An agreement has been reached regarding the state’s financing of local authorities, with the MPs from the House interior committee saying the central government and local authorities have found common ground on the matter.

Central and local authorities had been at loggerheads after the former attempted to stipulate a cap of 40 per cent of municipalities’ budgets to be spent on staff salaries, with the latter and trade unions fearing job losses and shutdowns of local services as a result.

However, Dipa MP Marinos Mousiouttas said that 40 per cent of local authorities’ budgets would now be spent on “all expenses arising from the development and regular budgets”, and that on top of this 40 per cent, “personnel expenses may be included”.

He added that it has been agreed that the central government will allocate €15m for road maintenance and €12 million to district governments for urban planning permits, with these expenditures in the future to be integrated into the single state grant allocated every year, which currently stands at €117m.

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“The result is that the discussion resolved any problems or misunderstandings which existed, and everyone is moving forward in agreement on what they have agreed to. [Local government] reform is an act which takes time to be fully implemented, but everyone – municipalities, district governments, and villages – believes in it and is working to strengthen it,” he said.

Committee chairman and Akel MP Aristos Damianou, meanwhile, was keen to express his disappointment at the initial disagreement between central and local authorities, pointing the finger at the central government.

“All this time, a public disagreement, a tug of war has arisen between municipalities and the interior and finance ministries,” he said, adding that “the legislation is clear” regarding what local authorities are entitled to.

“At the insistence of technocrats from the finance ministry, an unnecessary contract was caused,” he said, adding that it was MPs who eventually stepped in to find a “broader consensus”.

He added that the overall €117m figure is “not sufficient”, and that as such, “an objective recording of needs must be made, so that the central state can budget correctly”.

Disy MP Nikos Sykas lamented that “unfortunately, the municipalities’ administrative and financial autonomy, which we voted for, seems to not have fully been implemented”, saying that the central government “does not allow for quick decisions, whether they concern personnel issues, recruitment, or infrastructure management”.

“We will not accept returning to a well-trodden logic of increasing revenues by taxing people more, without simultaneously rationalising and reducing expenditures,” he said.