• Українською
  • Decentralization Reform

    The decentralization reform is to form effective local government and territorial organization of authority to create and support a genuine living environment for people, provide high-quality and accessible public services, raise the institutes of direct rule by the people, align the interests of the government and territorial communities.

    This reform makes local government accountable to the electorate for operational effectiveness and to the Government for lawfulness.

    Ukraine started decentralization in 2014 with the adoption of the Concept of the Reform of Local Government and Territorial Organization of Authority (4/1/2014) Laws On Cooperation of Territorial Communities

    (6/17/2014), On Voluntary Amalgamation of Territorial Communities (2/5/2015), and financial decentralization amendments to the Budget and Tax Codes.

    Based on the provisions of the European Charter of Local Self-Government, this process enabled creation of an effective and capable institute of local government on a basic level — amalgamated territorial communities (ATCs).

    882 ATCs were created in the 4 years of reform by amalgamating 4,043 communities (36.7% of the total number of local councils as of 1/1/2015), accounting for 38% of the area of Ukraine and about 69% of its population.

    Key achievements

    Why change anything?

    Today democracy is the most popular form of political order of a society enabling people not only to elect but also to control the government.

    Despite all the problems facing a democratically organized society and its government and political order, it is the government by the people that best addresses today's challenges.

    One of the reasons for rising separatist movements in eastern Ukraine was that there was no political will for a long time to carry out genuine decentralization in public administration. Consequences of the policy of total centralization of government in Ukraine include:

    • regions' significant dependence on the center;
    • low investment appeal of regions;
    • communities that are weak in terms of infrastructure, finance, and personnel;
    • degenerating countryside;
    • troubled demographics;
    • low-quality public services;
    • distrust of the Government;
    • rampant corruption; and
    • inefficient administrative decisions.

    When the reform was starting in 2014, only 6 regions in Ukraine were self-supporting, which caused significant regional disproportions and, accordingly, affected the quality of life and services received by Ukrainians. These challenges called for a radical reform of public administration, local government, and territorial organization of authority in Ukraine.

    What does the reform involve?

    1. Voluntary amalgamation and consolidation of territorial communities

    The decentralization reform gave impetus to the formation of a capable institute of authority closest to a citizen — local government.

    The voluntary amalgamation of territorial communities enabled newly created local government agencies to gain respective powers and resources that used to be available to cities of oblast subordination.

    Citizens living within an amalgamated community are now represented by the elected head, deputies, and executive agencies of the community's council, which implement powers granted by the law for the benefit of the community. In settlements that have become part of an amalgamated community, headmen make sure that their residents' right to local government is exercised and services are provided to them.

    Communities are consolidated and amalgamated through voluntary amalgamation based on public opinion. People that consider creating a community must identify resources potentially available to the community for economic and social development and the provision of quality services to the residents.

    2. Financial decentralization

    Effective local government and social and economic development of respective areas that it should secure must be accompanied by an expanding base of resources and finance. Decentralized powers should be supported with adequate resources for effective execution.

    This is why local government has received more funding to improve its economic capacity from January 1, 2015, after the Tax and Budget Codes were amended.

    Amalgamated communities acquired powers and resources available to cities of oblast subordination, including 60% of personal income tax revenues allocated to ATC local budgets for the exercise of their authority. In addition, tax revenues that remain in full in the local budget include the single tax, the corporate tax on community-owned enterprises and financial institutions, and the property tax (real estate, land, transport).

    Besides, ATCs maintain direct inter-budget relationships with the National Budget (prior to the reform, direct relationships were only maintained by oblast and rayon budgets and budgets of cities of oblast subordination), they get respective transfers (grants, subventions for education, health care, and the development of community infrastructure etc.) for the exercise of powers delegated by the state. Legislative changes also entitle local governments to adopt local budgets irrespective of the adoption date of the Law on the National Budget.

    Such improvements have already yielded noticeable results. Local budgets' own revenues added about UAH 200 bn from 2014 to 2018 (from UAH 68.6 bn to UAH 267 bn). This constitutes a tangible tool for contributing to results and responsibility for communities' trust.

    3. New powers and capabilities

    Apart from expanding financial capabilities, decentralization provides amalgamated territorial communities with other tools for boosting economic development such as borrowing in foreign markets, independently selecting institutions to keep local budget funds earmarked for development and own revenues of publicly funded institutions. Powers in the area of architecture and construction control and improvement of urban planning laws have been decentralized, and local government given the right to determine urban planning policy.

    After a number of laws are adopted on decentralization of powers and regulation of land relationships, people will be able to control land outside settled areas. The Verkhovna Rada of Ukraine adopted laws decentralizing part of central government agencies' powers related to basic administrative services such as registration of real estate, business, residential address by passing them down to the community level.

    A municipal guard law has already been drafted to provide local government with an effective instrument for administering law and order on its territory. The municipal guard is an entity that will be observing compliance with law and order, addressing the matters of beautification, unauthorized dumps, parking space etc. Under no circumstances may it deal with criminal cases, which are the exclusive competence of the police.

    Laws are being drafted to clearly allocate powers in education, health care, recreation, social and economic development, and infrastructure among local government agencies and executive agencies on every territorial level of the country's administrative division.

    What has the reform changed already?

    Powers and resources produced by decentralization have created for local government new opportunities for developing their territories and creating a modern education, health care, transportation, housing, and utilities infrastructure.

    Local authorities have become interested in enhancing investment appeal of their territories for the community's benefit because taxes paid here will be used to improve the locals' quality of life. Authorizations and registration documents required to conduct business can be obtained locally, and communities will be able to raise investments by themselves, using them to boost social and economic development.

    Many communities have already felt the advantages of this reform — repairs of roads, medical and educational institutions started in their cities, towns, and villages — all those things that have been in decline for dozens of years.

    The reform has given impetus to a genuine development of communities, a change to make living better in every settlement and the country overall, and enables citizens, that is, each of us, to be the owner of the place they live in.

    Key 2019 objectives and expected outcomes

    Objective 1: Creating a new territorial basis for community- and rayon-level activities of government agencies.

    Expected outcomes: 

    • CMU adopting prospective plans of creation of high-capacity oblast communities on 100% of Ukraine's area;
    • creating high-capacity amalgamated territorial communities throughout Ukraine;
    • adopting the draft Law of Ukraine On Foundations of the Administrative Division of Ukraine (Registration No. 8051)
    • producing guidelines with modern requirements and European standards of rayon-level administrative division;
    • drafting proposals (cartographic models) regarding the oblasts' basic and rayon-level administrative division;
    • CMU adopting a regulation on the formation of territorial foundations of activities of territorial bodies of ministries and other central government agencies;
    • CMU adopting regulations on determining the boundaries of territorial bodies, the maximum staff number and maintenance costs subject to the creation of administrative counties.

    Objective 2: Transferring (decentralizing) executive powers to local government agencies and allocating them between levels and bodies on the principle of subsidiarity.

    Expected outcomes:

    • CMU drafting and proposing Laws of Ukraine:
    • On Local Government in Ukraine (revised)
    • On Local State Administrations (revised)
    • On Central Government Agencies 
    • CMU adopting resolutions:
    • On Amending CMU Resolution No. 606 dated April 18, 2012 On Approving Recommended Lists of Structural Units of Oblast, Kyiv and Sevastopol City, Rayon, Kyiv and Sevastopol Rayon State Administrations
    • On Amending CMU Resolution No. 91 dated March 25, 2014 Certain Matters of Activities of Local State Administrations to Optimize the Staff Number of Local State Administrations and Maintenance Costs

    Objective 3: Creating an adequate resource base for local government to exercise its powers

    Expected outcomes:

    • drafting and proposing Laws of Ukraine to VRU:
    • amending the Budget Code of Ukraine and the Tax Code of Ukraine based on draft new revisions of Laws of Ukraine On Local State Administrations, and On Local Government in Ukraine to fund the exercise of powers by local government;
    • extending the jurisdiction of local government to the entire territory of its community in terms of land relationships 
    • on approving state standards and rules in terms of description and cost by every power delegated by the state to local government per average administrative territorial unit;
    • CMU adopting a draft resolution on amending CMU Resolution No. 284 dated April 19, 1993 On the Procedure for Determining and Paying Damages to Land Owners and Land Users;
    • calculating the cost of services based on state social standards and rules for every power delegated by the state.

    Objective 4: Creating an adequate resource base for local government to exercise its powers

    Expected outcomes:

    • adopting the Law of Ukraine On Amending the Law of Ukraine On Service in Local Government (Registration No. 8369);
    • adopting regulations on amending CMU Resolution No. 268 dated March 9, 2006 On Aligning the Structure and Conditions of Compensation of Administrative Office Staff of Local Government Agencies, Prosecution Agencies, Courts, and Other Agencies in order to streamline the system of organizational and financial support of local government staff.

    Objective 5: Streamlining the system of public control and supervision of local government compliance

    Expected outcomes:

    • drafting and proposing to VRU the Law of Ukraine On Amending the Law of Ukraine On Local Government in Ukraine and Certain Legislative Acts of Ukraine on Reducing Activities and Streamlining the System of State Supervision of Local Government Agencies.

    Objective 6: Developing forms of direct rule by the people such as elections, referendums.

    Expected outcomes:

    • adopting the draft Law of Ukraine On the Local Referendum (Registration No. 2145a-2);
    • CMU approving draft Laws of Ukraine On Amending the Law of Ukraine On Local Elections (to make sure that citizens are represented in the community council, and territorial communities — in rayon and oblast councils)

    The reform is implemented by

    the President of Ukraine, the Chief Department of Regional and Personnel Development at the Administration of the President of Ukraine, the Department of Local Government and Decentralization at the Administration of the President of Ukraine, the Committee of the Verkhovna Rada of Ukraine on State Building, Regional Policy, and Local Government, the Ministry of Regional Development, Construction, Housing, and Utilities of Ukraine,  the Association of Village Councils and Amalgamated Communities of Ukraine, the Association of Amalgamated Territorial Communities, the Association of Cities and Towns of Ukraine, oblast state administrations, rayon councils, rayon administrations, regional development agencies, U-LEAD with Europe

    Materials and useful links