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. Last Updated: 07/27/2016

Kremlin Sees Budget as Reform Tool

Two years into President Vladimir Putin's drive to build a better-organized vertical and centralized power structure, the country is to see another reform aimed at decentralizing power -- more authority and money will be shifted to the local municipal authorities.

The reform plan -- which is expected to be included in the 2003 budget -- was drafted by Dmitry Kozak, the deputy head of the presidential administration and has been approved by Putin, Kozak's office said Monday.

Kozak said the country's mentality works in such a way that the federal government is blamed for everything down to the failure of garbage collectors to do their work on time. His reform intends to change the situation by making sure that taxpayers have more control over who spends their money and how, Kozak said in an interview with Izvestia published Monday.

And if the budget cannot afford a public service, it should be cut from the agenda instead of becoming an empty promise, Kozak said.

Putin hinted at the reform in an official statement on the 2003 budget policy sent to the State Duma on Monday. "It is necessary to clearly determine the financial responsibilities of each body of power in ensuring revenues and financing of budget spending," Putin said.

Putin asked the government to crack down on "inefficient state spending," saying spending targets for the federal, regional and municipal budgets were "not in line with the current level of the country's economic development."

He said various financial and tax benefits should be replaced with targeted financial assistance, while the overall tax burden should be reduced and made more transparent for both taxpayers and tax collectors.

Putin said he wants to see more competitiveness in state services in the lower levels of power.

Municipal authorities currently receive about 10 percent of locally collected revenues. The share is likely to be boosted at the expense of regional and federal budgets. But while local authorities would get more responsibilities, they would be held accountable for that power and could lose it if they failed to fulfill their tasks, Kozak said. To secure the legal backing for the reform, Kozak and a special reform commission he has headed over the past year have prepared amendments to some 200 laws. The passage of the amendments through the Duma should take two to 2 1/2 years, Kozak said.

Kozak envisions tasks like social guarantees and support being left to the regions, while the management of local utilities would be strictly under the jurisdiction of municipal authorities. "Even from the regional level, it is impossible to control boiler rooms," he said. "Political tasks aimed at preserving the state, unifying human rights standards, unifying economic standards and upholding the Constitution must be in the hands of the federal government."

It was unclear Monday when the first set of Kozak's amendments would enter the Duma. The 2003 draft budget is to be discussed by the Cabinet on June 13. The draft budget puts 2003 inflation at 11 percent and the average ruble/dollar exchange rate at 34 rubles per dollar, according to information posted on the government's web site Monday.