the state-owned property share of the economic association operating the public utilities shall be due by the force of this Act in the form of shares to the locality local governments connected into the service.

(3) The shares due to the locality local governments on the basis of a separate Act shall be included in the property share in accordance with subsection (2), paragraph b).

(4) The property share defined in subsection (2), paragraph a) shall be issued in the capital to the metropolitan local government, to other locality local governments in proportion of the number of their population on 1 January 1995.

(5) Unless more than half of the locality local governments concerned agree otherwise by 30 November 1995, the property share defined in subsection (2), paragraph b) shall be delivered to the locality local governments in proportion of the number of their population on 1 January 1995.

(6) The property share defined in subsection (2), paragraph b) and in subsection (4) may not be less than the business quota due to the local government on the basis of a separate Act.

Section 108

The bodies of representatives of the settlements which were large-village-councils at the date of the coming into force of this Act, or on whose territory at least five thousand residents live, may use the title "large village".

Section 109

Act I of 1981, on the General Rules of State Administration Proceedings, shall duly apply to proceedings instituted in official local government proeedings, with regard to the differences set out in this Act.

Section 110

For the purposes of Section 14, subsection (2), and Section 26, relatives are the direct line relatives and their spouses, brothers, sisters, spouses and common-law spouses.

Section 111

In proceedings instituted on the basis of this Act, with the exception of Section 33/B, the provisions of Chapter XX of Act III of 1952 on Civil Proceedings shall apply.

Section 112

In every village, the guaranteed supply of safe drinking water, prescribed in Section 8, subsection (4) of this Act, shall be provided for by the end of the mandate of the local government body of representatives elected in 1990, at the latest.

Section 113

This Act shall come into force on the day of the 1990 election of the members of local government bodies of representatives.

Section 114

The Constitutional Court shall, based on the motion of the Government, voice its opinion on the unconstitutionality of the operation of local bodies of representatives.

Section 115

(1)-(2)

(3) Parliament hereby authorizes the Minister of Justice to publish the text in force of Act XVII of 1989 on Plebiscites and on the People's Initiatives, with the required editing.

(4) The county area development council refered to in Section 70, subsection (3) shall be set up in accordance with the provisions of the Act on Area Development, but by 30 June 1995, at the latest.

(5) If the body of representatives of a settlement local government will not undertake to fulfill the responsibilities defined in Section 70, subsection (1), it shall notify the General Assembly of the county local government concerned of its decision thereon within six months of being elected. This decision is valid for the period of the mandate of the settlement local government. Failing a provision of the law or of an agreement to the contrary, the date of the transfer of responsibilities is the 1st day of January of the year following the decision of the settlement local government.

(6) Section 92/A, subsection (1) shall come into force on the 120th day following the promulgation of Act XLVIII of 1995 on the Amendments of Certain Acts Serving Economic Stabilization.

Source: Website of the Office for National and Ethnic Minorities in Hungary
http://www.meh.hu/nekh/Angol/6.htm