The Constitutional Court found no 99 / 2018 Coll.
The Constitutional Court found of 20 February 2018 sp. zn.
Valid
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99
FIND
The Constitutional Court
On behalf of the Republic
The Constitutional Court decided under sp. zn. Pl. ÚS 6 / 17 on 20 February 2018 in plenary composed of the President of the Court of Paul Rychetský and the Judges Louis David, Jaroslav Fenyk, Josef Fialy, Jan Filip, Jaromír Jirsy, Jan Musil (judge of the Parliament of the Czech Republic), Vladimir Sládeček, Radovan Suchánek, Kateřina Šimáček, Vojtěch Šimíček, Milady Tomková and Jiří Zemámánek, on the proposal of the Senate of the Chamber of the Parliament of the Czech Republic, for which Senator RNDr. 14 (c), § 17 and § 18 (2) of Act No. 23 / 2017 Coll.
as follows:
Motion denied.
Reasons
Subject matter
1. By a proposal pursuant to Article 64 (1) (b) of Act No. 182 / 1993 Coll., on the Constitutional Court, a group of 64 Senators (hereinafter referred to as "the draftsman") seeks the annulment of the provisions of § 14 (c), § 17 and § 18 (2) of Act No. 23 / 2017 Coll., on the Rules of Budgetary Liability, provisions of § 6a to 6d of Act No. 243 / 2000 Coll., on the Budget Determination of Certain Tax Duties (hereinafter referred to as "the Law on Territorial Accounts"), as amended by Act No. 24 / 2017 Coll., amending certain laws relating to the adoption of the law on the law on Budgetary Management of Taxation, "(hereinafter referred to as" the Law on the Budget Rules of the Territorial of the Territorial Authority ") and the Act No. 4 (Act No. 250 / 2000 Coll. The contested provisions lay down the rules to be followed by territorial authorities in their management.
2. First of all, the appellant submits that, if the rules on budgetary liability applicable to local authorities and other so-called public institutions (Section 3 of the Act on the Rules on budgetary liability) are to be meaningful, they must be contained in constitutional standards. At the level of the law, the regulation lacks much practical importance as it can easily be amended by the standard legislative process. The absence of a constitutional basis of the legislation implies a conclusion on its non-constitutionality, as it constitutes an intervention into the law of the local authorities on the self-government, without the necessary authorisation to intervene at the constitutional level.
3. Those provisions therefore consider the appellant to be contradictory to Articles 1, 8 and 101 of the Constitution of the Czech Republic (hereinafter referred to as the Constitution) and to Article 11 of the Charter of Fundamental Rights and Freedoms (hereinafter referred to as the Charter) in conjunction with Article 1 of the Additional Protocol to the Convention on the Protection of Human Rights and Fundamental Freedoms (hereinafter referred to as the Additional Protocol). It therefore proposes their abolition.
Derogation of the contested provisions
4. The provisions of Sections 14 (c), 17 and 18 (2) of the Act on the Rules of Budgetary Responsibility read as follows:
Article 14 (c)
"If the amount of the debt of the public institution sector after deduction of the reserve of funds for the financing of sovereign debt is at least 55% of the nominal gross domestic product, the following measures shall apply from the first day of the second calendar month following the date of publication of the debt thus adjusted, leading to the long-term sustainable state of public finances:
(c) the territorial body shall approve its budget for the following year as balanced or surplus; the budget of the territorial unit may be approved as deficit only if the conditions laid down by law governing the budgetary rules of the territorial budgets are fulfilled. ';
(1) In the interests of sound and sustainable public finances, the Land Authority shall manage the unit so that the amount of its debt does not exceed 60% of the average of its revenue over the last 4 financial years on the balance sheet date.
(2) Where the debt of a local authority exceeds 60% of the average of its revenue for the last 4 financial years on the balance sheet date, the local authority shall reduce it by at least 5% in the following calendar year from the difference between its debt and 60% in the average of its revenue for the last 4 financial years.
(3) If the territorial government does not reduce its debt and its debt on the following balance sheet date exceeds 60% of the average of its income over the last 4 financial years, the Ministry shall decide, in the following calendar year, on the budgetary determination of taxes to suspend the transfer of its share of tax revenue under the Act.
(4) For the purposes of this Act, the revenue of a territorial unit shall be the sum of all cash made available to the budget during the financial year, consolidated under another legislation.
(5) For the purposes of this Act, the debt of the local government is the value of outstanding liabilities from:
(a) bonds issued;
(b) loans, loans and repayable financial assistance received;
(c) performance of the guarantee;
(d) the bills issued. "
Article 18 (2)
"(2) The Ministry shall publish annually a list of territorial units which have breached the obligation under Paragraph 14 (c)."
5. The provisions of paragraphs 6a to 6d of the Finance Tax Act are as follows:
Suspension of the transfer of a share of the tax revenue
(1) If the territorial unit does not reduce its debt under the Budget Liability Rules Act and its debt on the following balance sheet date exceeds 60% of the average of its income over the last 4 financial years, the Ministry of Finance shall decide in the following calendar year to suspend the transfer of its share of tax revenue of 5% of the difference between the debt achieved and 60% of the average of its income over the last 4 financial years.
(2) The transfer of the share of the territorial unit to the yield may be suspended
(a) value added tax;
(b) corporation tax, with the exception of corporation tax, the taxpayer of which is the competent local authority.
(3) The tax administrator will not, on the basis of a decision of the Ministry of Finance, transfer the share of the local self-government to the tax revenue until the above mentioned decision.
Repeal of suspension of the ex officio transfer
(1) If the debt does not exceed 60% of the average of its revenue for the last 4 financial years, the Ministry of Finance will decide to cancel the suspension of the transfer of the share of tax revenue on the following balance sheet date.
(2) The tax administrator shall transfer a share of the income of the tax whose suspension of the transfer has been lifted to the local authority within 14 days of the date on which it received the decision of the Ministry of Finance to withdraw the suspension of the share of the tax revenue.
Repeal of suspension of the transfer of the share to the application
(1) The Territorial Authority may request the Ministry of Finance to cancel the suspension of the transfer of a share of the tax revenue to cover its debt incurred by the end of the financial year in which the debt of the Territorial Authority exceeds 60% of the average of its revenue for the last 4 financial years.
(2) The territorial unit shall indicate in the application the amount of the share of the income of the tax which it requests to cancel the suspension of the transfer and the debt to be used for payment.
(3) In the Decision, the Ministry of Finance will indicate the amount of the share in the income of the tax whose suspension of the transfer is cancelled and the debt to which the share is to be paid.
Transfer of the share after cancellation of the suspension upon request
(1) The tax administrator shall transfer the share of the tax revenue to the local authority within 14 days of receiving the decision on the application for suspension of the transfer of the holding.
(2) The Land Authority shall use the transferred share of the tax revenue to cover the debt referred to in the Decision within 90 days of its crediting.
(3) The territorial unit accounts for the transferred share separately.
(4) If the territorial unit does not use the share of the tax revenue transferred pursuant to paragraph 1 to pay the debt referred to in the decision within 90 days of the date on which it is credited to its account, the Ministry of Finance shall decide on a further suspension of the share of the territorial unit in the tax revenue of the amount of the funds not used to pay the debt. ';
6. Paragraph 4 (6) of the Law on the budgetary rules of territorial budgets reads as follows:
Article 4 (6)
"(6) When applying measures under the Act on the Rules of Budgetary Responsibility, the budget of the Territorial Authority may be approved as deficit only if the deficit can be paid with funds from previous years or with repayable financial assistance. Only a deficit arising from pre-financing of projects co-financed by the budget of the European Union may be covered by a contractually secured loan, loan or income from the sale of municipal bonds of a local authority. '
Arguments of the appellant
In general, the unconstitutional nature of the legal provisions contested
7. In particular, the appellant contests the absence of the necessary constitutional framework for the contested provisions. Proposals of the two laws (Act No. 23 / 2017 Coll. and Act No. 24 / 2017 Coll.) were accompanied by a government draft Constitutional Act on Budgetary Responsibility, which was discussed by the Chamber of Deputies of the Parliament of the Czech Republic as House Press No. 411 (hereinafter referred to as the "draft Constitutional Act") and which the contested provisions follow directly. The draft constitutional law was not adopted.
8. The appellant is convinced that the government, as a promoter of the draft constitutional law, was aware that the right to have property and to manage according to its own budget (Article 101 (3) of the Constitution) was part of the right of local authorities. According to the explanatory memorandum to the draft Constitutional Law, Article 5 of the Law was intended to create a constitutional mandate for the establishment of a legal limit on the debt of a local authority. Therefore, the constitutional obligation of territorial authorities to maintain, under the statutory rules of budgetary responsibility, the sole constitutional permissible way of limiting the constitutional right of territorial authorities to self-administration.
9. Since the draft constitutional law has not been adopted, the current constitutional framework does not allow for the legal restrictions on the management of territorial units, as the contested provisions do. According to the appellant, and at the legal level, no substantive criteria for the management of the local authorities are laid down. The Law on the budgetary rules of the territorial budgets is only a procedural framework for the establishment and implementation of the budgets of the territorial authorities. However, the establishment of procedural rules cannot be regarded as an intervention in the constitutionally guaranteed right of local authorities to have their own assets and to manage their own budget. Similarly, the nature of the intervention in the right to self-administration is not the same as the provisions of § 38 et seq. of Act No. 128 / 2000 Coll., on municipalities (municipal establishment), as amended, or the provisions of § 17 of Act No. 129 / 2000 Coll., on regions (regional establishment), as amended. These provisions contain sub-rules on the management of the property of territorial authorities, but do not contain restrictions on their own management, i.e. the core ownership right.
10. The appellant considers the provisions of Sections 14 (c) and 17 of the Act on the Rules of Budgetary Responsibility to be contrary to the constitutional order for two reasons. The first is a contradiction with the guarantees offered by the Constitution to the local authorities. The second reason is the temporal effects of the contested legislation. This does not contain an adequate regime of transitional provisions which would at least mitigate the effects of intervention in the right to self-government. The contested provisions of Act No. 24 / 2017 Coll. show the same constitutional deficits and, in the event of the repeal of the provisions of the Act on the Rules of Budgetary Responsibility, it would become obsessive.
Non-constitutionality of provisions § 14 (c) of the Act on the Rules of Budgetary Responsibility
11. According to the appellant, the obligation of the local authorities to draw up the budget as a balanced or surplus (under the conditions laid down in Section 14 of the Budget Liability Rules Act) may lead to the situation that the local authorities will not be able to carry out the tasks assigned to them under their separate and delegated powers. This obligation will in fact result in a reduction of the expenditure of local and local authorities on activities they are obliged to provide (e.g. education, social services, culture or development of a local authority such as building or simple infrastructure maintenance), which may have an immediate impact on their citizens.
12. The design based on the principle of simple austerity measures allowing (except for the exceptions provided for in Article 4 (6) of the Law on the budgetary rules of the territorial budgets) the approval of only a balanced or surplus budget is therefore, according to the appellant, contrary to the constitutionally defined status of the Authority, as defined by the Constitutional Court in its decision in sp. zn.
13. The applicant assumes that, by default, the management of territorial units should be at least balanced or surplus. At the same time, however, the obligation of the local authorities to act for the benefit of their citizens cannot be overlooked [cf. Article 3 of the European Charter of Local Government (Communication of the Ministry of Foreign Affairs No. 181 / 1999 Coll., as amended by the Communication of the Ministry of Foreign Affairs No. 369 / 1999 Coll.)]. In view of this obligation, the balanced or even surplus management cannot constitute a single objective. In the interest of the local authorities, there may also be steps that lead to temporary deficit management (e.g. investment in existing infrastructure). The ban on the establishment of a deficit budget, which is based on the contested provision, will result in the municipalities and regions' councils giving up autonomous decisions on the management of the resources of the local authorities.
14. The obligation to approve a balanced or surplus budget also interferes with the ownership of the territorial authorities to which protection is provided at constitutional level through Article 11 of the Charter. The ban on the approval of the deficit budget will require the allocation of municipal or regional funds primarily to cover the necessary expenditure. If the current financial needs of the local government are higher than would correspond to the surplus or balanced budget, this will lead to a reduction in some expenditure that could otherwise be realised. This may be manifested, for example, by reducing investment in the property of the municipality or region, which is necessary to maintain its status and value. Thus, a surplus or a balanced budget may be at a disadvantage for the municipality or region, as "saved funds' will lead to future - potentially even higher - spending.
15. Even if the absence of the constitutional basis of the contested legislation were to be accepted from a constitutional point of view, the appellant considers it to be non-discriminatory as regards the wording of the statutory restriction of the constitutional right to self-government.
16. The Act on the Rules of Budgetary Responsibility does not contain any time limit on the obligation under Paragraph 14 (b). (c) the same law. The activation of the provision depends on two variables. These are the amounts of the debt of the public institutions sector and the nominal gross domestic product (GDP). While the debt level of the public institution sector can be regulated, inter alia, by reducing debt, the level of GDP cannot be applied in a direct way, because it is dependent on economic development. Since the activation of the obligation under Section 14 (c) of the Budget Liability Act depends on the mutual percentage of two variables, it is not excluded that budgetary measures will be long-term.
17. The applicant submits that the reduction in the established percentage ratio of public debt to GDP below 55% may not occur after one year of application of the budgetary measures. The border can therefore be crossed repeatedly. The longer such a situation would last, the more negative budgetary measures would be reflected in the state of the economy of the local authorities. In addition, the Act on the Rules of Budgetary Responsibility does not contain any restrictions which limit (e.g. by deadline) the obligation to respect the budgetary measures introduced. The appellant considers the contested scheme to be non-discriminatory in the absence of such limits. Paragraph 15 (1) (a) of the Law on the Rules of Budgetary Responsibility considers the appellant to be vague and uncertain and therefore does not constitute sufficient guarantee of a possible limitation on the duration of budgetary measures.
18. According to the appellant, the contested provision also lays down the principle of collective guilt. In fact, legal restrictions will affect local authorities regardless of which entity has caused the debt increase. The appellant therefore asks why the local authorities should be restricted in their management as a result of the result of the management of other entities, in particular the State. In such a situation, the appellant sees a denial of the constitutional guarantee of the property autonomy of the local authorities. At the same time, it cannot be overlooked that the deficit-management ban does not impose a law on the rules of budgetary responsibility on the State, even if the State has a major influence on the overall amount of public institution debt.
19. The appellant adds that the proposed repeal of Paragraph 14 (c) of the Act on the Rules of Budgetary Responsibility will become an obsolent provision of Paragraph 18 (2) of that Act.
Unconstitutionality of the provisions of Section 17 of the Act on the Rules of Budgetary Responsibility
20. The appellant points out that the obligation - to reduce its debt by 5% of the difference between the amount of the debt and 60% of the average of the revenue of the local government over the last four financial years under Section 17 (2) of the Act on the Rules of Budgetary Liability - could only be met by partially fulfilling the local authorities' debt (payment). This implies that two conditions are met: the existence of debt resources and the possibility of repayment of debt. If they have calculated a territorial entity with a certain maturity of debt, they will have to provide such funds. In the case of municipal bonds whose maturity will be set at 10 years, the municipality or county does not have the possibility to force their owners to sell early (similar to loans, loans, etc.).
21. According to the appellant, the penalty in the form of suspension of the transfer of the share of the tax revenue is linked to the mere fact that the amount of the debt of the local authority will exceed 60% of the average of its revenue over the last four financial years by the following balance sheet date. The suspension of the transfer of a share of the tax revenue constitutes a loss of a substantial source of income for the local authorities and can thus contribute to their economic liquidation. The appellant considers that this adjustment is counterproductive as it will lead to a further reduction in the capacity of the local authority to fulfil its obligations. Moreover, the current legislation on the redistribution of tax revenues seems to give rise to a legitimate expectation that such revenue is guaranteed by the State to the local authorities. The provisions in question and the subsequent paragraphs 6a to 6d of the Law on the Budget Determination of Taxation are therefore considered by the appellant to be an arbitrary interference in the property autonomy of the local authorities, which is, moreover, manifestly non-discriminatory. It sees proportionality in determining the extent to which the suspension of the transfer of a share of tax revenue will occur: the greater the debt of the local authority, the greater the suspension of the transfer of a share of tax revenue.
22. Paragraph 17 of the Act on the Rules of Budgetary Responsibility according to the author also shows the characteristics of an inadmissible genuine retroactivity. In assessing the average of the revenue of the local self-governing body, it is based on the average over the last four financial years. That provision is to take effect on 1 January 2018. The average over the last four financial years will therefore be calculated from 2014 to 2017, i.e. from a period where the local authorities had no reason to consider the ratio of their income and debt over that period.
23. The appellant points out that, according to the explanatory memorandum to Article 17 of the Act on the Rules of Budgetary Responsibility, 198 municipalities have a debt ratio of more than 100%. For these municipalities, the suspension of the transfer of a share of tax revenue would undoubtedly be difficult. The explanatory memorandum states that, on average, for municipalities in excess of the established debt ratio, the amount of the suspended tax return would be only 3% of their total revenue. Such an assessment is considered problematic by the appellant as it is based on the calculated average. Therefore, some municipalities need not be threatened at all, others quite fundamentally. An example can be the municipality of Karle, which has a debt of 450% of its revenue (due to investment in a wind power plant, but from which it pays the loan and has sufficient resources to secure its needs).
24. As regards the possibility of the suspension of the suspension of the transfer of the share of the tax revenue pursuant to Article 6c of the Act on the Budget Determination of Taxation, according to the appellant, this does not in any way eliminate the unconstitutionality of the entire construction. The possibility of repayment of the debt is not entirely at the will of the local authorities (as any debtor), unless the possibility of early repayment of the debt is expressly agreed. In other words, the release of suspended tax revenue can only occur if the debt is objectively due. In the context of their management, the local authorities count on the maturity of their debts and adapt their management accordingly. The appellant therefore does not see a reasonable reason for withdrawing part of the previously guaranteed revenue from the local authorities on the ground that such revenue could be used for purposes other than debt payment.
Unconstitutionality of the provisions contained in Act No. 24 / 2017 Coll.
25. In relation to the legislation contained in part 12. of Article XII of Act No. 24 / 2017 Coll., which supplements the Act on Budgetary Determination of Taxation with the provisions of § 6a to 6d, governing the rules governing the suspension of the transfer of a share of tax revenue, the appellant is convinced that, in the event of the annulment of § 17 of the Act on the Rules of Budgetary Liability, the amendment will cease to make sense. According to the appellant, it is possible, alternatively, to consider abolishing Sections 6a to 6d directly in the Finance Act. Moreover, the Constitutional Court had previously considered the principle of cessante ratione legis, cessat et lex ipse as sufficient to justify its deregation intervention [cf.
26. As regards the provisions of Section 14 of Article XIV of the amendment point 10 of Act No 24 / 2017 Coll. - supplementing the Act on the budgetary rules of the territorial budgets with the provisions of Section 4 (6), which lays down the conditions under which the territorial self-governing body may approve the deficit budget even in the event of activation of the measure under Paragraph 14 (b). (c) the Bill on the Rules of Budgetary Responsibility - according to the appellant, the same grounds for cancellation are given as in the previous paragraph.
Compliance with European Union law
27. The annulment of the contested provisions will not, according to the appellant, contradict the obligations arising from membership of the European Union for the Czech Republic. Although, according to the explanatory memorandum, there is a law on the rules on budgetary responsibility by transposing Council Directive 2011 / 85 / EU of 8 November 2011 on requirements for Member States' budgetary frameworks ("Council Directive 2011 / 85 / EU '), that Directive does not provide for such specific rules as would require transposition in the form of the adoption of the contested legislation.
Final proposal and proposal for a preliminary hearing
28. The appellant therefore proposes that the Constitutional Court should decide that the provisions of § 14 (c), § 17 and § 18 (2) of Act No. 23 / 2017 Coll., on the Rules of Budgetary Responsibility, § 6a to 6d of the Act on Budgetary Determination of Taxes and § 4 (6) of the Act on the Budgetary Rules of the Territorial Budget are repealed on the date of the declaration of the Constitutional Court's finding in the Collection of Laws. According to the appellant, the proposal for priority consideration is justified primarily by the effects of the application of Section 17 of the Act on the Rules of Budgetary Responsibility or the application of Sections 6a to 6d of the Act on Budgetary Determination of Taxes.
Observations of the parties and the intervener
29. Pursuant to Article 42 (4) and Article 69 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, the Constitutional Court sent a motion to initiate proceedings to the Chamber of Deputies of the Parliament of the Czech Republic, the Senate of the Parliament of the Czech Republic, the Government and the Ombudsman.
Statement by the Chamber of Deputies of the Parliament of the Czech Republic
30. In its observations of 13 April 2017, the Chamber of Deputies, through its President Jan Hamáček, limited itself to a description of the course of the legislative process which led to the adoption of Act No. 23 / 2017 Coll. and Act No. 24 / 2017 Coll.
Statement by the Senate of the Parliament of the Czech Republic
31. The Senate expressed its views on the invitation of the Constitutional Court through its President Milan Štěch's letter of 11 April 2017. The President of the Senate stated that the discussion of the proposals of the two laws concerned was accompanied by "unprecedented strict criticism," with no votes from the Senators present in the debate to argue for the adoption of the two proposals. None of the senators present has even submitted a proposal to approve any of the proposals.
Government observations
32. In its observations of 18 April 2017, the Government stated, first of all, that the relevant Council Directive 2011 / 85 / EU was transposed into the Czech legal order through Act No 23 / 2017 Coll. and Act No 24 / 2017 Coll. through Law No 24 / 2017. That directive obliges the Member States of the European Union to adopt numerical restrictions on the implementation of budgetary and fiscal policy (so-called numerical fiscal rules) to promote fiscal responsibility. The Czech Republic was the last Member State to transpose this Directive into its national law. Under Council Directive 2011 / 85 / EU, Member States are required to transpose fiscal rules into their national legal systems at local government level.
In general, the unconstitutional nature of the legal provisions contested
33. To the appellant's claim that the contested legislation lacks an appropriate constitutional framework, the Government referred to Article 101 (3) and (4) of the Constitution. From Article 101 (4) In doing so, the Constitution implies the possibility of regulating the activities of local and local authorities as a general rule. Moreover, that conclusion is based on the case law of the Constitutional Court [in particular on the findings of the Constitutional Court sp. zn. Pl. ÚS 34 / 02 of 5.2.2003 (N 18 / 29 SbNU 141; 53 / 2003 Coll.), sp. zn. Pl. ÚS 50 / 06 of 20.11.2007 (N 196 / 47 SbNU 557; 18 / 2008 Sb.), sp. zl. ÚS 66 / 04 of 3.5.2006 (N 93 / 41 SbNU 195; 434 / 2006 Sb.) and sp. Pl. ÚS 30 / 15 of 15.3.2016 (N 42 / 80 SbNU 517; 239 / 2016 Coll.)]. The activity of the local authorities is also regulated by the legislation in force, such as the municipal establishment and regional establishment, Act No. 131 / 2000 Coll., on the City of Prague, as amended, Act on the budgetary rules of the local budgets and others. According to the Government, this legal regulation regulates the activities of local and local authorities not only through a formal and procedural framework, but also in substance.
34. The Government rejected the appellant's argument based on the interpretation of Article 101 (3) The Constitution states that a number of standards and parameters of the budgets are given by the ordinary laws and implementing rules which are issued on the basis of Article 101 (4) of the Constitution. This is also the case with the contested provisions. The establishment of framework rules shall not affect the right of the local authority to approve its own budget or the powers of its representative to approve the budget.
35. Concerning the infringement of Article 11 The acts alleged by the appellant stressed that the contested provisions did not constitute an expropriation or restriction of property law, but rather a regulation of public budgeting by law and in the public interest.
Article 14 (c) of the Act on the Rules of Budgetary Responsibility
36. As regards that provision, the Government pointed out first of all that the obligation of the local authority to draw up a balanced or surplus budget is only subject to the provisions of Section 14 of the Act on the Rules of Budgetary Responsibility. This provision is based on the relevant sources of primary and secondary European Union law which impose on Member State governments to reduce debt to "general government sector '(under Act No. 23 / 2017 Coll. and Act No. 24 / 2017 Coll.," public institutions') in relation to GDP, with 60% of GDP as the limit of that debt.
37. The appellant's argument as to the impact of austerity measures on the management of local and local authorities was found misleading by the Government. If the municipality is unable to carry out its normal activity without deficit management, it is a problem of a structural nature which does not originate in the contested provisions. As regards the alleged need to limit the necessary expenditure on activities and actions provided by local authorities, the Government recalled that many of these activities are financed by direct transfers from the State budget.
38. The Government therefore held that the provisions of Section 14 (c) of the Act on the Rules of Budgetary Responsibility and of Section 4 (6) of the Act on the budgetary rules of the Territorial Budget did not constitute an interference with ownership law or the autonomy of the decision-making of the local authorities, but merely laid down the terms of reference for the establishment of the budget of the Territorial Authority in the event of the exceptional budgetary situation of the public institutions sector. Such a procedure allows both Article 101 (4) of the Constitution and Articles 4 (2) and 8 of the European Charter of Local Government.
39. If debt had to be reduced and the State had to bear all the burden, the local authorities would have felt the negative consequences of such a situation by reducing the government's mandatorial spending, reducing the various transfers and subsidies from the state budget, or correcting tax revenues. According to the Government, the territorial authorities are not "property islands' independent of the State. On the contrary, their budgets are linked to the state budget. In addition, the government added that according to the Czech Statistical Office, the level of debt of the public institutions sector in 2016 was 37,2% of GDP, with an annual decline of 3,1%. Thus, in the foreseeable future, there is no risk that the debt of the public institutions sector will reach 55% of GDP and that the local authorities will be obliged under Section 14 (c) of the Budget Responsibility Act.
40. The appellant contended that there was no time limit on the obligation of the local authorities to draw up a balanced or surplus budget, the Government recalled that the measure was designed to remedy the adverse situation of the public institutions sector. However, it is not possible to determine in advance how long such a situation will last and the limitation of obligations by a fixed time interval therefore lacks real meaning. As regards the alleged vagueness of the provision of Paragraph 15 (1) (a) of the Budget Liability Act, the Government argued that the appellant was removing the "significant deterioration of economic development over a period of 24 months' from the context and that that concept was defined in detail in that provision.
41. As regards the argument that Article 14 (c) of the Act on the Rules of Budgetary Responsibility introduces the principle of collective guilt, the Government argued that the local authorities form an integral part of the public institutions sector and that their management therefore affects the fiscal results for which the government is assessed. However, it does not have any tools to ensure the fiscal discipline of local authorities. The independence of local and local authorities cannot be understood as absolute, as they are part of the Czech Republic, are involved in its tax revenues and are linked to the state budget through transfer payments mainly to regional education and transport. If the local authorities benefit from the positive development of the state budget, they should be in solidarity with it at a time when the economy is failing. In a situation where the debt of the public institutions sector reaches 55% of GDP, it is clearly better to save money for local authorities. It would be wrong to believe that all public institutions would "cut and save" without feeling it.
42. To claim that the obligations under Section 14 (c) of the Act on the Rules of Budgetary Responsibility will restrict the ownership of the local authority, since it may lead to a reduction in the value of its assets and prevent the fulfilment of the needs of its citizens, the Government stated that without limiting the debt to the local authorities, all the burden of reducing the State's debt would be passed on to the state budget, i.e. the State would have to reduce the debt by the extent that the local authorities would be indebted.
Article 17 of the Act on the Rules of Budgetary Responsibility
43. The establishment of the debt ceiling of the local authorities, according to the government, does not lack a constitutional basis. According to the Constitution, the European Charter of Local Self-Government and the case law of the Constitutional Court, rights or obligations may be laid down by ordinary law, in particular if the purpose of regulation is to prevent the risk of indebtedness and the associated insolvency of territorial authorities. In addition, the Government stressed that the revenue of regional budgets is mainly made up of received transfers (62,4% of revenue) and tax revenue (34,9%). The revenue of municipal budgets consists mainly of tax revenue (68,4% of income) and transfers received (17,9% of revenue). Thus, the local authorities also manage funds from other public budgets (mainly the state budget).
44. According to the Government, the obligation of territorial authorities to reduce their debt under Paragraph 17 (2) of the Act on the Rules of Budgetary Responsibility and the suspension of the transfer of the share of tax revenue under Paragraph 17 (3) of that Act does not constitute an undue interference with the property autonomy of territorial authorities. This legislation is seen by the Government as a framework rule to prevent local authorities from accumulating their debts. The obligation to reduce debt does not exclude the possibility of debt financing of the investment activities of local and local authorities, but, at a certain level of indebtedness, sets the rate of repayment of debt. In this respect, the Government noted that the fulfilment of obligations under Section 17 of the Act on the Rules of Budgetary Responsibility would not pose any problem for approximately 93% of municipalities.
45. Paragraph 17 (2) of the Act on the Rules of Budgetary Responsibility provides for a legitimate means of ensuring enforcement of the fiscal rule. The suspension of the income of the share of tax revenue pursuant to Article 17 (3) of the Act on the Rules of Budgetary Responsibility constitutes the ultimate solution to which the State or the Ministry of Finance is entitled under the law, and according to the Government is also in accordance with the Constitution and the European Charter of Local Government. Moreover, the share of the tax revenue will only be suspended, not withdrawn, to the local authority.
46. The contested provisions, according to the Government, do not restrict the amount of the debt of the local authorities, but merely state that in the event of excessive debt, such a situation must be resolved and the local authorities should pay at least part of their debt. The government added that the local authorities generally have sufficient resources to make investments (according to Annex No. 1 to the Government's comments, the municipalities operated in 2016 with a significant surplus of CZK 40.5 billion) and it is up to them how they handle them. The fiscal rule therefore does not, according to the Government, threaten local authorities.
47. As regards the alleged impossibility of forcing the creditors of the local authorities to accept early payment (debt), the Government first argued that it could not be considered that the local authorities could repay their debt on a one-off basis at maturity without a continuously created provision for the payment of the debt. Moreover, the proposed bond financing of municipal spending is rarely used by the government. The Government mentioned an analysis by the Ministry of Finance on the functioning of the fiscal rule, which showed that in the last three years the municipalities, which are the most in line with the fiscal rules, have paid their debts much higher than they should have at least paid under Section 17 (3) of the Budget Liability Act.
48. In relation to the appellant's claim that the suspension of the transfer of a share of the tax revenue would lead to the failure of a substantial source of income of the local authorities, to the inability to meet their obligations and, where appropriate, to liquidate them, the Government referred to its earlier reasoning to paragraphs (17) (2) and (3) of the Budget Liability Rules Act. Moreover, the suspended share of the tax revenue may be released at the request of the local authority to repay its debt. The appellant's objection to the absence of a link between paragraphs 17 (2) and 17 (3) of the Act on the Rules of Budgetary Responsibility was rejected by the Government, stating that the link between those paragraphs is clear. The Government further stated that the level of the compulsory minimum repayment of debt is far below the level of normal credit conditions of banking institutions and therefore it is not possible to talk about the failure of a substantial source of income from local authorities. Moreover, the contested legislation does not in any way limit the indebtedness of territorial authorities and does not jeopardise the coverage of their normal or capital expenditure or the financing of their own projects from their own resources or from projects co-financed by the European Union funds. If the local authorities do not exceed the specified amount of the debt or pay the amount required after it has been exceeded, their share of the tax revenue shall not be affected.
49. The government considers the fiscal rule to be proportional, as the level affects directly in proportion to the level of breach of the rules set. The Government further stated that the value of 60% of revenue for the last four financial years, enshrined in the fiscal rule, was determined on the basis of foreign experience, taking into account the domestic economy. The importance of the fiscal rule lies in its universality, as it is a rule applicable to all territorial authorities. The mechanism for suspending the transfer of a share of tax revenue is equally universal. For this reason, the Government rejects the appellant's claim that the contested legislation is non-discriminatory. The Government, on the basis of a processed analysis (according to which the amount of the suspended shareholding for only three municipalities would exceed 10% of their total income), would call the suspension of the transfer of the shareholding for the municipalities concerned financially.
50. Neither the Government nor the appellant's objection that Paragraph 17 of the Budget Liability Rules Act constitutes an inadmissible genuine retroactivity is justified. It recalled that the Ministry of Finance would assess the fiscal rule only from 2018 and that the possible suspension of the share of tax revenue would only take place in 2019. The necessary period of legalization is thus created. As an example of the appellant in respect of the municipality which took a loan for the construction of a wind power plant, the Government notes that the municipality pays its debt twice as fast as the provisions of Paragraph 17 (2) of the Act on the Rules of Budgetary Responsibility.
Compliance with European Union law
51. The Government does not share the appellant's conclusion that the contested legislation is superfluous because Council Directive 2011 / 85 / EU does not provide for a way of achieving a sustainable and sound financial situation in the long term. The contested legislation does not only reflect its nature of regulation adopted in other Member States of the European Union, but also belongs to the most moderate.
Final Government proposal
52. For the reasons set out above, the Government has proposed to the Constitutional Court to reject the proposal in full.
Communication from the Ombudsman
53. The Ombudsman, by letter dated 28 March 2017, informed the Ombudsman that it did not exercise its right under Article 69 (3) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 404 / 2012 Coll., and did not intervene.
Replication of the appellant
54.
55. The appellant of the Government's claim that Article 101 (4) The Constitution constitutes the necessary constitutional framework for the contested provisions, calling it a breach of the general principle of venire contra factum proprium, as the Government itself submitted a draft constitutional law laying down the rules of budgetary responsibility for the local authorities, which was intended to underpin the budgetary responsibility of municipalities and regions. In its reply, the appellant reiterates its crucial argument that Article 101 (4) The Constitution does not create the necessary constitutional authority to impose obligations on local authorities through the law, and recalls that legal regulations must respect constitutional limits. In the case of the management of territorial units, these limits are constitutionally guaranteed economic rights "by budget 'and" own property'. In the case of rules determining how municipalities and counties are to manage and thus how they are to dispose of their own property, it is not the economy according to its own rules or its own budget. Only the legislator may, by its decision, restrict or lay down a specific rule for their management. However, the contested provisions were adopted by the legislature and on the basis of the overvote of the Senate (thus denying its role as a constitutional policy).
56. The caselaw of the Constitutional Court, which the Government referred to, is considered by the appellant to be inappropriate. In the present case, it is crucial to assess whether the failure to adopt a draft constitutional law (and to lay down the rules on budgetary responsibility only at the legal level) has affected the right of local authorities to self-administration and whether or not the position of the Senate has been affected by the constitutional process. The appellant adds that this is a question of law-making, not the interpretation of Article 101 of the Constitution. In that regard, the appellant further admits that, pursuant to Article 101 (4), The Constitution may be regulated by the ordinary law of the territorial authorities, but only the decision-making procedure or the objectives to be achieved by the local authorities may be determined by law. However, it is not possible by law to determine how municipalities and counties are to decide (which is said to do so).
57. The right of a local authority to own property within the meaning of Article 101 (3) The Constitution implies, according to the author, the possibility to dispose of this property at its discretion. The contested provisions prevent that. The assets constitute both assets and liabilities whose acceptance of the contested legislation is restricted under certain conditions and, where appropriate, excluded. The appellant refers to the finding of the Constitutional Court sp. zn. Intervention into the right to decide on the management of own property at the same time constitutes intervention into the right to own property within the meaning of Article 11 (1) of the Charter.
58. Government assertion that Article 101 (3) The Constitution imposes the right of local and local authorities to their own budget, not to a budget without attributes, as the appellant considers inaccurate and incorrect. Article 101 (3) The Constitution talks about the right to manage by budget, which is not the same as the right to "have a budget" (as the government imports). The content of this right is the right of the local authorities to dispose of the appropriations according to their decision, which is reflected in the approved budget.
59. In addition to the provisions of Section 14 (c) of the Act on the Rules of Budgetary Responsibility and Section 4 (6) of the Law on the budgetary rules of the Territorial Budget, the appellant further states that the government has significantly failed to carry out its effects on the functioning of the Territorial Authority if they claim that those obligations are to be met by the Territorial Authority only if the public institution sector's debt reaches the statutory level. The substance of the abstract constitutional review, according to the author, excludes objections of this type. Nor does the appellant share the Government's belief that the contested provisions reflect the requirements of Union law, since Union legislation does not require measures taken in connection with debt reduction in the general government sector to affect local authorities. According to the appellant, the contested provisions restrict the property autonomy of the local authorities, since when drawing up their budgets it will be necessary to comply with the conditions arising from the provisions in question [the appellant cites the reasons for the finding, sp. zn. The appellant summarises on the ground plan of the found by the Constitutional Court that it is the responsibility of the local authorities as they manage, while deficit management can contribute to the fulfilment of the tasks of the local authorities in relation to their citizens.
60. According to the appellant, it is also a question of whether the restriction of the autonomy of local and local authorities in managing their property is the right solution to a possible deficit at all, and it is at least questionable to introduce in the legal order institutions of a primarily economic nature which can also be counterproductive. Indeed, the investigation itself may reduce the deficit, but it may not remove its cause. The Government's claim that the activation of austerity measures is not imminent is not considered relevant by the appellant.
61. In addition to the provisions of Article 17 of the Act on the Rules of Budgetary Responsibility, the appellant adds that, in view of the constitutionally guaranteed property autonomy of the local authorities, they cannot be forced into certain specific fiscal measures under threat of sanctions. The legislature is limited by the Constitution in determining the obligations of the local authorities in the field of property autonomy. In this respect, the question of the financial independence of local and local authorities is not decisive, as it is a matter of political decision to ensure their material existence, or its extent, by the State. The State cannot force territorial authorities to manage in a certain way, otherwise it would also have to assume responsibility for their management. But it would eliminate the essence of self-government as such.
62. The fiscal rule is also supposed to undermine the property autonomy of local and local authorities, since if a particular entity is forced to behave in a certain way (here to repay its debts), it does not act autonomously. It is irrelevant whether the possible penalty for failure to comply with the fiscal rule is merely a temporary suspension of the income of a share of tax revenue, as the nature of the penalty (forcing the entity to behave in a certain way) does not lose its character. If the fiscal rule is aimed at preventing the municipality from being insolvent, the principle of responsibility of the local authority for its own management is again denied.
63. The appellant continues to believe that the establishment of a maximum ceiling on the debt of the local authority limits the possibility of managing the assets of the whole. Moreover, the fiscal rule does not sufficiently take account of the current indebtedness of the municipalities, as it does not provide for a possible transitional period by which the territorial authorities would be given the possibility, without risk of sanctions, of suspending the income share of the tax revenue to reduce their debt. The fiscal rule is said to fall on some of the local authorities, which did not go against previous legislation.
64. The Government's claim that the violation of the fiscal rule does not change anything in fact, since the payment of the suspended tax revenue may be made available to the local authorities on request on the repayment of the debt, the appellant contradicts that the local authorities may not always be interested in the accelerated (and essentially forced) repayment of their debts. Moreover, the situation where, for example, the maturity of the debt is deferred on the basis of an agreement does not reflect the adjustment. The appellant also doubts the suitability of the chosen device. As regards statistical data on the average indebtedness of municipalities, the appellant notes that the effects of the fiscal rule cannot be downgraded by the fact that there is no risk of its application for the vast majority of local authorities. The right to self-government is a testament to all territorial authorities. Moreover, if the management of territorial units is as good as the statistics are presented, the question is whether only some of them are penalised. Finally, on the question of the intertemporal effects of the contested legislation, the appellant summarises that territorial authorities are not in a position to take the necessary measures if the relevant debt limit is calculated on the basis of the economic results of the previous years, i.e. the period in which the amount of debt incurred cannot be affected by the territorial authorities in any way.
65. Finally, on the Government's argument that the introduction of the rules of budgetary responsibility stems from Union law, the appellant states that this cannot justify a breach of constitutional rules. Neither of points 23 to 25 of the preamble, or of Articles 12 and 13 of Council Directive 2011 / 85 / EU, are required to comply with the rules contained in Act No 23 / 2017 Coll. and Act No 24 / 2017 Coll. The appellant refuses to argue the need for the so-called Euroconformal interpretation used by the Government, as the problem is not seen in the interpretation of the law, but in the constitutional conformity of standards, or in the use of an inadequate form of national source of law.
Oral proceedings
66. The Constitutional Court found that further clarification of the case could not be expected from oral proceedings and therefore, in accordance with Article 44 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, it decided on the case without its regulation.
Self-examination of the contested legal provisions
Terms and conditions of the formal assessment of the proposal
67. The Constitutional Court concludes that it is competent to consider an application for annulment of the contested provisions. This proposal fulfils all the formal requirements laid down by law and has been submitted by persons entitled to do so. At the same time, the Constitutional Court found no grounds for inadmissibility of the application or for termination of proceedings. The conditions for a substantive assessment of the proposal are therefore met.
Assessment of the competence and constitutional conformity of the legislative process
68. Pursuant to Article 68 (2) of Act No 182 / 1993 Coll., on the Constitutional Court, as amended by Act No 48 / 2002 Coll., the Constitutional Court must examine whether the contested provisions have been adopted and issued within the limits of the Constitution laid down by the Constitution, in a constitutional manner, and whether their content complies with constitutional law. The Constitutional Court has therefore verified the progress of the process of adopting these laws. It was based on the observations submitted by the Chamber of Deputies and the Senate, as well as on publicly available electronic sources (the minutes of the meetings of the two chambers of Parliament, the resolutions and the House and Senate, freely available on the website http: / / www.psp.cz and http: / / www.senat.cz).
69. The draft Bill on the Rules of Budgetary Responsibility (Chamber of Deputies, 7th Election, 2013- 2017, House Press 412 / 0) was circulated to Members on 25 February 2015. The Chamber of Deputies approved the bill at its 50th meeting on 19 October 2016 at the third reading (Resolution 1380), with 101 out of 169 Members voting for it, 49 opposed and 19 abstained. The Senate discussed and rejected the bill (Senate, 11th term, 2016- 2018, Senate Press 349 / 0) at its 2nd session on 30 November 2016 (Resolution No 33). 63 senators voted to reject the motion, 4 senators abstained. On 17 January 2017, at its 54th meeting, the Chamber of Deputies remained in its originally approved bill (Resolution 1521). 104 of the 171 Members present voted in favour, 62 opposed and 5 abstained. The law adopted was delivered to the President of the Republic on 19 January 2017 and signed on 23 January 2017. It was published in the Collection of Laws on 6 February 2017 in amount 8 under No 23 / 2017 Coll.
70. The draft law amending certain laws in connection with the adoption of the budgetary liability legislation (Chamber of Deputies, 7th Election, 2013- 2017, House Press 413 / 0) was circulated to Members on 25 February 2015. The Chamber of Deputies approved the bill at the third reading on 19 October 2016 at its 50th meeting (Resolution 1381), when 102 of the 173 Members present voted for it, 16 opposed and 55 abstained.
71. The Senate discussed and rejected the bill (Senate, 11th term, 2016- 2018, Senate Press 350 / 0) at its 2nd session on 30 November 2016 (Resolution No 34). 60 senators voted to reject the motion, 4 senators abstained.
72. The Chamber of Deputies of 17 January 2017, at its 54th meeting, remained in the originally approved Bill (Resolution 1522). 103 of the 157 Members present voted in favour, 50 opposed and 4 abstained.
73. The Law adopted was delivered to the President of the Republic on 19 January 2017, which signed it on 23 January 2017. It was published in the Collection of Laws on 6 February 2017 in an amount of 8 under No 24 / 2017 Coll.
74. The Constitutional Court notes that Law No 23 / 2017 Coll. and No 24 / 2017 Coll. were adopted and issued in a constitutionally prescribed manner because, in a situation where the Senate rejected the draft of the two laws (Article 46 (2) of the Constitution), an absolute majority of all Members (Article 47 (1) of the Second Constitution) were subsequently declared for their adoption.
75. The Constitutional Court also addressed the question of the relationship between the draft laws and the draft constitutional law (House Press 411 / 0), which was not adopted by the Chamber of Deputies (The Chamber of Deputies rejected the draft constitutional law at the third reading of 19 October 2016 at its 50th session, when 75 of the 171 Members present voted for it, 34 opposed and 62 abstained).
76. The appellant argues in this regard that, in a situation where no constitutional law was adopted, which would constitute the basis for the budgetary responsibility of municipalities and regions at constitutional level, the subsequent adjustment of the budgetary responsibility of the territorial authorities contained in Act No 23 / 2017 Coll. and Act No 24 / 2017 Coll. should be regarded as unconstitutional because it lacks the necessary constitutional framework. The appellant recalls that the Constitutional Court had previously dealt with a similar case in its finding sp. zn. Pl. ÚS 59 / 2000 of 20.6.2001 (N 90 / 22 SbNU 249; 278 / 2001 Coll.), where it dealt with the proposal to abolish (inter alia) the provisions of § 2 paragraph 1 of the First Act No. 6 / 1993 Coll., on the Czech National Bank, as amended by Act No. 442 / 2000 Coll., according to which the main aim of the Czech National Bank is to ensure price stability. The contested provision was adopted in a situation where Article 98 of the Constitution was to be amended at the same time, which has so far established that the main objective of the Czech National Bank's activities is to provide for monetary stability (i.e. the objective of the Czech National Bank's activities was set out in Article 98 of the Constitution more widely than in the first sentence of § 2 (1) of Act No. 6 / 1993 Coll., on the Czech National Bank). The draft constitutional law amending Article 98 of the Constitution was not adopted, Act No. 442 / 2000 Coll., amending Act No. 6 / 1993 Coll., on the Czech National Bank, as amended, and Act No. 166 / 1993 Coll., on the Supreme Audit Office, as amended, was nevertheless adopted. The Constitutional Court, in its designated finding, concluded unequivocally that "through ordinary law, the scope of the central bank's main task is limited. This procedure is unacceptable from the point of view of the rule of law (Article 1 of the Constitution), from the point of view of the constitutionally prescribed way of amending and supplementing constitutional laws (Articles 9 (1) and 39 (4) of the Constitution), as well as from the point of view of Article 98 (1) of the Constitution itself. 'At the same time, the Constitutional Court recalled that the contested provision infringed the fundamental rule of hierarchical construction of the rule of law, according to which a law of lower legal force must not contradict the law of higher legal force. It can be reasonably pointed out at this point that the Constitutional Court found, sp. zn.
77. The Constitutional Court is aware that, in a situation where a draft constitutional law establishing the foundations of budgetary responsibility has been rejected, and yet the Chamber of Deputies has then continued to vote on the draft laws adopted under No 23 / 2017 Coll. and No 24 / 2017 Coll., at least a prima vista may offer a conclusion on the unconstitutional nature of the contested provisions of those laws in the absence of their constitutional framework.
78. However, such a conclusion cannot be drawn without further, i.e. without answering the question whether, by failing to adopt a draft constitutional law, the contested provisions actually came into conflict with the constitutional order of the Czech Republic, which would mean that either the current form of constitutional order did not allow such legislation to be adopted and it was necessary to amend the constitutional order or merely to supplement the constitutional order with another separate constitutional law governing budgetary responsibility as a new subject of constitutional regulation. In such a case, it would only be an extension of the constitutional criteria for assessing the constitutionality of the legislation in question and, in so doing, the protection of those criteria from interference by the ordinary legislator, in accordance only with the procedure laid down in Article 39 (1) and (2) of the Constitution, and not in accordance with Article 39 (4) of the Constitution. In the present case, the proposed amendment to the constitutional order did not take place, so the question is reduced to the problem of whether the adjustment of the issues on which the constitutional order was to be supplemented was in conflict with its unchanged form. The answer must be sought in the interpretation - in this respect completely essential - of Article 101 (3) of the Constitution (as was the case in the case of the finding of sp. zn. Pl. ÚS 59 / 2000 in relation to Article 98 of the Constitution). Article 101 (3) The Constitution constitutes the constitutional basis for the right of local and local authorities to have their own assets and to operate according to their own budget. If the Constitutional Court, by interpreting Article 101 (3) of the Constitution, concludes that the current form of the constitutional order of the Czech Republic does not allow restrictions on the management of municipalities and regions with their own property on the basis of their own budget in the way in which the contested legal provisions do so, the deficit represented by the failure to adopt a constitutional law will imply a conclusion on the unconstitutionality of the contested legal provisions (as was the case sp. v. ÚS 59 / 2000). The answer to the question whether, as a result of the failure to adopt a constitutional law, the contested legal provisions lack a constitutional basis, should therefore be sought in the interpretation of the relevant provisions of the constitutional order of the Czech Republic. This is the only way for the Constitutional Court to assess whether the adoption of the Constitutional Law constituted a condition sine qua non in relation to the adoption of the contested provisions governing the budgetary responsibility of municipalities and regions.
79. The Constitutional Court therefore took the view that the contested provisions were in substance compatible with the constitutional order [Articles 83 and 87 (1) (a) of the Constitution].
General basis for the review
80. The Constitutional Court must first assess whether the contested provisions constitute an interference with the law of the territorial authorities of the local authorities of the Autonomous Communities within the meaning of Article 8, Article 100 (1) and Article 101 (3) of the Constitution, or, where appropriate, an intervention in the property law of the territorial authorities of the territorial authorities of the Member States guaranteed by Article 11 of the Charter.
81. If the Constitutional Court concludes that the contested provisions constitute an intervention in one of those constitutional rights, it must assess whether this intervention does not change the Constitution or, where appropriate, amend the essential elements of a democratic rule of law. In such a case, it would be appropriate - with reference to Article 9 (1) of the Constitution - to abolish the contested provisions, since the Constitution can only be amended or supplemented by constitutional laws. At the same time, an assessment would also be made as to whether the amendment to the Constitution is not contrary to Article 9 (2) of the Constitution, expressing the irrevocability of the so-called material core of the Constitution. If the Constitutional Court does not conclude that the contested provisions constitute an amendment to the Constitution or the essential elements of the democratic rule of law, it must examine whether such intervention will stand in the proportionality test. If the Constitutional Court concludes that it is not proportional, it will be necessary to state that the contested provisions are contrary to the constitutional order and, therefore, to abolish them as unconstitutional. First of all, the appellant's argument is based on the opposition to the absence of a constitutional basis for limiting the right of local authorities to self-administration and the opposition to infringement of the right to own property and to manage according to their own budget.
In general, the right of local authorities to self-government and the right to own property and to manage according to their own budget
82. Article 8 and Article 100 (1) of the Constitution guarantee the right of local authorities to self-administration. The Constitutional Court has previously stated that it considers the local authorities to be an indispensable component of the development of democracy, which is an expression of the law and capacity of the local authorities within the limits of the law, within the limits of its responsibility and in the interests of the local population to regulate and manage part of public affairs [cf. the findings of the sp. zn. In this context, some authors refer to the constitutional guarantee of the right of local authorities to self-government as a key component of the vertical division of power and from the point of view of constitutional order as one of the essential elements of the democratic rule of law within the meaning of Article 9 (2) of the Constitution (cf. SUCHÁNEK, M. IN: BAHÍK, L., FILIP, J., MOLEK, P., SUCHÁNEK, R., ŠIMČEK, V., EXEMPHAZÁNÁK, L. Constitution of the Czech Republic. Comment. Praha: Linde, 2010, p. 140-141).
83. It is essential to ensure full implementation of the right of local and local authorities to self-government by their legal personality and property autonomy. The Constitution establishes the legal personality of the local authorities, which it designates as public bodies, and assumes that the bodies themselves have their own assets and manage them according to their own budget (Article 101 (3) of the Constitution) [see sp. zn.
84. In doing so, self-government, as an important component of the democratic rule of law, must have the real possibility of matter and issues of local importance, including those which go beyond the regional framework and which are decided within its own competence, on the basis of its discretion. The form of representative democracy is thus implemented by the will of citizens represented at local and regional level, and only by responsibility to the electorate, and on the basis of the legal and constitutional framework, the self-government is then limited in its specific speech (Article 101 (4) of the Constitution). Thus, territorial authorities representing the territorial community of citizens must be able, through the autonomous decision-making of their representative bodies, to freely decide how they will dispose of the funds they are equipped to carry out their tasks. It is on its own account that the management of its property is an attribute of self-administration [cf. sp. zn. Pl. ÚS 5 / 03 of 9.7.2003 (N 109 / 30 CollNU 499; 211 / 2003 Coll.)].
85. In this respect, the scientific literature agrees that one of the essential features defining the territorial authorities as such is their economic basis, namely the possibility for the territorial authorities to own the assets and manage their own budget. Article 101 (3) The Constitution is an integral part of that right in terms of the real possibilities of territorial authorities. Meaning of Article 101 (3) The constitution, in terms of the exercise of the right of local authorities to self-government, is thus to exclude the adoption of a law which would deny the territorial authority the right to property and to the management of its own budget. That provision may be interpreted as an attempt by the legislature to oblige Parliament not to adopt laws which remove the right to have property and to operate according to its own budget (see HENDRYCH, D., CAMLACH, M., SYLLA, M., SYLLO, J., FREEDOM, C., SEPTEMBER, P., ZOULÍK, F. Constitution of the Czech Republic. Comment. Praha: C. H. Beck, 1997, p. 179.).
86. From this, the very essence (essence) of the right of municipalities and regions to have their own property and to manage according to their own budget is also provided. The law guarantees the municipalities and regions property autonomy, on the one hand, in the sense that they can own property, and are therefore entities of property law like any other legal entity. From Article 101 (3) The Constitution therefore implies an imperative towards a legislator who prohibits the removal of territorial authorities from the capacity to participate in property-law relations, acquire and dispose of property in his sole possession in the sense of the ownership triad (ius possiddi, ius utendi et fruendi, ius disponendi). The second component of the right of local authorities to own their own assets and to manage their own budget is property autonomy in terms of independent budgetary management. The independence of the budget management of municipalities and regions means that their own budgets are not part of one of the budget chapters of the state budget. The municipalities and counties, when drawing up their budgets, shall act separately, as well as on the basis of the budgets drawn up and approved, and shall manage on their own responsibility.
87. In other words, municipalities and regions are already guaranteed at constitutional level, on the one hand, the status of the entity eligible to acquire assets (ownership status) and the status of the entity eligible to dispose of the acquired property on the basis of its own and prior economic discretion (economic status).
88. Both of these constitutionally guaranteed roles entail both partial rights and partial obligations, which, however, cannot be seen in isolation, but in conjunction with the status of a local body as a public body, whose task is to regulate and manage part of public affairs in the interests of the local population. Therefore, as owner, the territorial body must always take into account the interest of its population when dealing with its property. This limits to a large extent its freedom to handle this property. Similarly, the territorial body is limited as an economy, since it must be based on the legally established rules for the creation of territorial budgets when drawing up and approving its own budget, taking into account the interests of the local population.
89. The Constitution therefore guarantees the ownership and the economic position of municipalities and regions, but - and this is crucial in the light of the case under consideration - such a guarantee is not unfettered, but is necessarily based on the essence of the right to self-administration. Territorial authorities are therefore limited in their own management of their property and in their own budget creation by their status as public bodies.
90. In addition to the national constitutionally established framework of the right of local authorities to self-government, the standard resulting from the international obligations of the Czech Republic, namely the European Charter of Local Government, negotiated on 15 October 1985, which entered into force for the Czech Republic on 1 September 1999 and was published under No 181 / 1999 Coll. (hereinafter referred to as the Charter).
91. The Charter is not a classic international treaty on human rights, it does not concern individuals but the community of citizens, it establishes collective rights. This implies the particularities of its interpretation and application. The rules expressed by it, which constitute a European standard of local government, are hardly directly applicable (self-execution). The European Territorial Authority Standard is expressed in terms of the characteristics to be reported by the Contracting Party's Authority or the rights to be enjoyed. The Contracting Parties have an obligation to guarantee their territorial authorities a certain number of rights determined by the Charter. The rights guaranteed by the Charter are framework. The Charter itself envisages in a number of provisions detailed implementing national legislation, which certainly represents the limits within which the local authorities will move (the find sp. zn.
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Regulation Information
| Citation | The Constitutional Court found no 99 / 2018 Coll., on the application for annulment of certain provisions of Act No. 23 / 2017 Coll., on the Rules of Budgetary Responsibility, Act No. 243 / 2000 Coll., on the budgetary determination of the proceeds of certain taxes to the local authorities and certain state funds (Act on Budgetary Determination of Taxation), as amended, and Act No. 250 / 2000 Coll., on the budgetary rules of the territorial budgets, as amended |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 05.06.2018 |
|---|---|
| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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