On The Financial Foundations Of Local Self-Government In The Russian Federation

Original Language Title: О финансовых основах местного самоуправления в Российской Федерации

Read the untranslated law here: http://pravo.gov.ru/proxy/ips/?doc_itself=&infostr=x&backlink=1&fulltext=1&nd=102049310

Lost force since January 1, 2009 year-the Federal law dated 06.10.2003 N 131-FZ of the RUSSIAN FEDERATION FEDERAL LAW on the financial foundations of local self-government in the Russian Federation adopted by the State Duma of the year September 10, 1997 (as amended by the federal laws from 09.07.99 N 159-FZ;
from 06/29/2004 N 58-FZ; dated 28.12.2004 N 183-FZ) this federal law determines the main principles of organization of local finances, installs the sources of and directions for the use of the financial resources of local selfgovernment, basics of the budget process in municipalities and the relationship of the local self-government bodies, financial institutions, as well as financial guarantees of the rights of local authorities.
Chapter i. General provisions with t and t b I 1. (Repealed-federal law 09.07.99 N 159-FZ) t s t b I 2. Local finance 1. Local finance include the local budget, Government and municipal securities, owned by local governments, and other financial tools.
2. Formation and use of local finances based on the principles of independence, State financial support and publicity.
3. The rights of proprietor regarding local finances are carried out on behalf of the population of the municipality and local self-governing bodies or directly to the population of the municipality in accordance with the Charter of municipal formation(education).
T s t b I 3. Local finance legislative framework 1. Formation and use of local finance is carried out in accordance with the Constitution of the Russian Federation, federal law on general principles of organization of local self-government in the Russian Federation, this federal law, other federal laws, constitutions, statutes, and laws of constituent entities of the Russian Federation, statutes of municipalities, other legal acts of local self-government bodies.
2. the provisions of this federal law apply to all municipalities. For closed administrative-territorial formations of this federal law shall be valid if they do not contradict to the law of the Russian Federation "about the closed administrative-territorial entity".
T s t b I 4. Participation of public authorities in matters of organization of local finance 1. Bodies of State power of the Russian Federation and the State authorities of the constituent entities of the Russian Federation to promote the development of local finances in the manner prescribed by the legislation of the Russian Federation and laws of constituent entities of the Russian Federation. To this end, the bodies respectively: 1) govern the relationship between the budgets of the constituent entities of the Russian Federation and local budgets, as well as between the federal budget and the local budgets, within the framework of federal targeted programmes;
2) participate in solving local issues through the implementation of federal targeted programmes and regional programmes;
3) allocate funds to finance federal targeted programmes and regional programmes and other activities between municipal entities, monitor the effective and targeted use of these funds;
4) develop national minimum social standards, establish social norms;
5) render methodical assistance to local authorities in the work of formation and execution of local budgets;
6) supervise local governments tax and budget legislation of the Russian Federation and laws of constituent entities of the Russian Federation;
7) carry out other duties in accordance with the legislation of the Russian Federation and laws of constituent entities of the Russian Federation.
2. When giving the local self-government bodies some State powers of the Russian Federation and some State authority of the subjects of the Russian Federation transmitted simultaneously material and financial resources required to implement those mandates.
3. the increase or decrease in revenues of local budgets incurred as a result of decisions made by bodies of State power of the Russian Federation or the State authorities of the constituent entities of the Russian Federation, are compensated by the authorities, have taken these decisions. The amount of compensation is determined simultaneously with the adoption of the relevant decision. Local self-government bodies shall have the right to accept the decisions of public authorities, resulting in an increase in expense or decrease in revenue from local budgets, within the funds allocated to them as compensation.
Chapter II. FORMATION and execution of LOCAL BUDGETS with t a t b I 5. Local budgets 1. Each municipality has its own budget and the right to be in the process of implementing budget management of federal funds and funds from the budget of the Russian Federation in accordance with this federal law and the laws of the constituent entities of the Russian Federation.

2. formation and execution of local budgets are carried out independently by the local self-government bodies in accordance with the Charter of municipal formation(education).
3. the public authorities shall guarantee: 1) the right of representative bodies of local self-government to independently determine directions of use of local budgets;
2) the right of representative bodies of local self-government to dispose of free balances local budgets, formed at the end of the fiscal year as a result of increasing income or decreasing expenses;
3) compensation cost increase or decrease local budgets incomes arising from the adoption of the federal laws and laws of constituent entities of the Russian Federation, as well as other decisions of public authorities.
4. the formation of the local budget is carried out through the use of a common methodology, national minimum social standards social standards set by public authorities.
5. State authorities of the constituent entities of the Russian Federation in implementing budget management and bodies of local self-government in the process of forming local budgets are governed by the State minimum social standards, social standards, minimum standards of fiscal security.
6. As an integral part of local budgets may be included in the estimates of income and expenditure of individual settlements, non-municipal entities. Procedure for development, approval and execution of these estimates is determined independently by the local self-government bodies in accordance with the Charter of municipal formation(education).
7. the chapter of municipal formation(education), other local government officials responsible for execution of local budgets in accordance with federal laws, the laws of the constituent entities of the Russian Federation, statutes of municipalities.
8. Local self-government bodies reporting on execution of local budgets in accordance with the established procedure.
T s t b I 6. Profitable part of the local budget revenues of local budgets consists of own revenue and revenue from governing revenue, it can also include financial assistance in various forms (subsidies, subventions, financial support fund municipalities), mutual settlements.
T s t b I 7. Own revenues of local budgets 1. To their own local budgets incomes include local taxes and fees, other own revenues of local budgets, the share of federal taxes and share of taxation of subjects of the Russian Federation reserved for local budgets on an ongoing basis. These taxes and fees listed by taxpayers in local budgets.
2. To local taxes and fees include taxes and levies in accordance with the federal laws.
3. other personal income of local budgets are: 1) the proceeds of privatization and implementation of municipal property;
2) not less than 10 percent of the proceeds from the privatization of State property situated in the territory of the municipality, in accordance with the State program of privatization (subparagraph 2 of paragraph 3 suspended from January 1 to December 31, 2002 year in proceeds from privatization of federal property-the Federal law dated out N 194-FZ) 3) income from the rental of municipal property, including rent non-residential premises and municipal land;
4) payments for subsoil use and natural resources, established in accordance with the legislation of the Russian Federation;
5) income from municipal monetary and commodity lotteries;
6) fines payable in local budgets in accordance with federal laws and laws of constituent entities of the Russian Federation;
7) the State fee established in accordance with the legislation of the Russian Federation;
8) not less than 50 percent of the property tax of enterprises (organizations);
9) income tax from natural persons carrying out business activity without establishment of legal entity. (Subparagraph 9 paragraph 3 suspended for year 2001 federal law of 27.12.2000 N 150-FZ)
4. personal income of local budgets also included the share of federal taxes, distributed among the budgets of different levels and assigned to the municipal entities on a permanent basis in the manner provided for in paragraph 5 of this article.
These revenues include: 1) part of the income tax from individuals within not less than 50 per cent on average on the subject of the Russian Federation;
2) part of the tax-for-profit organizations within not less than 5 per cent on average on the subject of the Russian Federation;
3) part of the value added tax on goods of domestic production (excluding precious metals and precious stones, prescription drugs from the State Fund of precious metals and precious stones of the Russian Federation) within not less than 10 per cent on average on the subject of the Russian Federation;
4) excise duties on alcohol, vodka and other spirits within at least 5 per cent on average on the subject of the Russian Federation;

5) part of excise taxes on other types of excise goods (except for excise duties on mineral raw materials, petrol, cars, imported excisable goods) within not less than 10 per cent on average on the subject of the Russian Federation.
5. Minimum proportion (%) of federal taxes, docking for municipal entities on an ongoing basis in accordance with paragraph 4 of this article shall be defined by the legislative (representative) bodies of constituent entities of the Russian Federation. Calculation of the share of federal taxes to be consolidating for municipal entities, is based on the total funds allocated to the subject of the Russian Federation on each of these taxes. Within these limits the legislative (representative) body of a constituent entity of the Russian Federation establishes, in accordance with a fixed formula for each municipality share relevant federal taxes, fixed on an ongoing basis, based on their average level on the subject of the Russian Federation. The share of these taxes are calculated based on actual data from the base year. Over these shares the legislative (representative) body of a constituent entity of the Russian Federation may establish standards of royalties (percentage) in local budgets from regulating income on planned fiscal year, as well as on a long-term basis (not less than three years).
6. personal income of local budgets may include also other payments established by the legislation of the Russian Federation and laws of constituent entities of the Russian Federation.
7. If within the boundaries of the territory of municipal formation(education) (excluding City) there are other municipalities, the revenue sources of local budgets distinguished between them the law of the Russian Federation. Thus for each municipality are fixed on a permanent basis (fully or partly) its own taxes and charges, other local revenues. With respect to intra-city municipalities entrenchment own taxes and charges, other local revenues are regulated by the City Charter.
T s t b I 8. Powers of local self-government bodies to form local budgets 1. Representative bodies of local self-government shall have the right to: 1) set local taxes and fees and provide them benefits payable in accordance with the federal laws;
2) in accordance with the legislation of the Russian Federation to decide on establishing or abolishing local tax collection, and about modification in the order of paying it. Decisions are subject to official publication at least one month before their entry into force.
2. Local self-government bodies are entitled to receive in local budget provided by the laws of the Russian Federation and laws of constituent entities of the Russian Federation taxes with branches and representative offices, the head of the enterprise which are located outside the territory of the municipality.
3. the population of the municipality can directly decide ad hoc voluntary charges means citizens in accordance with the Charter of municipal formation(education). Collected in accordance with the decisions of the samooblozhenija tools are used solely for its intended purpose. Bodies of local self-government shall inform the population of the municipality of samooblozhenija usage.
T s t b I 9. Basic principles of inter-budgetary relations, means and budget management procedure 1. Organization of intergovernmental fiscal relations in local self-government bodies and bodies of State power of the constituent entities of the Russian Federation shall be exercised on the basis of federal laws and laws of constituent entities of the Russian Federation.
2. Intergovernmental Relations are based on the following principles: mutual responsibility;
the application of the uniform for all municipalities of the methodology that takes into account their individual characteristics;
alignment of income municipal entities;
as far as possible, reducing the oncoming financial flows;
compensation to local budgets in the case of a reduction in income or increase in expenses resulting from decisions taken by public authorities;
increasing interest in local self-government bodies to increase their own revenues of local budgets;
transparency of inter-budgetary relations.
3. budget management tools to local budgets are: 1) statutory deductions from the governing income;
2) grants and subventions to local budgets;
3) allocations from the Fund of financial support for municipalities;
4) mutual funds calculations from the federal budget and the budgets of the constituent entities of the Russian Federation.
4. Standards contributions (percentage) from regulating income and the proportion (in percentage) of funds appropriated from the Fund for financial support of municipalities are established by applying unified methodology developed by State authorities of the constituent entities of the Russian Federation in accordance with the legislation of the Russian Federation.

5. Procedure for granting subventions set normative legal acts of the public authorities. These authorities exercise control over target use of allocated funds.
6. The actual increase in own revenues of local budgets in the current fiscal year, as a result of financial and economic activity in territory of municipal formation(education), cannot serve as a basis for the reduction for the next fiscal year the State authorities of the constituent entities of the Russian Federation standards contributions (percentage) of governing revenue in local budgets, as well as the proportion (in percentage) of funds allocated from the municipalities Fund financial support for municipalities.
7. In deciding whether to provide financial assistance to municipalities bodies of State power of constituent entities of the Russian Federation shall have the right to verify the validity of the provision of financial assistance, and after a positive decision to verify the adequacy of the measures to increase the income of local budgets, compliance with the legislation of the Russian Federation on the spending of local budgets, including their target use.
8. State authorities of the Russian Federation and the State authorities of the constituent entities of the Russian Federation shall have the right to monitor the use of funds allocated to their municipalities to perform federal and regional programmes, as well as in the form of subsidies.
T s t b I 10. The procedure for the formation and operation of the Fund financial support for municipalities in the constituent entities of the Russian Federation 1. Municipal financial support fund created in the budget of the Russian Federation.
2. The Fund financial support for municipalities are formed by contributions from the Federal and regional taxes coming into the budget of the Russian Federation.
3. the allocation of the Fund financial support for municipalities is carried out in accordance with a fixed formula, which takes into account the population of the municipality, the proportion of children of preschool and school-age children in the total population of the municipality, the proportion of people of pensionable age in the total population of the municipality, the municipal area, level shower security budget of the municipality, as well as other factors that determine the characteristics of the constituent entities of the Russian Federation.
4. The share of each municipality in the total volume of the Fund financial support for municipalities is set in percents, and approved by the law of the Russian Federation on the budget of the Russian Federation.
5. Transfer of funds in local budgets of the Fund, financial support to municipalities is done monthly for all municipalities eligible for financial assistance.
6. Information about the actual amount of funds financial support to municipalities is published in the media on a monthly basis.
T s t b I 11. The basis of the budgetary process in the municipality 1. Representative bodies of local self-government shall independently develop position about the budget process in this municipality in accordance with the General principles of the budgetary process established by federal laws and laws of constituent entities of the Russian Federation.
2. Drafting of local budgets, approval and execution of local budgets shall be carried out in accordance with the budget classification of the Russian Federation and budgetary classification of constituent entities of the Russian Federation.
3. A decision on the objectives, forms and amounts of long-term (over one year) borrowing takes a representative body of local self-government in the order established by the Charter of municipal formation(education).
4. In case the local budget is not approved before 1 January of the planned fiscal year expenditure of funds of the municipality prior to the approval of the local budget is made under the relevant articles of the local budget of the past financial year on a monthly basis in the amount of one twelfth of the amounts actually incurred, taking into account the consumer price index.
5. the control over the execution of local budgets is carried out by the representative bodies of local self-government. Local self-government bodies shall have the right to involve Auditors for this purpose. Local self-government bodies publish information about the execution of local budgets over the past financial year.
6. Municipalities are in the prescribed manner of information about the execution of local budgets in the Federal service of State statistics. (As amended by the Federal law dated 06/29/2004 N 58-FZ) t s t b I 12. Expenditure part of local budgets 1. Expenditure part of local budgets includes: 1) costs related to the issues of local significance, established by the legislation of the Russian Federation and laws of constituent entities of the Russian Federation;

2) costs associated with the implementation of certain State powers transferred to the local self-government bodies;
3) costs related to the servicing and repayment of municipal debt loans;
4) expenses related to maintenance and municipal debt repayment on loans;
5) provision for municipal employees, insurance of objects of municipal property, as well as civil liability and business risk;
6) other charges as provided for in the Charter of municipal formation(education).
The order of execution of the expenditure of the local budget are established by the municipality or another legal act of the local authority.
2. placement of the municipal order for execution of works (provision of services), financed from the local budget, is carried out on the basis of open competition, the rules which are set by a representative body of local self-government. The employer on the municipal order for execution of works (provision of services), financed from the local budget, are bodies or local government officials.
Chapter III. The PARTICIPATION of local governments in financial-credit relations with t a t b I 13. The legal basis of the relationship of the local self-government bodies with financial and credit organizations 1. Local government bodies are performing functions for the Organization of local finance in collaboration with the finance and credit institutions as in the territory of the municipality and beyond.
2. Local Government bodies are supporting the development of the market of local finances, local financial and credit organizations.
3. Local self-government bodies in the manner prescribed by the legislation of the Russian Federation and laws of constituent entities of the Russian Federation shall have the right to: 1) choose from a number of banks authorized Bank through an open competition;
2) to issue municipal bonds and housing certificates.
4. Local self-government bodies shall not have the right to transfer funds to the local budget and plots, which are owned by municipalities, in statutory funds (capital) of banks and other credit organizations.
T s t b I 14. Local self-government bodies relations with tax authorities and territorial bodies of the federal Treasury (as amended by the Federal law dated 06/29/2004 N 58-FZ dated December 30, 2008) 1. The interaction of the local self-government bodies with tax authorities based on: (as amended by the Federal law dated 06/29/2004 N 58-FZ) 1) coordination and integration of efforts to control the flow of timely and full in the relevant budgets of the tax payments of all kinds, including local taxes and fees;
2) mutual granting of the necessary information.
2. Representative body of local self-government shall be entitled at the expense of the local budget to create a municipal tax office to collect local taxes. The activities of the municipal service tax shall be administered in accordance with the law of the Russian Federation "on the tax authorities of the Russian Federation in the part relating to the subjects of reference of local self-government. Municipal tax service brings together and coordinates with tax authorities efforts to monitor compliance with the tax legislation of the Russian Federation. Municipal revenue service federal tax service has an obligation to provide all the necessary information. (As amended by the Federal law dated 06/29/2004 N 58-FZ)
3. Local self-government bodies interact with territorial bodies of the federal Treasury on the basis of respect for the public interest and mutual provision of information. (As amended by the Federal law dated 06/29/2004 N 58-FZ)
4. Local self-government bodies shall have the right to conclude agreements with territorial bodies of the federal Treasury on servicing local budget. In this case, the powers of the territorial bodies of the federal Treasury are distributed to organizations conducting transactions with funds of the local budget. Territorial bodies of the federal Treasury could not refuse to the local authorities in the conclusion of such agreements. (As amended by the Federal law dated 06/29/2004 N 58-FZ)
5. in order to administer the local Treasury and execution of local budgets servicing representative body of local self-government may create municipal Treasury at the expense of the local budget.
T s t b I 15. The relationship of the local self-government bodies with financial and credit organizations 1. Bodies of local self-government through the territorial bodies of the federal Treasury and in accordance with the concluded agreement is entitled to entrust an authorized bank the following functions: (as amended by the Federal law dated 28.12.2004 N 183-FZ) 1) cash execution of local budgets;
2) servicing of the local self-administration bodies;
3) accommodation (investing) free local budget surpluses through the purchase of State and municipal bonds with obligatory transfer of income in the local budget;

4) placement of municipal bonds and municipal money-commodity lotteries.
For nonperformance or improper performance of obligations under the Treaty, the parties bear responsibility in accordance with the legislation of the Russian Federation and under the conditions provided for by the Treaty.
2. In conformity with the legislation of the Russian Federation, bodies of local self-government shall have the right to: 1) grant provided by the local budget loans to legal entities and physical persons, while ensuring the financing of the expenditure side local budgets;
2) receive in banks and other credit organizations, short-term and long-term loans on terms agreed with the representative bodies of local self-government.
T s t b I 16. Municipal loans 1. Municipal loan contract is through the acquisition of a citizen or legal entity issued by the authority of the local government municipal bonds.
2. municipal bonds are issued solely for the purpose of implementation of development programmes and projects of the municipality approved in the order established by the Charter of municipal formation(education).
3. Issuing municipal bonds is ensured by municipal property and means of local budgets.
4. the procedure for the issuance of municipal bonds is determined by the legislation of the Russian Federation.
5. the State is not liable for the obligations of the municipality and the municipality is not liable for the obligations of the State.
6. performance of obligations on municipal bonds are financed from local coffers in accordance with legal acts of the local self-administration bodies of the local budget for the current fiscal year.
7. The maximum permissible amount of debt obligations of organs of local self-government shall not exceed 15 per cent of the expenses of the local budget. Short-term borrowing in any form may not be implemented prior to the approval of the local budget for the current fiscal year.
8. placement, circulation, distribution (sale and purchase) of municipal bonds are carried out in accordance with the legislation of the Russian Federation.
Chapter IV. FINAL PROVISIONS t s t b I 17. Bringing of normative legal acts in accordance with this federal law 1. The President of the Russian Federation, the Government of the Russian Federation, the legislative (representative) bodies of constituent entities of the Russian Federation to bring its normative acts in compliance with this federal law within three months from the date of its entry into force.
2. Normative legal acts of the Russian Federation and the normative legal acts of the constituent entities of the Russian Federation to bring them into compliance with this federal law applies to the extent that they do not contradict this federal law.
T s t b I 18. The entry into force of this federal law this federal law shall enter into force on the day of its official publication.
The President of the Russian Federation, b. Yeltsin, Kremlin, Moscow, N 126 September 25, 1997-FZ