Lietuviškai
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
R U L I N G
On the compliance of Article 6 of the Republic of
Lithuania Law on Amendment of the 1997 State
Budget and Local Governments Budgets with the
Constitution of the Republic of Lithuania
8 November 2000, Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the Judges of the Constitutional Court Egidijus
Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas
Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas
Sinkevičius, and Teodora Staugaitienė,
with the secretary of the hearing-Daiva Pitrėnaitė,
pursuant to Paragraph 1 of Article 102 of the Constitution
of the Republic of Lithuania and Paragraph 1 of Article 1 of
the Republic of Lithuania Law on the Constitutional Court, on
19 October 2000, in its public hearing conducted the
investigation of case No. 1/99 subsequent to the petition
submitted by the Kaunas Regional Court requesting to
investigate if the provision of Article 6 of the Republic of
Lithuania Law on Amendment of the 1997 State Budget and Local
Governments Budgets that unused appropriations of 1996 local
governments budgets for financing environment protection
objects shall be returned to the state budget is in compliance
with Paragraph 1 of Article 127 of the Constitution of the
Republic of Lithuania.
The Constitutional Court
has established:
I
The petitioner-the Kaunas Regional Court-was investigating
a civil case on the obligation to the local government of
Kaunas city to transfer the unused appropriations of 1996
allocated for financing environment protection objects from its
budget to the state budget. On 21 December 1998, by its ruling
the said court suspended the investigation of the case and
appealed to the Constitutional Court with a petition requesting
to investigate whether the provision of Article 6 of the
Republic of Lithuania Law on Amendment of the 1997 State Budget
and Local Governments Budgets (Official Gazette Valstybės
žinios, 1997, No. 98-2482; hereinafter also referred to as the
Law) whereby unused appropriations of 1996 local governments
budgets for financing environment protection objects shall be
returned to the state budget was in compliance with Paragraph 1
of Article 127 of the Constitution of the Republic of
Lithuania.
II
The request of the petitioner is based on these arguments.
Paragraph 1 of Article 127 of the Constitution provides
that the budgetary system of Lithuania shall consist of the
independent state budget of the Republic of Lithuania and the
independent local governments budgets. This provision
establishes independence of local governments budgets.
Meanwhile, Article 6 of the 21 October 1997 Law on Amendment of
the 1997 State Budget and Local Governments Budgets stipulates
that unused appropriations of 1996 to finance capital
investments (the estimate value of which exceeds 5000 thousand
litas) and environment protection objects shall be returned
from local governments budgets to the state budget to the
extent that the factual revenues of 1997 of these local
governments budgets are larger than the revenues established on
approval of deduction rates to local governments budgets. The
Law provides for taking some funds from the budget of the local
government against the will of institutions of the local
government. The petitioner doubts if this requirement is in
compliance with Paragraph 1 of Article 127 of the Constitution.
III
In the course of the preparation of the case for the
Constitutional Court hearing, a written explanation of the
representative of the party concerned-the Seimas-E. Žilevičius,
Vice-Minister of Finance, was received.
The representative of the party concerned noted that
Paragraph 1 of Article 127 of the Constitution and Paragraph 1
of Article 1 of the Republic of Lithuania Law on Budgeting
provide that the budgetary system of Lithuania shall consist of
the independent state budget of the Republic of Lithuania and
the independent local governments budgets. The Seimas annually
approves the state budget of the Republic of Lithuania and the
funds allocated to local governments budgets. Local government
councils, taking account of the budget funds allocated to each
particular local government, within one month after the
approval of the state budget of the Republic of Lithuania
approve respective local governments budgets. The
aforementioned procedure results in composition of the
independent state budget and local governments budgets as
Articles 12, 13, 28 and 29 of the Law on Budgeting in a special
manner regulate such issues as the state budget and local
governments budgets revenues and the needs covered by
appropriations from the state budget and local governments
budgets. The independence of the state budget and local
governments budgets is also confirmed by Articles 23 and 31 of
the said law which establish that additional revenues accrued
in the course of the execution of the state budget of the
Republic of Lithuania, and the appropriations that have lost
their purpose, and which were designated for additional state
expenditures, shall be distributed by the Seimas upon the
recommendation of the Government of the Republic of Lithuania.
Additional revenues accrued in the course of the execution of
local governments budgets and the appropriations that have lost
their purpose remain at the disposition of local government
councils and are distributed upon decisions of institutions
authorised by the said councils for additional local government
needs.
The representative of the party concerned pointed out that
Paragraph 2 of Article 1 of the Law on Budgeting provides that
appropriations received by local governments from the state
budget and used not according to the established purpose or
unused at all must be returned to the state budget. The Seimas
may allocate appropriations designated for a specific purpose
from the independent state budget to local governments for
fulfilment of certain programmes. As such appropriations are
allocated from the independent state budget, therefore, the
Seimas also establishes conditions upon which local governments
are entitled to use the said state budget appropriations. This
legal provision requires that local governments return the
approved state budget appropriations to the state budget upon
certain conditions, however, it does not require that the
appropriations approved for local governments budgets under
common procedure be returned. In the opinion of the
representative of the party concerned, such a provision of the
law does not violate the independence of local governments
budgets. Therefore, on 21 October 1997, the Seimas adopted the
Law on Amendment of the 1997 State Budget and Local Governments
Budgets. Article 6 thereof, taking account of Paragraph 2 of
Article 1 and Article 32 of the Law on Budgeting, provided that
unused appropriations of 1996 to finance capital investments
(the estimate value of which exceeds 5000 thousand litas) and
environment protection objects shall be returned from local
governments budgets to the state budget to the extent that the
factual revenues of 1997 of these local governments budgets are
larger than the revenues established on approval of deduction
rates to local governments budgets.
The representative of the party concerned is of the
opinion that Article 6 of the Law on Amendment of the 1997
State Budget and Local Governments Budgets is in compliance
with Paragraph 1 of Article 127 of the Constitution.
IV
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations concerning
the arguments of the petitioner were submitted by L. Sabutis,
Head of the Seimas Public Administration and Local Governments
Committee, J. Rudalevičius, Minister of Administration Reforms
and Local Government Affairs of the Republic of Lithuania, G.
Švedas, Vice-Minister of Justice, and S. Šiupšinskas, Director
of Local Governments Association of Lithuania.
The Constitutional Court
holds that:
1. On 21 October 1997, the Seimas adopted the Republic of
Lithuania Law on Amendment of the 1997 State Budget and Local
Governments Budgets. Article 6 of the Law provides: "Unused
appropriations of 1996 to finance capital investments (the
estimate value of which exceeds 5000 thousand litas) and
environment protection objects shall be returned from local
governments budgets to the state budget to the extent that the
factual revenues of 1997 of these local governments budgets are
larger than the revenues established on approval of deduction
rates to local governments budgets."
Taking account of the petition of the petitioner, the
Constitutional Court will investigate the compliance of the
provision of Article 6 of the Law that unused appropriations of
1996 to finance environment protection objects shall be
returned from local governments budgets to the state budget to
the extent that the factual revenues of 1997 of these local
governments budgets are larger than the revenues established on
approval of deduction rates to local governments budgets with
the Constitution.
2. Paragraph 1 of Article 127 of the Constitution
provides: "The budgetary system of the Republic of Lithuania
shall consist of the independent State Budget of the Republic
of Lithuania and the independent local governments budgets."
Under Paragraph 1 of Article 127 of the Constitution,
local governments budgets are independent and at the same time
they are a part of the indivisible budgetary system of
Lithuania. Systematic interpretation of this provision, while
taking into consideration the other provisions of Article 127
as well as those of Articles 121 and 131 of the Constitution,
makes it possible to state that local governments, in
accordance with the Constitution and laws, independently
dispose of appropriations provided for by laws.
3. Local governments budgets accrue funds to finance
social, economic and other needs, to maintain local governments
institutions. Local governments budgets may also provide for
appropriations for capital investments, environment protection
objects, and other programmes having specific purposes.
4. It is established in the disputed provision of Article
6 of the Law that: unused appropriations of 1996 to finance
environment protection objects must be returned from local
governments budgets to the state budget; the said
appropriations must be returned from the 1997 local governments
budgets; the said unused appropriations must be returned to the
state budget to the extent that the factual revenues of 1997 of
these local governments budgets are larger than the revenues
established on approval of deduction rates to local governments
budgets.
5. Consideration of the legal regulation established in
Article 6 is to be based on the fact that Annex 5 of the 7
December 1995 Law "On the Republic of Lithuania 1996 State
Budget and the Deduction Rates and Subsidies to Local
Governments Budgets" established concrete appropriations to
particular local governments for financing certain environment
protection objects. Besides, Article 3 of the said law
established that remaining appropriations unused for their
purpose were to be returned to the state budget. Thus, the
appropriations established in the said law were to be used
according to their purpose only.
The Constitutional Court notes that the provision of
Paragraph 1 of Article 127 of the Constitution that local
governments budgets are independent does not mean that
appropriations for financing environment protection objects,
established in laws, may be used not according to their
purpose, or that the remaining appropriations unused according
to their purpose may not be returned to the state budget. Thus,
the requirement of Article 6 to return the unused
appropriations designated for financing environment protection
objects from local governments budgets to the state budget in
itself does not deny the principle of independence of local
governments budgets established in the Constitution.
6. Article 6 contains a wording "unused appropriations".
The content of this wording is not disclosed in the Law.
Finance law of Lithuania defines appropriations as a sum of
money established in the Law on Establishment of the Financial
Indicators of the State Budget and Local Governments Budgets,
which a holder of appropriations has the right to receive from
the funds accrued in the budget. The Constitutional Court notes
that the wording "unused appropriations <...> for financing
environment protection objects" is to be construed as including
the appropriations which had been received to finance
environment protection objects but used for other purposes and
also appropriations which had been received but were not used
at all.
7. As mentioned, under Article 6 of the Law, the unused
1996 appropriations for financing environment protection
objects must be returned to the state budget from the funds of
the local governments budgets of 1997. The reason of this
obligation to local governments is that in the course of the
execution of the 1996 budget the appropriations provided for in
local governments budgets for financing environment protection
objects were not used according to their purpose. Therefore the
legal relations regulated by Article 6 of the Law occur
provided in 1996 local governments did not use the
appropriations for financing environment protection objects and
did not fulfil the obligation established in Article 3 of the
Law "On the Republic of Lithuania 1996 State Budget and the
Deduction Rates and Subsidies to Local Governments Budgets" to
return the unused appropriations to the state budget. Thus, it
may be concluded that such disputed legal regulation, which
provides that the unused appropriations of 1996 shall be
returned from the local governments budgets funds of 1997 does
not deny the independence of local governments budgets
established in the Constitution.
8. Under Article 6 of the Law, the unused appropriations
of 1996 for financing environment protection objects shall be
returned from local governments budgets to the state budget
only to the extent that the factual revenues of 1997 of these
local governments budgets are larger than the revenues
established on approval of deduction rates from local
governments budgets. The regulation establishes the amount of
the appropriations that must be returned. Such establishment of
the size of the unused appropriations which must be returned
does not deny the independence of local governments budgets.
9. The disputed legal regulation established in Article 6
of the Law does not create any new obligations to local
governments, but gives more concrete expression of the legal
regulation established in the 7 December 1995 Law "On the
Republic of Lithuania 1996 State Budget and the Deduction Rates
and Subsidies to Local Governments Budgets", i. e., it points
out the size of sums, as well as concrete finances from which
the said sums must be taken, that must be returned to the state
budget in order to fulfil the obligation established in Article
3 of the said law of 7 December 1995.
Taking into consideration the above-mentioned arguments,
one is to conclude that the provision of Article 6 of Republic
of Lithuania Law on Amendment of the 1997 State Budget and
Local Governments Budgets adopted on 21 October 1997 that
unused appropriations of 1996 to finance environment protection
objects shall be returned from local governments budgets to the
state budget to the extent that the factual revenues of 1997 of
these local governments budgets are larger than the revenues
established on approval of deduction rates to local governments
budgets is in compliance with Paragraph 1 of Article 127 of the
Constitution.
Conforming to Article 102 of the Constitution of the
Republic of Lithuania and Articles 53, 54 and 56 of the
Republic of Lithuania Law on the Constitutional Court, the
Constitutional Court has passed the following
ruling:
To recognise that the provision of Article 6 of the
Republic of Lithuania Law on Amendment of the 1997 State Budget
and Local Governments Budgets that unused appropriations of
1996 to finance environment protection objects shall be
returned from local governments budgets to the state budget to
the extent that the factual revenues of 1997 of these local
governments budgets are larger than the revenues established on
approval of deduction rates to local governments budgets is in
compliance with the Constitution of the Republic of Lithuania.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated on behalf of the Republic of
Lithuania.