SOME local authorities are on the verge of default and solutions must be found urgently if they are to survive, chairman of the union of municipalities said on Wednesday.
In an interview with the Cyprus News Agency (CNA), Andreas Vyras said state funding should be reinstated to pre-crisis levels if municipalities were to pull through.
“Things in the majority of municipalities are very difficult,” Vyras said. “A default or partial default is not far from reality for some municipalities.”
Vyras said some local authorities cannot meet their basic obligations due to this, he added; some cannot pay the social insurance of their staff.
Vyras said state funding was reduced to over 45 per cent but revenues were also down, either from tax or management of certain public venues.
The main expense in the majority of municipalities was personnel cost, an inelastic expense that couldn’t be reduced or rationalised as other expenses could.
“When 60 to 70 per cent of the budget goes towards personnel expenses you understand how limited the potential is for a more effective expense management,” he said.
“From the moment the state proves public finances have improved, that we are entering years of growth, then municipalities are legitimised, due to their importance and the great need, to claim back some of the reductions,” he said.
To protest the situation, local authority staff will be staging a one-hour strike on Thursday at 11am.
Trade unions Peo and Sek said there was an unjustified delay in passing local authority reform and important problems plaguing municipalities must be tackled.
Party filibustering has seen the local government reform package languish at committee level since July 2015, when it was first submitted by the interior ministry.
In October last year, Interior Minister Socratis Hasikos proposed the postponement of municipal elections in December for a couple of years so that the reforms could be put in place.
The idea was rejected by the parties. Hasikos then suggested mayors and councillors could serve a term of two-and-a-half years instead of five but this was also turned down.
Local authorities are plagued by several problems, as highlighted in successive reports by the auditor-general. These include cash-flow problems, big delays in debt collections, loans in excess of €300m for some, failure to submit accounts within the period specified by law, non-existent audit procedures and debts to pension funds in excess of €150m.