GOLD Report I - UCLG

139are designated as “personalizable” areaspertaining to the powers and responsibilitiesof the communautés 11 .The preceding examples indicate, that theorganization of the intermediate levels nowtends to be associated with developmentstowards regionalization. In functional terms,it is a response to the new importancegiven to territories with respect to economicdevelopment. In institutional terms, itis a formal recognition of the changes inresponsibilities at the intermediate levels.However, regionalization manifests itself instates whose size, constitutions and territorialinstitutions are extremely varied, andwhich fulfil other tasks than those connectedto regional development. If we also takeinto account the political factors, thenthe very great institutional diversitythrough which regionalization can manifestitself is hardly surprising. In many countries,it is limited to an administrativeregionalization, i.e. it is based on institutionssubordinated to the central authorities(e.g. England –as opposed to otherparts of the UK–, Greece, continental Portugal,Bulgaria and Hungary). By contrast,it gave rise to autonomous regions in somecountries (e.g. Italy, Spain, the status ofScotland). In many countries, regionalizationis reflected in the kind of powers andresponsibilities devolved to the localauthorities or to the institutions whichdepend on them (e.g. Finland, Ireland, Netherlandsand Romania). Finally, othercountries have simply extended their systemof local self-government to the regionallevel or have invested their intermediatelevel authorities with functions of regionalscope, without impinging on the unitarynature of the State (Denmark since 1January 2007, France, Poland, Czech Republic,Slovak Republic).III. Powers and responsibilities,management and financesLocal governments operate within a systemthat requires interaction with the state,and more generally with higher authorities.Managing such a system has becomean ever more complex business, as thepowers and responsibilities of local authoritieshave expanded to cover tasks importantenough to merit regional or nationallegislation and policies. The challenges tobe met include how to apportion and sharepowers and responsibilities, how to financelocal budgets and how to decide whatadministrative capacities local authoritiesshould and can have.In theory, it is the powers and responsibilitiesto be exercised which determine thelevel of resources necessary to cover thecorresponding costs. The European Charterof Local Self-Government puts it thisway: The financial resources of localauthorities should be commensurate withthe powers and responsibilities they mustexercise as provided for by the law, andthese resources must be sufficientlydiversified and progressive to allow themto keep pace with the real changes incosts (Art. 9, paras. 2 and 4). In practice,local finances are the product of eachnation’s complex history of public finance,as well as its particular administrative history.More than any others, these factorsexplain the various characteristics of localfinance, as well as the size, in budgetaryterms, of local powers and responsibilities.These same factors pertain to countriesthat only recently introduced localself-government institutions, or are in theprocess of doing so. Setting up an efficienttax system and reorganizing financialnetworks takes more time thanchanging the law does. Therefore, considerthe financial systems of local governmentbefore moving on to comparisons ofpowers, responsibilities and administrativecapacities.III.1. FinancesFinancial autonomy is the basis of localself-government, as stated in Article 9 ofthe European Charter of Local Self-Government,and it has three dimensions:11. These areconstituentmembers of theBelgium federalsystem, nowadaysrun by institutionsshared, or largelyshared, with thoseof the region.