The Saeima has adopted and the President promulgated the following laws: For local government financial equalisation of chapter I. General provisions article 1. The law is applied in the following terms: 1) municipal financial equalisation: municipal revenue and Government grants for redistribution to create similar opportunities to local authorities statutory functions;
2) cohesion fund: the set of features that result from municipal and State budget contributions to the municipal financial equalisation; 3) the Equalization calculation – according to the provisions of this law, made a calculation to determine the local revenue and Government grants for the redistribution of the financial year;
4 economic year-year), covered by local finance equalization, 5) budgeting year – the year before the financial year;
6) grant from the Equalization Fund, the financial allocation to the municipality from the Equalization Fund, 7) municipal group — a group that includes municipalities with the same features and similar costs of implementation of this function;
8) estimated revenue projected local revenue from real estate tax and the annual State budget act in the individual income tax; 9) align revenues — authorities estimated revenue reduced by the contributions calculated Equalization Fund or increase the calculated grant from the Cohesion Fund;
10) describes the criteria — expenditure of local government activity regardless of the statistics, which are used in municipal financial need calculations; 11) criteria, the proportion (relative value) — with the law "on local governments" set local function (except functions, which are funded in the form of grants) performance in municipal expenditure relative value;
12) grants: funding from the local government expenditure: (a)) public budgetary mērķdotācij, b) municipal special budget funds, c) revenue derived from the municipality and the institution of paid services, provided to d) local long-term loans taken, e) regional funds;
13 total) financial need — local government total expenditure to municipal functions as defined by the law "On local governments" and which is not funded in the form of grants;
14) being security financial necessity — the results of the calculations in certain municipalities divided into municipal total financial need.
2. article. (1) the law specifies the order in which the local government financial equalisation to create similar opportunities to local authorities by law for the performance of functions provided for, taking into account local socio-economic differences.
(2) local government financial equalisation system provides municipal financial difference partial alignment to facilitate local initiative and autonomy of his financial resources and to ensure the protection of the financial activities of the local authorities.
3. article. (1) local government financial equalisation is carried out with the Equalization Fund.
(2) the Equalization Fund revenue consists of: 1) the Equalization calculation results in local government contributions;
2) national budget allocations.
(3) the Cohesion Fund expenditure form the Equalization calculation travel grants to municipalities.
4. article. The Equalization calculation is to be made in the following order: 1) each municipality's estimated revenue calculation.
2) each municipality's financial need calculation; 3) in favour of the Cohesion Fund contribution;
4 Equalization Fund payable) of the grant; 5) required for the calculation of the grant to the State budget.
5. article. (1) the Equalization calculation is carried out by the Ministry of finance budget preparation year. The Equalization calculation is included in the annual State budget preparation and approval process, if necessary, provide for a State budget grants the Equalization Fund. The Equalization calculation is included in the annual State budget, part of the explanation. If necessary, amendments to this law, they shall be submitted to the Saeima before the annual national budget bill or simultaneously with it.
(2) cabinet two weeks after the annual State budget act in the tender shall lay down the rules on local finance equalization, which include information about: 1) population in each municipality;
2) personal income tax forecast in each municipality; 3) real property tax forecast in each municipality;
4) expenditure need in each municipality and determines: 1) each municipality calculated from the Equalization Fund grant to be paid or charged in the cohesion fund contributions; 2) the procedures for the authorities of the Cohesion Fund contribution;
3) order in which is paid out in grants from the Cohesion Fund.
6. article. (1) the Equalization calculation is used, the Central Statistical Bureau confirmed data on the number and structure of population on the territory of the local government budget drafting year on January 1, the Ministry of welfare data for the number of children and number of occupants of the bērnunamo old people's homes and centres, the State land service confirmed data on real property cadastre value municipalities, as well as to Finance Ministry data on personal income tax forecast for municipalities and municipal total finance needs in the financial year.
(2) local forecasts total revenue calculation methodology approved by the Minister of finance.
Chapter II. Assessment of local revenue article 7. (1) for the purpose of local government financial equalisation, assess each local government vērtēto revenue.
(2) personal income tax forecast distribution between authorities is carried out in accordance with the percentage, calculated on the basis of the actual enforcement of the tax year before the year of preparation of the budget.
(3) the Cabinet of Ministers approved the procedure for the financial year is compensated individual income tax projections do not.
(4) the municipalities which have concluded with the Ministry of finance contract for individual income tax evasion and special accounting procedures in their own territory, individual income tax forecast shall be determined in accordance with the local government and the Ministry of Finance agreement. In this case, the individual income tax refunds are not provided.
(5) real estate taxes each municipality is projected under the State land service of the official data on the municipal territory of real property cadastral value, in agreement with the relevant authorities of the Cabinet of Ministers.
Chapter III. Municipal financial calculation of the needed article 8. (1) the total minimum financial need financial year shall determine the annual State budget act in the process of preparation and included in the Cabinet and the law "on local governments" set out in article 96 local civic organizations annual in the record of discussions, on the basis of: 1 the preparation of the budget for the year) planned authorities total financial need;
2) national financial year forecasts of the macro-economic indicators; 3) the redistribution of functions among municipalities and between municipalities and the Government financial year;
4) financial year priorities.
9. article. (1) Each municipality's financial need in accordance with the overall financial authorities need to be assessed by calculating the criteria described by the municipal functions associated costs. The evaluation to be carried out separately for each municipality the municipal group. A representative for each expenditure criterion is determined by the proportion (relative value), the total expenditure of the municipality.
(2) the expenses of local representative criteria are: 1) the local government (urban authorities group — urban municipalities of the Republic; rural group — district, city, County, district authorities);
2) population; 3) the number of children under the age of 6 years;
4) the number of children and young people aged from 7 to 18 years of age; 5) working age population exceeded;
6) number of children bērnunamo; 7), the number of elderly residents of nursing homes and centers.
(3) criteria (relative value) calculations taking into account: 1) the municipal budget implementation rates for the two year period before the annual budget preparation;
2) financial year national budget priorities.
(4) the expenses criteria characterize specific gravity (relative value) used exclusively in the municipality's financial need, and they are not considered municipal financing, regulatory function. Municipal financial need calculation methodology and local representative proportion of the criteria (relative value) set out in the annex.
Chapter IV. The Equalization Fund revenue and distribution procedures article 10. (1) the Contribution of the Cohesion Fund are calculated, evaluated local revenue is greater than the financial need is not a ceiling. Municipal finance is not the needs of the upper limit is the level that is 10 percent more than the municipal financial need.

(2) the first paragraph of this article of the municipal Equalization Fund contributions make up 45 percent of the deductions from estimated excess of revenue over the municipal financial need is not a ceiling.
(3) a municipal Equalization Fund contributions does not exceed 35 per cent of the estimated revenue of the municipality.
(4) the municipalities which the Cohesion Fund, it is calculated as a certain percentage of the projected national budget, annual statutory personal income tax (if necessary also from the real estate tax).
11. article. (1) grants from the Cohesion Fund receives the authorities assessed revenue is lower than the financial need is not a lower limit. Municipal finance is not necessary, the lower limit is the level that: 1) the district municipalities are equal to the municipal financial need;
2 urban municipalities of the Republic) is equal to 95 percent of the municipality's financial need; 3) district city and parish Governments, equal to 90 percent of the municipality's financial need.
(2) grants in the first paragraph, the said authorities shall determine the relevant authorities to align revenue would be equal to the municipal financial need is not a lower limit.
(3) the municipalities which receive grants from the Cohesion Fund, it is calculated as a certain percentage of the total Equalization Fund revenue.
12. article. The authorities financial need is greater than the financial need is not a lower limit and less than the financial need of the upper limit is not, does not make contributions to the Cohesion Fund, as well as do not receive grants from the Cohesion Fund.
13. article. (1) the State budget allocation for the municipal equalisation fund total contributions must be equal to the total grants to municipalities from the Equalization Fund. If this law laid down in article 10 of the municipalities Equalization Fund total contributions are lower than those laid down in article 11 the total grants from the Cohesion Fund, this difference is covered by the State budget grant.
(2) If this Act, set out in article 10 of the municipalities Equalization Fund total contributions are higher than those laid down in article 11 the total grants from the Cohesion Fund, increases the total local financial need, to the extent that the total contribution of the municipalities Equalization Fund should equal the total grants from the Cohesion Fund.
14. article. (1) contributions to the Cohesion Fund in the State Treasury from the annual State budget act in the personal income tax or the municipality, if the Ministry of Finance has contracted for individual income tax evasion and special accounting arrangements in the territory of the municipality. If you need contributions from the real estate tax, the order in which these contributions, to be determined by the Cabinet of Ministers.
(2) contributions to the Cohesion Fund is established for each municipality a percentage of personal income tax revenue and, if necessary, also from the real estate tax revenue. This allowance for each municipality may not exceed the calculated levels of contribution.
(3) the costs of the Equalization Fund carried out by the Treasury, making deductions from it directly, the city and county budgets twice a month — no later than the 15th of the month and 25 date.
(4) the municipalities which receive grants from the Cohesion Fund, they are transferred as each municipality a certain percentage of the Equalization Fund revenue.
Chapter v. The Equalization Fund and supervision article 15. (1) the Equalization Fund is managing the Treasury and is responsible for the existing financial resources of the timely transfer of local government.
(2) cohesion fund monitoring of the activities of the Cabinet of Ministers established the municipal equalisation fund of Finance Council, which includes the parliamentary budget and finance (taxation) recommended by the Commission and approved by the Saeima representative — members of the Parliament, two representatives from the Ministry of Finance, one representative of environmental protection and regional development Ministry, the Ministry of welfare and the Ministry of education and science, as well as five representatives of local authorities, which set itself the law "on local governments" laid down in article 96 local government public organization. In addition, as experts or consultants may invite representatives of other institutions.
16. article. (1) the cabinet shall determine the order in which the municipal administrative territory of which residents sign up other local educational or social care services, the authorities conclude contracts with the relevant authorities on these services provided to citizens.
(2) If a municipality has not adhered to the first part of this article, the requirements, the State Treasury, based on the relevant local government financial equalisation fund Council decision, copies of the relevant local individual income taxes or from grants payable to it from the Equalization Fund, the amount required for other municipal services for payment.
Transitional provisions 1. Municipalities, of which the financial year within the administrative and territorial reform of the Equalization Fund, adjustment of the financial year in question is not made, but estimated the grants or contributions are summed.
2. Up to 1999 31 December (that is, until the date by which are exempt buildings and structures with real estate tax) assessed in revenue also includes revenues from local property tax.
3. for 1998, the local government financial equalisation purposes of the property tax forecast distribution between authorities is carried out in accordance with the percentage, calculated on the basis of the 1997 property tax forecast distribution.
4. for 1998, the local government financial equalisation purposes personal income tax forecast distribution between authorities is carried out in accordance with the percentage, calculated based on population 1997 income tax forecast distribution.
5. This law, 5, 8, 10 and 11 shall enter into force on 1 January 1999.
6. the 1998 local government financial equalisation calculation, stating that: 1) contributions made to the Equalization Fund authorities assessed revenue is greater than the financial need is not a ceiling. Municipal finance is not the needs of the upper limit is the level that is 10 percent more than the municipal financial need. The contributions shall be calculated as follows: (a) the first installment) Equalization Fund has 15 percent of the estimated revenues, (b)), the second installment of the Cohesion Fund in deduction of 50 percent of assessed income (deducted from the first installment), overrun over municipal financial need is not a ceiling, c) of the total contributions of the municipalities Equalization Fund does not exceed 35 percent of the municipality's estimated revenue, and their local government leveled revenue which must not be less than the local financial need is not a ceiling; 2) grants that paid to local authorities from the Cohesion Fund, are calculated as follows: (a) grants from the Cohesion Fund) receives the authorities assessed revenue is less than the financial need is not a lower limit. Municipal finance is not necessary, the lower limit is the level that the district municipalities are equal to the municipal finance, urban municipalities of the Republic — with 95 percent of the municipal district of financial need, city and county municipalities, with 80 percent of the municipality's financial need, b) grants referred to in subparagraph a, authorities set up to relieve the municipal revenue would be equal to the municipal financial need is not the lower limit;
3) municipalities, which is the Equalization Fund, contributions are calculated as a certain percentage of the predicted, annual State budget act in the individual income tax; 4) municipalities that receive grants from the Cohesion Fund, the grant is calculated as a certain percentage of the total Equalization Fund revenue;
5) total financial need which is taken into account in the calculation of financial equalization, down no less than 179 856 540 lats.
7. Cabinet two weeks after the promulgation of this law shall lay down the rules on local finance equalization in 1998, they shall be determined by: 1) each municipality calculated from the Equalization Fund grant to be paid or to the Equalization Fund contributions;
2) the procedures for the authorities of the Cohesion Fund contribution; 3) the order in which is paid out in grants from the Cohesion Fund.

8. If, pursuant to the provisions of this law, the municipalities Equalization Fund of financial revenue in 1998 not to bear the expenses of the Fund, the Treasury lends the missing amount and the Cabinet of Ministers submitted to the Parliament amendments to the law "on State budget of 1998", which is increased accordingly grant local government financial equalisation fund.
9. the authorities of their activities, as a result of circumstances it is not possible to charge the 1998 forecast expected real estate tax, the Ministry of Finance submitted a reasoned application for real estate tax projections of default compensation. This referred to the application and examination procedures and tax forecasts the compensation procedures regulated by the Cabinet of Ministers regulations. If necessary, the cabinet shall submit to the Parliament amendments to the law "on State budget of 1998".
The Parliament adopted the law on 5 March 1998.
The President g. Ulmanis in Riga, 18 March 1998, the law "on local government financial equalisation of the" municipal finance need calculation methodology and local representative of the proportion of the criteria (relative value) 1. Municipal total finance needed for K = K1 + K2 Division: 1) municipalities of the Republic group together: K1 = 0, 45xK;
2) District, a district of the city and parish of the municipality of group total: K2 = 0, 55xK.
2. the expenditure of the municipal representative criteria, their proportion (relative value): criteria and their numeric values in the municipal criteria and their numeric values in the appropriate local group Criteria of urban municipalities of the Republic Group criterion editions share the rural communes of the Republic Group editions city local group rural communes of the Republic city municipal group group group of rural districts budget expenditure of the city and County of the district municipal budget for editions of the residents i a2 a1 A1 A2 i 0.3918 0.0520 0.3219 children up to 6 years b1 b2 i i
B1 B2 0.1555 0 0.1110 children and young people aged 7 to 18 years i c2 c1 C1 C2 0.2790 0.0340 0.2573 i the working age population exceeded d1 d2 D2 D1 0 i i 0.1300 bērnunamo i 0.1700 children in e1 e2 E1 E2 0.0194 0.0196 0 i nursing home residents of f1 f2 F1 F2 0.0243 0.0342 i i 0 total: 1.0000 0.1398 0.8602 3 Government of cities in the Republic. : 1) financial need factor k1 is calculated by the following formula: k1 = 0,3918 (a1/A1) + 0,1555 (b1/B1) + 0,2790 (c1/C1) + 0,1300 (d1/D1) + 0,0194 (e1/E1) + 0,0243 (f1/F1);
2) financial need K1 are calculated by the following formula: K1 = k1 × K1.
4. the district municipalities: 1) financial need factor k2 is calculated by the following formula: k2 = 0.0520 (a2/A2) + 0.0340 (c2/C2) + 0.0196 (e2/E2) + 0.0342 (f2/F2);
2) financial need K2 are calculated by the following formula: K2 = k2 × K2.
5. The area of the city and county municipalities: 1) financial need factor k3 is calculated by the following formula: k3 = 0.3219 (a2/A2) + 0.1110 (b2/B2) + 0.2573 (c2/C2) + 0,1700 (d2/D2);
2) financial need K3 are calculated by the following formula: K3 = k3 x K2.