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On the indicators of state and municipal budgets

Case No. 25/01

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF THE REPUBLIC OF LITHUANIA’S LAW ON APPROVING THE FINANCIAL INDICATORS OF THE 2001 STATE BUDGET AND MUNICIPAL BUDGETS (WORDING OF 19 DECEMBER 2000), THE REPUBLIC OF LITHUANIA’S LAW ON THE APPROVAL OF THE INDICATORS DETERMINING THE SIZE AND LEVELLING OF REVENUES OF MUNICIPAL BUDGETS FOR 2001, 2002 AND 2003 AND ARTICLE 16 OF THE REPUBLIC OF LITHUANIA’S LAW ON THE STATE REGULATION OF ECONOMIC RELATIONS IN AGRICULTURE WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

14 January 2002
Vilnius

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, and Teodora Staugaitienė

The court reporter—Daiva Pitrėnaitė

Seimas member Vytenis Povilas Andriukaitis, acting as the representative of a group of Seimas members, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 18 December 2001, in its public hearing, considered case No. 25/01 subsequent to the petition of a group of members of the Seimas of the Republic of Lithuania, the petitioner, requesting an investigation into whether the Republic of Lithuania’s Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), the Republic of Lithuania’s Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 in view of their enactment procedure were in compliance with Paragraph 1 of Article 69 of the Constitution of the Republic of Lithuania, while in view of their content—with Paragraph 3 of Article 41, Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 and Paragraph 2 of Article 131 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

On 19 December 2000, the Seimas enacted the Republic of Lithuania’s Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (Official Gazette Valstybės žinios, 2000, No. 111-3567). On 21 December 2000, it enacted the Republic of Lithuania’s Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 (Official Gazette Valstybės žinios, 2001, No. 4-86).

The petitioner—a group of Seimas members—applied to the Constitutional Court requesting an investigation into whether the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 in view of their enactment procedure were in compliance with Paragraph 1 of Article 69 of the Constitution, while in view of their content, with Paragraph 3 of Article 41, Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 and Paragraph 2 of Article 131 of the Constitution.

II

The petition of the petitioner is based upon the following arguments.

1. Paragraph 1 of Article 69 of the Constitution provides that laws shall be enacted in the Seimas in accordance with the procedure established by law. Paragraph 2 of Article 131 of the Constitution stipulates that expenditures established by law may not be reduced as long as said laws are not amended.

The expenditures of the budget are organically interrelated, therefore, in case one did not follow the requirements of the procedure of enactment of the law on approval of the draft budget, this entire law would be in conflict with the Constitution.

1.1. In the opinion of the petitioner, in the course of the enactment of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), one made the following violations of the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended:

1) Article 16 of the Republic of Lithuania’s Law on the State Regulation of Economic Relations in Agriculture provides that not less than 10% of the national budget expenditure as well as foreign targeted loans and other funds shall be generally allocated annually for implementing the national agriculture development programme and the measures of state regulation of relations in agriculture, for forming state food product reserves, and for the purposes of land reclamation and acid soil liming. In the opinion of the petitioner, these requirements of Article 16 of the Law on the State Regulation of Economic Relations in Agriculture were not realised in the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), since it was provided to allocate LTL 618.7 million for the purposes of agriculture, forestry, fishing industry and veterinary medicine in 2001, i.e. 6.3 percent of the national budget expenditures. The petitioner maintains that thereby the requirement set in Paragraph 2 of Article 131 of the Constitution for the procedure of enactment of the law approving the state draft budget, stipulating that expenditures established by law may not be reduced as long as said laws are not amended was violated;

2) Paragraph 5 of Article 7 of the Republic of Lithuania’s Law on Land Reclamation provides that the Seimas shall approve budgetary allocations according to the targeted purpose for the work to be performed in the sphere of land reclamation, and that the budgetary allocations for the work to be performed in the sphere of land reclamation must guarantee a normal functioning of state-owned land reclamation facilities. The petitioner points out that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) approved such a state budget which separately provided only LTL 40 million for financing land reclamation. The said amount was not sufficient to guarantee a normal functioning of state-owned land reclamation facilities. Thus, the requirement established in Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended was violated;

3) Article 39 of the Republic of Lithuania’s Law on Special Education provides that special education shall be financed from the state and municipal budgets in accordance with the procedure established by law. The petitioner points out that in order to attain the objectives sought by the law on special education, for this purpose one must allocate funds from the national budget. The petitioner maintains that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not provide for funds for the implementation of the Law on Special Education. Thus, the requirement established in Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended was violated.

1.2. According to the petitioner, under Paragraph 2 of Article 6 and Paragraph 5 of Article 11 of the Republic of Lithuania’s Law on the Methodology of the Determination of Municipal Budgetary Revenues, municipalities may be given a general subsidy for administration of the national service, however, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) gave a special targeted subsidy of LTL 2.714 million for administration of the national service.

2. Article 41 of the Constitution provides that everyone shall have an equal opportunity to attain higher education according to their individual abilities and that citizens who demonstrate suitable academic progress shall be guaranteed education at state establishments of higher education free of charge. The petitioner maintains that the state, while declaring these rights, assumes, alongside, an obligation to create opportunities to implement them. The petitioner is of the opinion that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not allocate sufficient funds to ensure the rights of individuals enshrined in Paragraph 3 of Article 41 of the Constitution. Thus, the said provisions of the Constitution were violated.

3. Article 127 of the Constitution provides that the budgetary system of the Republic of Lithuania shall consist of the independent state budget of the Republic of Lithuania and the independent municipal budgets, Paragraph 1 of Article 121 thereof provides that municipalities shall draft and approve their own budget, while Article 120 thereof provides that municipalities shall act freely and independently within the limits of their competence which shall be established by the Constitution and laws. The Republic of Lithuania’s Law on Local Self-Government regulates autonomous and delegated competence of municipalities. Under Paragraph 8 of Article 23 of the said law, funds for implementation of the functions of municipalities delegated by the state shall be allotted from the Lithuanian State Budget. In the opinion of the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not provide for sufficient funds for the implementation of the municipal functions delegated by the state, i.e. civil registry, civil defence and fire-prevention, health activities etc. Thus, according to the petitioner, the aforementioned requirements of the Constitution were also violated.

4. Under Article 10 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, the Government, having considered together with the Association of Municipalities of Lithuania the indicators determining the size and levelling of revenues of municipalities, shall submit them to the Seimas for their approval. Such indicators were approved by the Republic of Lithuania’s Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002, and, according to Articles 10 and 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, the indicators ought to have been valid until 2002, however, before this time period had elapsed, different indicators were approved for the next three-year period by the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003. In the opinion of the petitioner, this conflicts with Articles 10 and 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues and with the Constitution.

III

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from the representative of the party concerned—the Seimas—A. Brazdilienė, concerning the arguments of the petitioner.

1. In the opinion of the representative of the party concerned, the provision of Article 16 of the Law on the State Regulation of Economic Relations in Agriculture that not less than 10% of the national budget expenditure as well as foreign targeted loans and other funds shall be generally allocated annually for implementing the national agriculture development programme and the measures of state regulation of relations in agriculture, for forming state food product reserves, and for the purposes of land reclamation and acid soil liming is not an imperative one. It leaves an opportunity for the Seimas, before it adopts the law on the approval of the financial indicators of the state budget and municipal budgets for a particular year, to assess the financial resources and undertaken obligations of the state and the concluded agreements with international financial institutions and to establish the subsidies for the performance of state functions.

1.1. The Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) provided for LTL 618,736 thousand of subsidies from the state budget for the state function “Agriculture, forestry and veterinary medicine” (according to the classification of the revenues and expenditures of the Republic of Lithuania State Budget and municipal budgets approved by the Order (No. 352) “On the Approval of the Classification of the Revenues and Expenditures of the Republic of Lithuania State Budget and Municipal Budgets” of 29 December 2000, issued by the Minister of Finance). Along with these subsidies, the following was allocated from the state budget: LTL 91,383 thousand for maintenance of agricultural schools, LTL 38,482 thousand for various scientific institutions and educational establishments carrying out programmes related to agriculture. Thus, on the whole LTL 748,601 thousand were allocated for agriculture from the 2001 state budget, which is 7.8 percent of the national budget expenditures.

1.2. Besides, according to the representative of the party concerned, the funds allocated for agriculture from the funds disposed of by the state must also be recognised as funds allocated from the state budget. In 2001, it was provided to allocate LTL 1,399 thousand for agricultural investment projects from the Privatisation Fund.

1.3. The representative of the party concerned notes that Article 6 of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) provided for a limit of the liabilities undertaken by institutions and insurance enterprises, which are guaranteed by the state. On 7 February 2001, following Paragraph 2 of Article 8 of the Law on the National Debt and Article 6 of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), by means of its Resolution (No. 140) “On the Limits of State Guarantees Provided for the Obligations Undertaken by the Closed-Type Joint-Stock Enterprise ‘The Guarantee Fund of Agricultural Loans’ and the Closed-Type Joint-Stock Insurance Enterprise Lietuvos eksporto ir importo draudimas”, the Government approved the limit of state guarantees within LTL 230,000 thousand for the obligations undertaken by the Guarantee Fund of Agricultural Loans for the banks which gave loans to farmers, farmers’ cooperative partnerships and farmers’ associations, and within LTL 30,000 thousand from the above amount for the obligations under the Special Accession Programme for Agriculture and Rural Development (SAPARD).

The representative of the party concerned also points out that the Council of the European Union approved Regulation No. 1268/1999 of 21 June 1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the pre-accession period. Financial support is provided for the years 2000–2006 for candidate states within the framework of SAPARD if the projects are jointly financed also from the national funds of a respective country. In the course of financing investment projects, the beneficiary must himself finance not less than 50 percent of the total investment value of the project, while the SAPARD and the Government jointly contribute to no more than 50 percent of the total investment value of the project (European Union through the SAPARD 75 percent while the Government—25 percent of the financial support respectively). Lithuania is eligible to LTL 110,181 thousand annually from the European Structural Funds within the framework of the SAPARD.

1.4. According to A. Brazdilienė, in 2001, LTL 1,090,800 thousand were allocated to agriculture from the state budget, from funds disposed of by the state and other sources (state guarantees, SAPARD funds), i.e. 11.31 percent of the national budget expenditures. Thus, the provision of Article 16 of the Law on the State Regulation of Economic Relations in Agriculture was implemented in the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000). Alongside, the conclusion may be drawn that Paragraph 2 of Article 131 of the Constitution was not violated.

2. The representative of the party concerned points out that the Law on Land Reclamation does not provide for indicators of financing which might be objectively assessed. The size of allocations is linked with neither the size of the national budget expenditures nor relative indicators of the gross domestic product. Therefore, the argument of the petitioners that in the state budget approved by the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) there are not sufficient funds for financing state-owned land reclamation facilities to guarantee their normal functioning is a subjective one.

A. Brazdilienė notes that under the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) LTL 40 million were allocated for land reclamation and soil liming, i.e. the same amount as in the year 2000. In 2001 all the debts for the work performed in 2000 were cleared, thus, the 2001 allocations permit the chiefs of counties, who perform the functions of the owner of state-owned land reclamation facilities, to finance the repair and reconstruction of the land reclamation facilities. In the opinion of A. Brazdilienė, since the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) provided for funds for the work to be performed in the sphere of land reclamation, the provision of Paragraph 5 of Article 7 of the Law on Land Reclamation was not violated. Alongside, Paragraph 2 of Article 131 of the Constitution was not violated.

3. The representative of the party concerned maintains that the state pays much attention to special education. The Ministry of Education and Science, implementing the programme of the second stage of the Education Reform, maintains 9 boarding-schools and establishments of child care, in which children of special needs are educated. These establishments were allocated LTL 17,493 thousand in 2001. The Educational Psychological Centre which renders psychological help for establishments of education and care was allocated LTL 1,680 thousand in 2001. From the funds provided for in the state budget designated for the Specialists Training Programme, the Ministry of Education and Science maintains two establishments of vocational training for pupils of special needs: the said establishments were allocated LTL 4,297 thousand in 2001. From the funds of the said programme two more vocational schools are maintained, in which half of the pupils are of special needs; the said schools were allocated LTL 4,353 thousand in 2001. Besides, the counties in their turn allocate LTL 19,700 thousand for implementation of the Law on Special Education. By these funds special establishments of education and rehabilitation are maintained. The Council for the Affairs of the Handicapped, enforcing the Law on Special Education and other laws, implements the Programme for the Education of the Handicapped, for the purposes of which LTL 2,717 thousand were allocated in 2001.

The representative of the party concerned does not agree with the statement of the petitioner that that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not provide funds for the implementation of the Law on Special Education. In the opinion of the representative of the party concerned, while allocating funds for special education in the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), Paragraph 2 of Article 131 of the Constitution was not violated.

4. The representative of the party concerned points out that on 17 July 2000, the Seimas enacted the Republic of Lithuania’s Law on Amending Articles 8, 11, 13, 14, 17, 20, 29, 30, 31, 32, 33, 35 of and Supplementing Chapter II1 to the Law on the National Service. This law reorganised administration of the national service and institutions of local self-government were commissioned to directly administer the national service. Under Paragraph 2 of Article 154 of the Republic of Lithuania’s Law on the National Service, the administering functions of the national service to organise call-up shall be performed by the servant appointed by the municipality, who will be invested with appropriate powers.

The representative of the party concerned also points out that under Paragraph 1 of Article 6 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues a state budget general subsidy is allocated to level the differences within the municipal revenue and expenditure structures, which are determined by objective factors independent of municipal activities, while under Item 3 of Paragraph 2 thereof, special targeted subsidies may be granted to municipal budgets for implementation of programmes approved by either the Seimas of the Government. Paragraph 5 of Article 11 of the said law provides that if the Seimas or the Government adopts decisions in the course of the budget year or intends to adopt such decisions for the next budget year due to which municipal expenditures are changed, a state budget general subsidy compensation of relevant size must be allocated to compensate the changes in the expenditures for the relevant or subsequent year, which is related either to the change in municipal expenditures or a corresponding amount taken from the municipal budgets. The amounts of state budget general subsidy compensations, as well as corresponding amounts taken from the municipal budgets, related to the change in municipal expenditures, are computed for the municipalities under the formula presented in Article 9 of the said law. Under this formula, the size of the funds for levelling the differences in the structure of municipalities expenditures allocated to municipalities is computed, with consideration of the share of every municipality in the demographic, social and other indicators affecting the differences in the structure of municipalities expenditures.

5. In the opinion of A. Brazdilienė, the statement of the petitioner that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not allocate sufficient funds to ensure the rights of individuals enshrined in Article 41 of the Constitution is also unreasonable. The content of such a statement is not clear.

5.1. The Republic of Lithuania’s Law on the Long-term Financing of Science and Education, wherein relative indicators of financing science and education are established, contains a provision that not less than 1.35 percent from the gross domestic product must be allocated to finance science and studies, while 6.5 percent from the gross domestic product must be allocated to education in 2001.

5.2. According to the representative of the party concerned, LTL 608,533 thousand were allocated to science and studies (i.e. establishments of higher education and state institutes of science), LTL 7,452 thousand were allocated to the Department of Science and Studies which takes part in determining and implementing the Government policy in the area of science and studies, LTL 20,668 thousand were allocated for other scientific research from the state budget in 2001. LTL 20,000 thousand are provided for the allocation from the loans received in the name of the state for various investment projects of establishments of higher education and establishments of science. Thus, from all sources LTL 656,653 thousand were allocated for financing science and studies in 2001, which comprises 1.39 percent of the gross domestic product.

5.3. The representative of the party concerned points out that under Article 2 of the Republic of Lithuania’s Law on Education, the educational system of Lithuania shall comprise pre-school education, general education of children and young people, vocational and further education, higher education, and education of the adults. Therefore, in the course of establishment of the sizes of allocations designated for education, the allocations from the state budget for establishments of higher education are included. LTL 407,903 thousand were allocated for establishments of higher education in 2001.

5.4. In addition, under Article 10 of the Law on Education, state educational establishments may be founded by the Ministry of Education and science, other ministries and chiefs of counties, and these educational establishments are financed with funds from the state budget. Municipal councils may found municipal educational establishments providing with primary, basic and secondary education, as well as establishments of pre-school, additional and adult informal education. These establishments are financed from the funds of municipal budgets. A. Brazdilienė maintains that LTL 677,841 thousand were allocated to educational establishments (schools of general education, boarding-schools, schools of additional education, vocational schools, schools of further education, as well as for the purpose of raising one’s qualification) from the state budget, LTL 28,113 thousand are provided to be allocated from the Privatisation Fund and LTL 100,850 thousand are provided to be allocated from loans received in the name of the state and with the state guarantee for investment projects of educational establishments. LTL 1,849 thousand are provided to be allocated for education from the municipal budgets.

5.5. According to the calculations of the representative of the party concerned, from all sources LTL 3,064,382 thousand were allocated for financing education in 2001, i.e. 6.5 percent of the gross domestic product. She maintains that sufficient funds were allocated for education, science and studies from the state budget, funds disposed of by the state and other sources (Privatisation Fund, loans in the name of the state and with the state guarantee) as well as municipal budgets in 2001. The provisions of the Law on the Long-term Financing of Science and Education have been implemented. In the course of the enactment of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) Article 41 of the Constitution was not violated.

6. The representative of the party concerned notes that the Law on Amending the Law on Local Self-Government, whereby the Law on Local Self-Government was set forth in a new wording, went into effect on 27 October 2000. Under Paragraph 1 of Article 18 of the Law on Budgeting, the Government shall submit the draft law on approving the financial indicators of the state budget and municipal budgets for a particular year to the Seimas not later than 75 days before the end of the budget year, i.e. not later than until October 17. The Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) was drafted on the basis of the previous wording of the Law on Local Self-Government.

Article 16 of the Law on Local Self-Government of the previous wording defined the competence of municipalities delegated by the state: self-government institutions were to perform the functions of civil registration, keep the register of municipalities, state and private enterprises, as well as of public organisations, to perform secondary healthcare supervision, they were also permitted to administer state parks (national and regional), organise the municipal police, civil security and fire prevention system, and implement other functions delegated by law. Paragraph 8 of Article 23 of the said law provided that funds to finance the functions delegated by the state shall be allocated from the Budget of the State of Lithuania, however, it was not provided under what procedure the said funds must be allocated.

Article 23 of the Law on Budgeting provides that subsidies of municipal budgets are used for the implementation of the Law on Local Self-Government and other laws, i.e. to perform the state delegated functions to municipalities by law and carry out the programmes approved by municipal councils. The Law on the Methodology of the Determination of Municipal Budgetary Revenues establishes the sources of municipal budgets revenues and the procedure for calculation, approval and transfer of subsidies and finances allocated to municipal budgets from the state budget. Item 10 of Article 10 of this law provides that the Seimas shall approve the planned budgetary expenditures of all municipalities as part of the common state and municipal budgetary expenditures in percentages. Article 6 of this law provides how the size of general subsidy from the state budget is calculated. If the planned tax and non-tax-derived revenues of municipal budgets are not sufficient to cover the expenditures of municipal budgets, a general subsidy is allocated from the state budget.

A. Brazdilienė maintains that the general subsidy of LTL 89,426 thousand was allocated from the state budget to municipal budgets.

The representative of the party concerned does not agree with the statement of the petitioners that, allegedly, sufficient funds for the implementation of the municipal functions delegated by the state as pointed out by the petitioner were not allocated in 2001. In the course of the approval of the financial indicators of municipal budgets and the size of their expenditures, one also assesses the need for funds for performing the functions delegated by the state. In the opinion of the representative of the party concerned, such a procedure of determination of municipal budgets expenditures and allocation of finances for the performance of state delegated functions to the municipalities is in conformity with Article 16 and Paragraph 8 of Article 23 of the Law on Local Self-Government. A. Brazdilienė is of the opinion that in the course of the enactment of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) Paragraph 2 of Article 120, Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution were not violated, either.

A. Brazdilienė points out that, in 2001, a special subsidy was allocated to municipalities from the state budget (LTL 46 thousand for each municipality) to create a job of the servant of a municipality performing the functions of administering the national service, i.e. for particular expenditures whose size is not determined by social, demographic and other indicators of municipalities. In her opinion, this is in compliance with Paragraph 5 of Article 11 and Item 3 of Paragraph 2 of Article 6 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues and with the Constitution.

7. The representative of the party concerned points out that Paragraph 2 of Article 17 of the Law on Budgeting provides that a draft state budget shall be prepared for three budget years on the basis of strategic planning principles, this law, other laws and legal acts, macroeconomic forecasts of economic development of this country, the Programme of the Government, the Long-term Plan of the Government Activities, plans of strategic activities of ministries and Government establishments and on the approved preliminary basic indicators of the national budget, as well as on the programmes and draft expenditure estimates presented by the possessors of state budget subsidies.

The representative of the party concerned also points out that under Article 10 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, the Government, after consideration with the Association of Municipalities of Lithuania, shall submit to the Seimas for approval for a three-year period the expected expenditures of the budgets of all municipalities as a portion of common expenditures of the state and municipal budgets in percentages, the expected size of tax-derived revenues of all municipal budgets, the expected size of non-tax-derived revenues of all municipal budgets as a fixed portion of tax-derived revenues in percentages, the expected amounts of special targeted subsidies from the state budget, the expected size of the general subsidy to municipalities from the state budget and other indicators of municipalities.

A. Brazdilienė maintains that the Seimas, while taking account of these provisions, together with the law on approving the financial indicators of the state budget and municipal budgets for a particular year adopts a resolution wherein the main three-year national budget indicators are presented: the expected national budget revenues, expected expenditures of the state budget and the municipal budgets, and adopts a law on the approval of indicators determining the size and levelling of revenues of municipal budgets for a three-year period. In the course of the drafting and drawing up the law on approving the financial indicators of the state budget and the municipal budgets for a particular year, one assesses the macroeconomic indicators, their match with the expectation, one takes account of the reforms intended to be carried out, tendencies in the fiscal policy, and one respectively corrects the financial indicators of the state budget and those of municipal budgets.

In the opinion of the representative of the party concerned, if one agreed with the consideration of the petitioners that the indicators determining the size and levelling of revenues approved in 1999 ought to be valid till 2002, there would be a legal collision, since the law on approving the financial indicators of the state budget and the municipal budgets for a particular year, while taking account of the corrected indicators, would approve tax-derived revenues of municipal budgets, the general and special targeted subsidy of the state budget (Article 11 of Law on the Methodology of the Determination of Municipal Budgetary Revenues), i.e. the same indicators as in the law on the approval of indicators determining the size and levelling of revenues of municipalities for a three-year period, however, their size would be different.

The representative of the party concerned also points out that Article 1 of the Republic of Lithuania’s Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 1998 and 1999 contained the provision that the indicators approved the previous year shall not be amended. The Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 does not contain such a provision.

Therefore, according to A. Brazdilienė, the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 was adopted without violating Article 10 and Paragraph 6 of Article 11 of the of Law on the Methodology of the Determination of Municipal Budgetary Revenues. A. Brazdilienė maintains that the impugned Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with the Constitution.

8. On the grounds of the arguments set forth, the representative of the party concerned maintains that the impugned Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), and the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 both in view of their enactment procedure and in view of their content are in compliance with the articles (parts thereof) of the Constitution which have been pointed out by the petitioner.

IV

In the course of the preparation of the case for the judicial consideration, additional explanations were received from the representatives of the petitioner P. Papovas and J. Sabatauskas, both are members of the Seimas, concerning the arguments of the petitioner, as well as the explanations concerning the counter-arguments of the representative of the party concerned.

V

In the course of the preparation of the case for the judicial consideration, explanations were received from G. Kniukšta, Chairman of the Seimas Committee on Rural Affairs, R. Pavilionis, Chairman of the Seimas Committee on Education, Science and Culture, K. Rimšelis, Deputy Chairman of the Seimas Committee on State Administration and Local Authorities, D. Grybauskaitė, Minister of Finance of the Republic of Lithuania, A. Monkevičius, Minister of Education and Science of the Republic of Lithuania, J. Kraujelis, Minister of Agriculture of the Republic of Lithuania, A. Astrauskas, Vice-minister of the Interior, Dr. M. Starkevičiūtė, a teacher of the International Business School, Vilnius University, Assoc. Prof. Dr. I. Čepienė, Head of the Department of Finance and Credit of the Faculty of Economics, Vilnius University, Assoc. Prof. Dr. A. Misiūnas who works at the Department of System Analysis of Economy of the Faculty of Economics, Vilnius University, Prof. Habil. Dr. A. Kusta, Rector of the Lithuanian University of Agriculture, Assoc. Prof. Dr. L. Katkevičius, Head of the Water Management Department of the Faculty of Water and Land Management, the Lithuanian University of Agriculture, D. Stanikūnas, Director of the Lithuanian Institute of Agrarian Economics, Dr. A. S. Šileika, Director of the Water Management Institute, Dr. V. Morkūnas, Deputy Director of the same institute, Dr. V. Šaulys, Head of the Exploitation Laboratory of the same institute, G. Steponavičienė, Vice President of the Lithuanian Free Market Institute, R. Šimašius and Dr. R. Vilpišauskas, senior experts of the same institute, Dr. G. Nausėda, advisor to the President of the joint-stock company Vilniaus bankas, J. Saladžius, Head of Vilnius Lawyers Office VII associated with the PriceWaterhouse Coopers, J. Kabašinskas, Director General of Deloitte & Touche, S. Šiupšinskas, Director of the Association of Municipalities of Lithuania, Prof. Dr. J. Antanavičius, President of the Conference of Rectors of Lithuanian Universities, Dr. K. Sivickas, Chairman of the Association of Lithuanian Enterprises of Land Reclamation, J. Petraškienė, Chairwoman of the Lithuanian Union of Land Planning and Hydrotechnology Engineers.

VI

1. At the court hearing the representative of the petitioner V. P. Andriukaitis, a Seimas member, virtually reiterated the arguments set forth in the petition.

2. V. P. Andriukaitis additionally noted that special procedures and time limits are provided in the Constitution for enactment of the law on the state budget. Drafting the state budget is a right of the Government. The Seimas does not enjoy such a right.

According to the representative of the party concerned, the Seimas may establish by individual laws that certain portions from the state budget or gross domestic product (expressed in percentages) must be allocated for financing certain sectors. Such laws are enacted not under the said special procedure established in the Constitution for the enactment of the law on the state budget. By such laws the right of the Government to independently draft the state budget might be restricted.

Alongside, the representative of the petitioner noted that there is no unanimous opinion as to the interpretation of the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended, particularly, whether this provision refers to the state budget law, or laws establishing that for the purpose of financing certain sectors certain portions from the state budget or the gross domestic product must be allotted.

The Constitutional Court

holds that:

I

1. On 19 December 2000, the Seimas passed the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets, and on 21 December 2000 it passed the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003.

On 12 July 2001, the Seimas passed the Republic of Lithuania’s Law on Amending the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (Official Gazette Valstybės žinios, 2000, No. 111-3567), which amended Article 1, Paragraph 5 of Article 2, Article 4, Article 5, Paragraph 2 of Article 7, Paragraph 1 of Article 8, Article 9 of the impugned Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) as well as its Annexes 1, 2, 3, 4, 5, 8, 9, 10, and supplemented its Article 8 with Paragraph 3, and Article 9 with Items 7, 8 and 9.

On 11 December 2001, the Seimas passed the Republic of Lithuania’s Law on Amending and Supplementing the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (Official Gazette Valstybės žinios, 2001, No. 105-3739), which amended Paragraph 5 of Article 2, Item 8 of Article 9 of the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets as well as the part titled Allocations of Annex 1, Annexes 2, 8, 10, and supplemented it with Articles 14 and 15.

2. The petitioner requests an investigation into whether the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) and the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 are in compliance with Paragraph 1 of Article 69 in view of their enactment procedure, while in terms of its content, with Paragraph 3 of Article 41, Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127, and Paragraph 2 of Article 131 of the Constitution.

3. According to the arguments stated in the petition, the petitioner has doubts whether:

1) the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 3 of Article 41, Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 of the Constitution as well as the provision contained in Paragraph 2 of Article 131 thereof that expenditures established by law may not be reduced as long as these laws are not amended;

2) the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 of the Constitution as well as the provision contained in Paragraph 2 of Article 131 thereof that expenditures established by law may not be reduced as long as these laws are not amended.

4. Following the petitioner’s petition, the Constitutional Court will determine whether the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 3 of Article 41, Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 of the Constitution as well as the provision contained in Paragraph 2 of Article 131 thereof that expenditures established by law may not be reduced as long as these laws are not amended, and whether the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 of the Constitution as well as the provision contained in Paragraph 2 of Article 131 thereof that expenditures established by law may not be reduced as long as these laws are not amended.

II

1. Paragraph 1 of Article 127 of the Constitution prescribes: “The budgetary system of the Republic of Lithuania shall consist of the independent State Budget of the Republic of Lithuania and the independent municipal budgets.”

Paragraph 1 of Article 121 of the Constitution prescribes: “Municipalities shall draft and approve their own budget.”

Paragraph 1 of Article 131 of the Constitution prescribes: “The draft budget of the State shall be considered by the Seimas, and shall be approved by law by the beginning of the new budget year.”

Thus, according to the Constitution, the state budget and municipal budgets are independent. Together they form Lithuania’s budgetary system.

2. It is generally recognised that the state budget is a plan of revenues and expenditures over a certain period of time, i.e. a state’s financial plan for the purpose of redistributing public funds. Similarly, the municipal budgets are municipal plans of revenues and expenditures over a certain period of time. Under Article 129 of the Constitution, this period is the budget year lasting from January 1 till December 31. Legally, the state budget is a law that approves the state budget, i.e. plan of revenues and expenditures, for the budget year.

According to the constitutional concept of the state budget, the state revenues and expenditures planned for the budget year have to be provided for in the state budget approved by law.

3. Paragraph 2 of Article 127 of the Constitution prescribes that the state budget revenues shall be accrued from taxes, compulsory payments, dues, receipts from state property, and other income, while Paragraph 3 thereof prescribes that taxes, other budgetary payments and dues shall be established by means of laws of the Republic of Lithuania.

4. Pursuant to Item 4 of Article 94 of the Constitution, the Government shall draft the state budget and submit it to the Seimas. Article 130 of the Constitution provides that the Government shall draft the state budget and submit it to the Seimas not later than 75 days before the end of the budget year, and Item 14 of Article 67 of the Constitution prescribes that the Seimas shall approve the state budget, and Paragraph 1 of Article 131 thereof establishes that the draft state budget shall be considered by the Seimas and shall be approved by law by the beginning of the new budget year.

Paragraph 2 of Article 131 of the Constitution prescribes that, upon considering the draft budget, the Seimas may only increase expenditures upon specifying financial sources for said expenditures. Expenditures established by law may not be reduced as long as said laws are not amended.

Paragraph 2 of Article 132 of the Constitution provides that during the budget year the Seimas may change the budget. It shall be changed according to the same procedure by which it was drafted, adopted and approved. As necessary, the Seimas may approve an additional budget.

5. The constitutional concept of the state budget implies a presumption that the drafting (forming) of the state budget, its consideration in the Seimas and its approval by law, as well as its implementation, are separate steps of the budgetary process.

6. While drafting (forming) the state budget as well as while considering and approving it, the powers of the Seimas as a legislative body and the powers of the Government as an executive body are separated; the constitutional principle of the separation of powers has to be ensured in this area.

6.1. The Constitutional Court has held a number of times that the constitutional principle of the separation of powers means that the legislative, the executive and the judicial branches of power have to be separated, they have to be sufficiently independent, although there has to be a balance between them, and that each state institution has its purpose-consistent competence. This also means that the specific content of the competence of an institution depends on the place of that state institution in the overall system of branches of powers as well as its relation to the other branches of power, on the place of the institution among the other institutions and the inter-relation between its powers and the powers of the other institutions; and since the Constitution directly establishes the powers of each particular institution, one institution cannot take over the functions of another, it cannot transfer or waive them, and these powers cannot be changed or limited by law. The Seimas does not have the right to commission the Government or any other institution to implement the constitutional competence of the Seimas.

6.2. Under the Constitution, only the Government has the right and duty to draft (form) the state budget. Once the Government has drafted the state budget, it submits it to the Seimas for approval following the terms provided for in the Constitution. By the Constitution, during the budget year the budget may be changed also only upon the proposal of the Government. An additional budget is approved by law upon the proposal of the Government as well. The drafting (forming) of the state budget and its submission to the Seimas belong to the sphere of the Government’s decision-making in regard to state administration as prescribed by the Constitution. Therefore, the draft state budget is submitted to the Seimas upon the resolution of the Government.

The Government not only exercises institutional right, but also has a constitutional duty to provide for specific revenue sources in the draft state budget, indicate their sizes as well as specific sizes intended for financing the needs of the state and the society.

While submitting the draft budget to the Seimas, the Government must substantiate the revenues and allocations indicated therein with the evaluation of the needs and possibilities of the state and the society. This information has to be public. The draft state budget prepared by the Government has to provide for funds necessary for the implementation of laws.

6.3. Only the Seimas has the prerogative to consider the draft state budget submitted by the Government and approve it by law. According to the Constitution, the adoption of the law on the state budget constitutes a final step in the formation of the budget.

Upon considering the draft budget, the Seimas may only increase expenditures upon specifying financial sources for said expenditures (Paragraph 2 of Article 131 of the Constitution). If the State Budget is not approved by the prescribed date, monthly budget expenditures at the beginning of the budget year may not exceed one-twelfth of the State Budget expenditures of the previous budget year (Paragraph 1 of Article 132 of the Constitution).

6.4. According to the Constitution, the budget year coincides with a calendar year. The Seimas must approve the state budget for the budget year, and not for some other period of time. Each budget year the Seimas must form the state budget for the following budget year taking into consideration the existing social and economic situation, the needs and possibilities of the society and the state, the available or potential financial resources and the liabilities of the state, as well as a number of other important factors. While passing the law on the state budget, the Seimas must pay attention to the striving for a just and harmonious society enshrined in the Constitution.

6.5. Upon the statutory approval of the state budget, the Seimas approves the revenues and allocations of the state budget, based on the evaluation of the needs and possibilities of the society and the state. The constitutional concept of the budgetary process implies a presumption that all the income sources of the state budget, planned revenues and expenditures out of the state budget, the size of these funds, and entities to whom allocations from the state budget are given must be specified in the law on the state budget.

Establishing entities eligible to the allocations from the state budget falls solely within the competence of the Seimas. The Seimas may not waive or transfer it to another institution, and the latter cannot take it over. Otherwise the competence of the Seimas to form the state budget would be denied, this competence would become shared with the executive, which would deny the constitutional principle of the separation of powers. Acts issued by the executive bodies can only deal with the execution of the state budget and they cannot compete with the law on the state budget or change it.

6.6. Once approved by the Seimas, the state budget becomes a law. Pursuant to Item 4 of Article 94 of the Constitution, the Government shall execute the state budget. The provision of Item 4 of Article 94 of the Constitution that the Government shall execute the state budget means that the Government has a duty to ensure that the budget receives the specified revenues and that these funds are transferred to the entities specified in the law on the state budget. The Constitutional Court has previously held that under the Constitution, the Government has to implement the approved state budget according to its purpose and to the extent prescribed by the budget law, and that it does not have the right to change the sizes of the allocations or their possessors established in the budget law (the Constitutional Court’s ruling of 3 June 1999).

7. Paragraph 2 of Article 131 of the Constitution provides, inter alia, that expenditures established by law may not be reduced as long as these laws are not amended.

7.1. While interpreting the provision of Paragraph 2 of Article 131 of the Constitution, it should be noted that if certain laws provide for certain expenditures, then the Government has to follow these laws in the preparation of the draft state budget and implement them. According to the Constitution, the Government has a duty to submit to the Seimas such a draft state budget which would be consistent with the statutory provisions pertaining to public expenditures.

7.2. The Constitutional Court has previously held that in the preparation and adoption of legal acts, public institutions must adhere to the principle of the rule of law enshrined in the Constitution, and that the provision contained in Paragraph 2 of Article 5 of the Constitution that the scope of powers shall be defined by the Constitution means that the Seimas, as the legislator of laws and other legal acts, is independent inasmuch as its powers are not limited by the Constitution (the Constitutional Court’s ruling of 12 July 2001).

Under the Constitution, the Seimas is bound by the laws that it itself passed. Thus, if certain laws provide for certain expenditures, the Seimas must follow them during the deliberation and approval process of the state budget. Pursuant to Paragraph 2 of Article 131 of the Constitution, during the approval process of the state budget, expenditures established by law may not be reduced as long as these laws are not amended.

7.3. It follows from the constitutional concept of the state budget, namely from the provision contained in Article 129 of the Constitution prescribing that the budget year starts on January 1 and ends on December 31, that laws providing for certain expenditures cannot establish such legal regulation which would deny the Government’s constitutional right and duty to form the state budget for the budget year and the Seimas’ constitutional right and duty to approve the state budget for the budget year. Such laws cannot change the law on the state budget. The provision of Paragraph 2 of Article 131 of the Constitution, prescribing that expenditures established by law may not be reduced as long as these laws are not amended, cannot be interpreted as allowing providing for such funding of certain needs that is not included in the law on the state budget of a respective year.

It is worth noting that the laws specified in Paragraph 2 of Article 131 of the Constitution that provide for certain expenditures are not laws that would substitute for or change the law on the state budget. These are laws enabling to ensure the succession of the relations of the state budget each budget year as well as the financial continuity when the persistent pursuit of certain public objectives (special, long-term, strategic) requires more funds than it is possible to allot in one budget year.

Thus, the laws specified in Paragraph 2 of Article 131 of the Constitution that provide for certain expenditures are an exception rather than a rule. It should be stressed that such laws can only provide for expenditures necessary in order to achieve a defined, generally important goal over a certain period of time established by law, provided these needs cannot be satisfied in one budget year. Such laws may not provide for funds necessary for the execution of routine functions of the state, for funds necessary to finance every-day needs of the society. Otherwise the constitutional concept of the state budget would be distorted: the constitutional institute of the budget year would lose its purpose, the constitutional right and duty of the Government to prepare the draft state budget and the constitutional right and duty of the Seimas to approve it for the budget year, taking into consideration the existing social and economic situation, the needs and possibilities of the society and the state, the available or potential financial resources and the liabilities of the state, as well as a number of other important factors, would be denied. This would also result in preconditions for violating the constitutional imperative of social justice and social harmony.

III

On the compliance of the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) with Paragraph 3 of Article 40 and Paragraph 3 of Article 41 of the Constitution as well as the constitutional principle of the separation of powers.

1. In the opinion of the petitioner, the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not provide for sufficient funds necessary to ensure the human rights enshrined in Article 41 of the Constitution, which violates the provisions of Paragraph 3 of Article 41 thereof prescribing that everyone shall have equal opportunities to attain higher education according to their individual abilities, and that citizens who demonstrate suitable academic progress shall be guaranteed education at State establishments of higher education free of charge.

2. Paragraph 3 of Article 41 of the Constitution provides: “Everyone shall have an equal opportunity to attain higher education according to their individual abilities. Citizens who demonstrate suitable academic progress shall be guaranteed education at establishments of State higher education free of charge.”

3. The Constitution is an integral act (Paragraph 1 of Article 6 of the Constitution). The construction of certain provisions of the Constitution cannot deny its other provisions. The content of the provisions contained in Paragraph 3 of Article 41 of the Constitution that have been specified by the petitioner should be construed in a systematic way, in the context of the entire constitutional regulation.

4. Under the Constitution, everyone has the right to higher education accessible according to his abilities. In state higher schools, citizens who demonstrate good academic results have the right to get education free of charge. The human right to seek higher education is an important condition for the implementation of one’s different rights and legitimate interests. The constitutional human right to seek higher education presumes the state’s duty to ensure preconditions necessary in order to implement this right.

5. Paragraph 3 of Article 41 of the Constitution should be construed in the context of the striving for an open, just, harmonious civil society and state under the rule of law as well as public solidarity. The availability of higher education to everyone according to their individual abilities and guarantee of education free of charge in the state establishments of higher education to citizens who demonstrate good academic results are both aimed at ensuring the common interest of these persons, the society and the state, which is a need for specialists with higher education in different areas.

6. According to Paragraph 3 of Article 41 of the Constitution, every person has the right to higher education according to their individual abilities.

6.1. Paragraph 3 of Article 41 of the Constitution refers to state higher schools. Pursuant to Paragraph 2 of Article 40 thereof, non-governmental teaching and educational institutions may be established according to the procedure prescribed by law. These provisions presume that not only state but also non-state higher schools may function in Lithuania. State higher schools have to be allotted state funds that have to be provided for in the state budget.

The constitutional provision that higher education is available to everyone according to his abilities means that both state and non-state higher schools established according to the procedure prescribed by law, the entire system of higher education establishments, have to be accessible to every person. This provision also means that those who seek higher education cannot be subjected to requirements that are based on criteria other than their abilities. The said provision is closely related to the principle of equality of individuals enshrined in Article 29 of the Constitution, to the provision contained in Paragraph 2 thereof that a person may not have his rights restricted in any way, or be granted any privileges, on the basis of his or her sex, race, nationality, language, origin, social status, religion, convictions, or opinions.

It should be noted that state institutions have the duty not only not to impose any requirements inconsistent with the constitutional principle of equality of persons on those who seek higher education, but also to ensure that higher schools do not impose such requirements themselves. The law must provide for such legal regulation that would ensure everyone an opportunity to seek higher education according to their individual abilities.

6.2. There has to be a balance between the legitimate interests of a person and the needs of both the society and the state. The financial possibilities of the state (including the possibilities of funding higher education) are not and cannot be unlimited. The constitutional provisions that higher education shall be available to everyone according to their individual abilities cannot be interpreted as imposing a duty on the state to ensure the funding of any higher education for anyone capable of seeking it without proper consideration of the needs and possibilities of the society and the state. The constitutional provisions that higher education shall be available to everyone according to their individual abilities cannot be interpreted in a way that would deny an individual’s constitutional right to seek higher education according to his abilities even when the state does not finance his education because that would exceed the needs and possibilities of the society and the state. The need of the society and the state to have graduate specialists in various areas and the possibility of financing only a certain number of specialists cannot be an obstacle for a person to seek higher education according to his abilities not at the expense of the state even when this exceeds the needs and possibilities of the society and the state.

It follows from Paragraph 3 of Article 41 of the Constitution that if a state higher school is able to provide higher education in accordance with the requirements set by the state not only to the persons whose studies are financed by the state but also to those who seek higher education in a state higher school not at the expense of the state, then the legal regulation obstructing or even prohibiting a state higher school from admitting these persons to that higher school cannot be established.

7. Paragraph 3 of Article 41 of the Constitution establishes the right of every citizen with a good academic progress in a state higher school to free higher education. This right presumes that funds must be provided out of the state budget to guarantee higher education free of charge to citizens who demonstrate good academic progress in state higher schools.

7.1. According to the Constitution, the state must cover tuition for citizens who demonstrate good academic results in case of the following three conditions: 1) the student is a citizen of the Republic of Lithuania; 2) he studies at a state higher school; 3) he demonstrates good academic results, i.e. his academic results meet the established criteria of good academic results.

Pursuant to Paragraph 3 of Article 41 of the Constitution, higher education tuition of citizens who are students at state higher schools and demonstrate good academic results cannot be imposed on these persons themselves in whatever form. Higher education of citizens who are students at state higher schools and demonstrate good academic results is financed by the state. According to the Constitution, the state has a duty to provide for the principles and procedure of allocation of state funds necessary to finance tuition of citizens who are students at state higher schools and demonstrate good academic results, and also to establish control over their legal utilisation.

On the other hand, the Constitution does not contain any prohibition for the state against undertaking higher financial obligations, in accordance with its possibilities, to students of higher schools. The undertaking of higher financial obligations than implied in the constitutional provision stipulating that citizens who demonstrate good academic results shall be guaranteed education free of charge in state higher schools, should not deny the striving for a just and harmonious society enshrined in the Constitution.

7.2. The constitutional provision that citizens who demonstrate good academic results shall be guaranteed education free of charge in state higher schools means that a citizen who demonstrated good academic results has the right that his education in a state higher school be financed by the state. According to the Constitution, it is financed out of the funds of the state budget. Therefore, the criteria enabling to establish which students can be said to demonstrate good academic results and which would, consequently, as prescribed by the Constitution, have the right that their education in state higher schools be financed by the state, should be established by law.

8. Paragraph 3 of Article 40 of the Constitution provides that institutions of higher learning shall be granted autonomy. “Traditionally, the autonomy of the institution of higher learning is conceived as the right to independently determine and establish in the regulations or statute the organisational and governmental structure, relations with other partners, the order of research and studies, academic syllabus, the order of student enrolment, to resolve other related questions, to use the property given over by the state as well as newly acquired, to possess the territory and buildings as well as other property, allotted for the needs of research and studies, to have the guarantee of inviolability. For this purpose, the institution of higher learning is guaranteed the institutional autonomy, i.e. certain status, which means that there are certain spheres of activities, independent from the control of the executive power” (the Constitutional Court’s ruling of 27 June 1994). The Constitution guarantees autonomy to both state and non-state higher schools.

The fact that pursuant to the Constitution the system of establishments of higher education, including state higher schools, has to be available to every person according to his abilities, that citizens who demonstrate good academic results shall be guaranteed education free of charge in state higher schools, and the fact that the Constitution establishes the autonomy of higher schools, allow one to make the presumption that in order to perform their functions state higher schools need to be allotted state funds. These funds have to be provided for in the state budget. The essential guarantee of the autonomy of state higher schools is such legal regulation when the state budget law provides not only for allocations for higher education but also funds for each state higher school. While providing for state budget funds for state higher schools, the needs of the society and the state ensured by these schools, their existing and future programs, also their way of ensuring adherence to the set teaching standards, the correspondence of the content and level of teaching to the qualification recognised by the state, state obligations to these schools etc. should be considered.

9. In the opinion of the petitioner, the funds provided for in the state budget of 2001 for the implementation of the human rights enshrined in Paragraph 3 of Article 41 of the Constitution were insufficient.

9.1. The Part (continuation) titled Allocations of Annex 1, titled The 2001 State Budget of the Republic of Lithuania, of the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) provides for allocations for the Ministry of Education and Science (Chapter I, Ministries), the Department for Education and Science under the Ministry of Education and Science (Chapter III, Departments, Services and Inspectorates), and education and studies (Chapter VI, Establishments and Organisations of Education, Culture and Others). Annex 2 thereto, titled Allocations from the 2001 State Budget of the Republic of Lithuania, provides for allocations for education and fundamental scientific research. Neither allocations for state higher schools nor allocations for financing citizens who demonstrate good academic results are separately specified.

9.2. Education, science, and studies are inter-related areas. Institutions where scientific research is carried out quite often are also involved in educational activities and studies take place there. And, vice versa, apart from direct educational activities and studies, educational and teaching establishments (including higher schools) are also involved in scientific research. The grouping of state budget funds to be allocated for science, studies and education is not unreasonable in itself. Some part of the funds from the 2001 state budget intended for science, studies and education have obviously been allocated for financing state higher schools and citizens who demonstrate good academic results. It should be noted that the petitioner does not assert that funds for financing higher education were not provided for in the 2001 state budget.

9.3. The assumption that sufficient funds for financing higher education were not provided for in the state budget cannot be an argument in judging whether the state budget law for a particular year is in compliance with Paragraph 3 of Article 41 of the Constitution. The question whether certain needs (goals) are provided sufficient or insufficient funds from the state budget is not about the compliance of the state budget with the Constitution but about budget planning, evaluation of the needs of the society and the state, their balance with the possibilities of the society and the state, and consequently social and economic expediency.

Therefore, there are no legal grounds to assert that the regulation established by the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) denied the rights enshrined in Paragraph 3 of Article 41 of the Constitution and that the implementation of these rights is not ensured.

10. In view of the above arguments, it may be concluded that the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 3 of Article 41 of the Constitution.

11. At the same time the Constitutional Court notes that the fact that this Ruling holds that the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 3 of Article 41 of the Constitution cannot be interpreted as a recognition that the impugned law provides for sufficient funds for the implementation of the rights enshrined in Paragraph 3 of Article 41 of the Constitution.

12. It has also been held herein that according to the Constitution, state higher schools have to be allocated state funds to be able to perform their functions and these funds have to be provided for in the state budget, and an essential guarantee of the autonomy of state higher schools is such legal regulation when the state budget law provides not only for allocations for higher education but also funds for each state higher school.

In the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), allocations for state higher schools are not separately specified. The fact that the state budget law does not specify allocations for each state higher school separately conflicts with the provision of Paragraph 3 of Article 40 of the Constitution that higher schools shall be granted autonomy.

13. As mentioned above, the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) did provide for funds for state higher schools. However, the fact that this law did not specify allocations for each state higher school separately allowed allotting funds for each state higher school by executive enactments, i.e. budget execution enactments. Such legal regulation is not in accordance with the constitutional principle of the separation of powers.

14. In view of the above arguments, it may be concluded that the Law on the Approval of Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000), to the extent that it does not specify allocations for each state higher school separately, conflicts with Paragraph 3 of Article 40 of the Constitution and the constitutional principle of the separation of powers.

IV

On the compliance of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended as well as with the constitutional principle of a state under the rule of law and on the compliance of Article 16 of the Law on the State Regulation of Economic Relations in Agriculture with Article 129, and the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

1. According to the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) conflicts with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

The doubts of the petitioner are based on the fact that

1) Article 16 of the Republic of Lithuania’s Law on the State Regulation of Economic Relations in Agriculture provides that not less than 10% of the national budget expenditure as well as foreign targeted loans and other funds shall be generally allocated annually for implementing the national agriculture development programme and the measures of state regulation of relations in agriculture, for forming state food product reserves, and for the purposes of land reclamation and acid soil liming, meanwhile, in the opinion of the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) provided to allocate LTL 618.7 million for the purposes of agriculture, forestry, fishing industry and veterinary medicine, i.e. 6.3 percent of the national budget expenditures;

2) Paragraph 5 of Article 7 of the Law on Land Reclamation provides that the budgetary allocations for land reclamation must guarantee a normal functioning of state-owned land reclamation facilities, meanwhile, according to the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) approved such a state budget which separately provided only LTL 40 million for financing land reclamation, which was not sufficient to guarantee a normal functioning of state-owned land reclamation facilities;

3) Article 39 of the Republic of Lithuania’s Law on Special Education provides that special education shall be financed from the state and municipal budgets in accordance with the procedure established by law. Meanwhile, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) did not provide for funds for the implementation of the Law on Special Education.

2. It has been held in this Ruling that the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as these laws are not amended means, inter alia, that if certain laws provide for certain expenditures, then the Government has to follow these laws in the preparation (forming) of the draft state budget. If certain laws provide for certain expenditures, the Seimas must also follow them during the deliberation and approval process of the state budget.

It has also been held in this Ruling that laws providing for certain expenditures cannot establish such legal regulation that would deny the Government’s constitutional right and duty to form the state budget for the budget year and the Seimas’ constitutional right and duty to approve the state budget for the budget year, while taking into consideration the existing social and economic situation, the needs and possibilities of the society and the state, the available or potential financial resources and the liabilities of the state, as well as other important factors.

It is not permitted to regulate the relations, which the Constitution permits regulating by the state budget law only, by other, not state budget laws. The state revenues and expenditures planned for a budget year may be provided only in the state budget which is approved by law. The provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as these laws are not amended should not be construed as permitting such financing of certain needs which would not be reflected in the state budget law for a particular year. Non-state budget laws can only provide for expenditures necessary in order to achieve a defined, generally important goal over a certain period of time established by law, provided these needs cannot be satisfied in one budget year, however, such laws may not provide for funds necessary for the execution of routine functions of the state, for funds necessary to finance every-day needs of the society.

3. While deciding whether the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) from the aspect pointed out by the petitioner is in compliance with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended, it is important to ascertain whether Article 16 of the Law on the State Regulation of Economic Relations in Agriculture, Paragraph 5 of Article 7 of the Law on Land Reclamation and Article 39 of the Law on Special Education, which are pointed out by the petitioner, provide for the subsidies which are not permitted to be reduced in the course of the approving of the state budget without amending the aforesaid laws.

4. Article 16 of the Law on the State Regulation of Economic Relations in Agriculture provides: “Not less than 10% of the national budget expenditure as well as foreign targeted loans and other funds shall be generally allocated annually for implementing the national agriculture development programme and the measures of state regulation of relations in agriculture, for forming state food product reserves, and for the purposes of land reclamation and acid soil liming.” The national budget is a whole-complex of the state budget and municipal budgets (Paragraph 12 of Article 2 and Paragraph 1 of Article 3 of the Law on Budgeting).

Thus, Article 16 of the Law on the State Regulation of Economic Relations in Agriculture not only indicates the needs for the purpose of which funds from the national (i.e. the state and municipalities) budget are allocated and that other funds may be allocated for the same needs but it also provides for the portion of the national budget of each budget year which must be allocated for the said needs.

4.1. It needs to be noted that the formula “not less than 10% of the national budget expenditure <…> shall be generally allocated annually” (and, particularly, the word “generally”) implies that not less than 10% of the national budget expenditure is a tentative portion of all national budget expenditure. Such legal regulation lacks legal clarity.

4.2. It needs to be emphasised that the needs pointed out in the said article are routine needs of the society, while their financing is a constant duty of the state. After one has established by law that every year not less than a certain portion of the national budget funds must be allocated for a certain sector, pre-conditions are created to deny the constitutional concept of a budget year, as well as the time limit of the budget year established in Article 129 of the Constitution. This law regulates the relations which, under the constitutional concept of a budget year, may be regulated only in the law on the state budget, it denies the constitutional right and duty of the Government to draft (form) the state budget for a budget year, as well as the constitutional right and duty of the Seimas to form the state budget for a budget year, while taking account of the existing socio-economic situation, the needs and possibilities of the state and the society, the available or potential financial resources and the liabilities of the state and other important factors. The legal regulation established in Article 16 of the Law on the State Regulation of Economic Relations in Agriculture is not line with the constitutional concept of the laws providing for certain expenditures, pointed out in Paragraph 2 of Article 131 of the Constitution.

4.3. The Constitutional Court, having established that the provisions of a law the compliance with the Constitution of which is not impugned by the petitioner but by which the social relations regulated by the impugned law are interfered with conflict with the Constitution, must state so.

4.4. On the grounds of the arguments set forth, the conclusion should be drawn that Article 16 of the Law on the State Regulation of Economic Relations in Agriculture (Official Gazette Valstybės žinios, 1995, No. 1-5; 1996, No. 116-2694; 1997, No. 96-2429; 2000, No. 30-828) conflicts with Article 129 and the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

4.5. After one has held that Article 16 of the Law on the State Regulation of Economic Relations in Agriculture conflicts with Article 129 and the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended, it must also be held that, after subsidies had been allocated by the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) for the needs pointed out in Article 16 of the Law on the State Regulation of Economic Relations in Agriculture, irrespective of the fact whether these subsidies comprise 10 percent of the national budget expenditure as pointed out in the aforesaid article or not, there are no grounds to assert that the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended may be violated.

5. Paragraph 5 of Article 7 of the Law on Land Reclamation provides: “The Seimas of the Republic of Lithuania shall approve budgetary allocations for the work to be performed in the sphere of land reclamation according to the targeted purpose. The budgetary allocations for land reclamation must guarantee a normal functioning of state-owned land reclamation facilities.”

5.1. The aforesaid provision of Paragraph 5 of Article 7 of the Law on Land Reclamation establishes that, first, the work to be performed in the sphere of land reclamation must be financed from the state budget according to the targeted purpose, and, second, the work to be performed in the sphere of land reclamation must be financed so that a normal functioning of state-owned land reclamation facilities would be guaranteed.

Paragraph 5 of Article 7 of the Law on Land Reclamation does not point out specifically as to what size of the allocations from the state budget there should be so as to guarantee a normal functioning of state-owned land reclamation facilities.

5.2. It needs to be noted that the formula “must guarantee a normal functioning of state-owned land reclamation facilities” as used in Paragraph 5 of Article 7 of the Law on Land Reclamation may not be construed as establishing a quantitative criterion on the basis of which it might be possible to calculate unambiguously whether sufficient budgetary funds are provided for the work to be performed in the sphere of land reclamation.

The provision of Paragraph 5 of Article 7 of the Law on Land Reclamation that the budgetary allocations must guarantee a normal functioning of state-owned land reclamation facilities should not be regarded as one providing for expenditures which may not be reduced as long as the law is not amended wherein this provision is set forth. This provision is not related to the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

5.3. The Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not indicate separately allocations for the work to be performed in the sphere of land reclamation.

The fact that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not indicate separately allocations for the work to be performed in the sphere of land reclamation may not serve as the basis to hold that this law conflicts with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

5.4. The provision of Paragraph 5 of Article 7 of the Law on Land Reclamation that the Seimas shall approve budgetary allocations according to the targeted purpose for the work to be performed in the sphere of land reclamation implies that the subsidies for land reclamation must be pointed out in the law on the state budget itself but not in the acts meant for the execution of the budget.

As mentioned before, under the Constitution, the legislature is bound by its previously adopted laws. This is an essential element of the constitutional principle of a state under the rule of law. Therefore, the Seimas is bound by the provision of Paragraph 5 of Article 7 of the Law on Land Reclamation that the budgetary allocations for the work to be performed in the sphere of land reclamation are approved by the Seimas according to the targeted purpose. As long as the said provision of the Law on Land Reclamation is valid, the Seimas has a duty to point out in the law on the state budget the allocations according to the targeted purpose for the work to be performed in the sphere of land reclamation and to indicate the possessors of these allocations.

If the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not point out allocations for the work to be performed in the sphere of land reclamation according to the targeted purpose, the provision that the legislature is bound by its previously adopted laws is violated. Thus, the principle of a state under the rule of law entrenched in the Constitution is violated.

5.5. On the grounds of the arguments set forth, it should be concluded that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not point out allocations according to the targeted purpose for the work to be performed in the sphere of land reclamation conflicts with the principle of a state under the rule of law.

6. Article 39 of the Law on Special Education provides, inter alia, that special education shall be financed from the state and municipal budgets in accordance with the procedure established by law.

It needs to be held that the provision of Article 39 of the Law on Special Education that special education shall be financed from the state and municipal budgets in accordance with the procedure established by law should not be regarded as one providing for expenditures which may not be reduced as long as the law is not amended wherein the said provision is set forth. Alongside, it needs to be noted that this provision is not related to the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

7. On the grounds of the arguments set forth, the conclusion should be drawn that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

V

On the compliance of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) with Paragraph 2 of Article 120, Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution.

1. In the opinion of the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) conflicts with Paragraph 2 of Article 120, Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution.

The doubts of the petitioner are based on the fact that, in his opinion, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not provide for funds from the budget for the implementation of the municipal functions delegated by the state, i.e. civil registry, civil defence and fire-prevention, health activities etc. The doubts of the petitioner are virtually based on the fact that, in his opinion, the impugned law violates the independence of municipalities in the sphere of the budget.

2. Paragraph 2 of Article 120 of the Constitution provides: “Municipalities shall act freely and independently within the limits of their competence which shall be established by the Constitution and laws.”

Paragraph 1 of Article 121 of the Constitution provides: “Municipalities shall draft and approve their own budget.”

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 municipal budgets.”

3. While construing the provisions of Paragraph 2 of Article 120, Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution pointed out by the petitioner, it should be hold that the principle of independence of municipalities within the limits of their competence established by the Constitution and laws is established in the Constitution. The provision of the Constitution that municipalities shall act freely and independently within the limits of their competence which shall be established by the Constitution and laws should be judged to be a guarantee of the participation of these local communities in the administration of these territories (the Constitutional Court’s ruling of 28 June 2001).

The Constitution does not identify self-government with state administration. Administrative units provided by law on state territory shall be entitled to the right of self-government. This right shall be implemented through municipal councils (Paragraph 1 of Article 119 of the Constitution). There is interaction between the state and municipalities as a form of self-regulation of the community. Paragraph 1 of Article 120 of the Constitution provides that the state shall support municipalities. The Constitutional Court has noted that the interests of the state and municipalities must be coordinated. The principle of the coordination of interests of the state and municipalities finds expression not only in the state support of municipalities in all ways and forms or in the state supervision of municipal activities in the manner prescribed by law but also in coordination of joint actions when significant social objectives are sought (the Constitutional Court’s ruling of 18 February 1998).

4. The independence of municipalities within the limits of their competence established by the Constitution and laws entrenched in the Constitution implies that if municipalities are transferred state functions by law, or if they are given duties by law or other legal acts, funds must be provided for the implementation of these functions (duties). If, before the end of a budget year, municipalities are transferred additional state functions (are given duties), for this purpose funds must be allocated also. Under the Constitution, municipalities must observe the laws, thus, also the laws whereby the municipalities are obligated to exercise the functions transferred to them by the state. The municipalities would be unable to exercise such duties unless their implementation were not guaranteed by financial funds. The funds for the implementation of the functions transferred by the state to municipalities must be provided for in the law on the state budget but not in the acts on the execution of the budget.

5. The Constitution does not group the functions of municipalities into state, delegated, independent or in any other manner. Under Paragraph 3 of Article 119 of the Constitution, the procedure for the organisation and activities of self-government institutions shall be established by law. It is within the powers of the legislature to establish functions of municipalities and types of such functions. The functions of municipalities are established in the Law on Local Self-Government and other laws.

The constitutional principle of coordination of the interests of municipalities and those of the state means, inter alia, that when one establishes functions and powers of municipalities by law, when one provides for the sources of municipal budgets and their size by law, the reasonable interests of local communities may not be ignored. It is not permitted to assign any such functions to municipal institutions that they would be unable to perform.

6. Under the Constitution, municipal budgets are independent. The independence of municipal budgets is an important aspect of the constitutional principle of the independence of municipalities within the limits of their competence established by the Constitution and laws. Alongside, it needs to be noted that the independence of municipalities in the sphere of the budget is not absolute.

The independence of activities of municipalities within the limits of the competence established by the Constitution and laws and the support of the state for municipalities, coordination of the interests of municipalities and those of the state, which are entrenched in the Constitution, imply that funds (municipal revenues and their sources) must be provided for in the state budget, necessary for the ensuring of the fully-fledged functioning of self-government and for the implementation of functions of municipalities.

The provision of Paragraph 1 of Article 121 of the Constitution that municipalities shall draft and approve their own budget means that municipalities draft and approve their own budget on their own. In the budget of a municipality, revenues and expenditures must be provided for which are necessary to finance its functions.

7. The petitioner maintains that, under the Law on Local Self-Government, civil registry, civil defence and fire-prevention, health activities etc. are functions delegated to municipalities by the state.

8. While deciding whether the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 2 of Article 120, Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution, it is important to ascertain whether civil registry, civil defence and fire-prevention, health activities are state functions which were transferred by law to municipalities, and also whether funds were provided for their implementation in the law on the state budget.

8.1. It needs to be noted that the Law on Local Self-Government was being amended at the time of the consideration of the 2001 state budget in the Seimas: at the time when the Government submitted the draft 2001 state budget, this law in its wording of 24 November 1998 was relevant, while at the time when the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) was being adopted, the Law on Local Self-Government in its wording of 12 October 2000 was relevant, therefore, in the case at issue it is important how the aforementioned functions of municipalities were treated in both wordings (24 November 1998 and 12 October 2000) of the Law on Local Self-Government.

8.2. Under Paragraph 1 of Article 14 of the Law on Local Self-Government (wording of 24 November 1998), the competence of local self-government institutions was grouped into autonomous competence and that delegated by the state; under Article 16 titled Competence Delegated by the State of the same law, self-government institutions were to perform the functions of civil registration, keep the municipal register, state and private enterprises as well as public organisations, implement secondary healthcare, they were permitted to administer state parks (national and regional), organise the municipal police, civil security and fire prevention system and implement other functions delegated by law.

Under Paragraph 8 of Article 3 of the Law on Local Self-Government (wording of 12 October 2000), the functions of municipalities are functions of civil service and public services established to municipalities by the Law on Local Self-Government and other laws. Paragraph 1 of Article 5 of the said law provides that, according to the freedom of adoption of decisions, the functions of municipalities shall be grouped into (1) autonomous ones which are performed by municipalities within the competence established by law, obligations before their communities and in their interests, in the course of implementation of which the municipalities shall enjoy the freedom of initiative of decisions, that of their adoption and implementation and shall be responsible for the performance of these functions; (2) assigned ones (restrictedly autonomous) which municipalities, while taking account of the local conditions and circumstances, perform in the course of the implementation of the Law on Local Self-Government and other laws as well as other legal acts adopted on their basis; (3) state ones (transferred to municipalities), i.e. state functions transferred to municipalities by law while taking account of the interests of the population, which are implemented while following legal acts and in the course of the implementation of which the municipalities enjoy the freedom of adoption of decisions within the limits established by law; (4) contractual ones the implementation of which is based on contracts. Under Items 1, 2, 3, and 4 of Article 8 of the said law, registration of civil status acts, the keeping of the registers established by law as well as supplying data to state registers, organisation of civil security and municipal firefighting services are state functions of municipalities (those transferred to municipalities).

The municipal functions delegated by the state by the Law on Local Self-Government (wording of 24 November 1998) pointed out by the petitioner, i.e. civil registry, civil security and fire prevention, even though referred to differently in the Law on Local Self-Government in its subsequent wording of 12 October 2000, are provided for as state functions of municipalities (those transferred to municipalities) .

8.3. Paragraph 1 of Article 53 of the Constitution provides that the state shall take care of people’s health and shall guarantee medical aid and services in the event of sickness, while Paragraph 2 thereof provides that the procedure for providing medical aid to citizens free of charge at state medical facilities shall be established by law. Thus, taking care of people’s health and guaranteeing medical aid and services in the event of sickness should be treated as a state function. The administering and supervision of health activities are one of the elements of the aforementioned function. These relations are regulated by the Republic of Lithuania’s Law on the Health System, under which part of the function of administering and supervision of health activities is transferred to municipalities. The financing of the said function must be guaranteed from the state budget.

9. Under Paragraph 7 of Article 36 of the Law on Local Self-Government (wording of 12 October 2000), the finances for performing state (transferred to municipalities) functions shall be allocated from either the state budget or state financial funds and shall be transferred to municipalities as a special subsidy.

The 2001 state budget provided for certain funds for civil registration, civil security and fire prevention, health activities, as well as the other state functions transferred to municipalities.

The Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not indicate separately the funds for registration of civil status acts, the keeping of the registers established by law as well as supplying data to state registers, organisation of civil security and administering and supervision of health activities carried out by municipalities.

The fact that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) does not indicate separately the subsidies to perform the state functions transferred to municipalities implies that this law does not guarantee that the municipalities will be able to properly perform the functions transferred to them. Such legal regulation is not in line with the provision of Paragraph 2 of Article 120 of the Constitution that municipalities shall act freely and independently within the limits of their competence which shall be established by the Constitution and laws.

10. On the grounds of the arguments set forth the conclusion should be drawn that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not indicate separately the subsidies to perform the state functions transferred to municipalities conflicts with Paragraph 2 of Article 120 of the Constitution.

11. Having held that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not indicate separately the subsidies to perform the state functions transferred to municipalities conflicts with Paragraph 2 of Article 120 of the Constitution, in this case the Constitutional Court will not consider the compliance of the aforesaid law with Paragraph 1 of Article 121 and Paragraph 1 of Article 127 of the Constitution.

VI

On the compliance of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) with Paragraph 1 of Article 69 of the Constitution.

1. In the opinion of the petitioner, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) conflicts with Paragraph 1 of Article 69 of the Constitution.

The doubts of the petitioner are based on the following:

1) under Paragraph 2 of Article 131 of the Constitution, expenditures established by law may not be reduced as long as said laws are not amended. In the opinion by the petitioner, after the impugned law had provided for smaller expenditures if compared with those established in the Law on the State Regulation of Economic Relations in Agriculture, the Law on Land Reclamation and the Law on Special Education pointed out by the petitioner, the provision of Paragraph 1 of Article 69 of the Constitution was violated;

2) under Paragraph 2 of Article 6 and Paragraph 5 of Article 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, municipalities may be given a general subsidy for administration of the national service, however, the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) gave a special targeted subsidy for administration of the national service.

2. Paragraph 1 of Article 69 of the Constitution provides: “Laws shall be enacted in the Seimas in accordance with the procedure established by law.”

3. It needs to be noted that the provision of Paragraph 1 of Article 69 of the Constitution is related to the provision of Article 76 of the Constitution that the structure and procedure of activities of the Seimas shall be determined by the Statute of the Seimas which shall have the power of law. The determination of the procedure of activities of the Seimas includes regulation of the procedure of legislation (the Constitutional Court’s ruling of 18 October 2000). The duty of the Seimas to act in accordance with the procedure of law enactment established by the Statute of the Seimas not only may but, in fact, must be interpreted as a constitutional duty because it is conditioned by the provision established in Paragraph 1 of Article 69 of the Constitution (the Constitutional Court’s ruling of 8 November 1993). Construing the provision of Paragraph 1 of Article 69 together with the provision of Article 76 of the Constitution, the Constitutional Court has noted that both said provisions mean that the legislation procedure can be regulated by the Statute of the Seimas as well as other laws (the Constitutional Court’s ruling of 28 June 2001).

4. The petitioner does not challenge the compliance of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) with Paragraph 1 of Article 69 of the Constitution from the aspect of enactment of laws in accordance with the procedure established by the Statute of the Seimas.

5. It has been held in this Ruling that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended, therefore, the Constitutional Court will not investigate into the compliance of the said law with Paragraph 1 of Article 69 of the Constitution from this aspect pointed out by the petitioner.

6. Paragraph 2 of Article 6 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999 which was relevant at the time of the enactment of the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000)) provided:

The Ministry of Finance shall calculate the expected size of the state budget general subsidy (D), assigned to municipal budgets under the formula D=A-B-C, where:

1) A shall constitute the size of expenditures expected for the planned budget years of all municipalities. The planned budgetary expenditures of all municipalities shall be established as part of the common state and municipalities budgetary expenditures in percentages;

2) B shall constitute the expected size of tax and non-tax-derived budgetary revenue of all the municipalities for the planned budget years. The size of the non-tax-derived revenue is established as a fixed part of tax-derived revenue by percentages;

3) C shall constitute the special targeted subsidies from the state budget for the planned budget year. In order to carry out programmes approved by the Government or the Seimas, special targeted subsidies may be allocated to municipal budgets.”

Paragraph 5 of Article 11 of the same law provided: “If in the course of the budget year the Seimas or the Government adopts or plans to adopt decisions for the next budget year due to which expenditures of municipalities become changed, in order to compensate the changes in the expenditures in the same or subsequent year a state budget compensation of general subsidy of corresponding size must be allocated, which is related to the changes in the expenditures of municipal budgets, or corresponding amounts shall be taken from municipal budgets. The compensation amounts of the state budget general subsidy, as well as the corresponding amounts taken from municipal budgets, related to the changes in the expenditures of municipal budgets shall be calculated under the formula presented in Article 9.”

6.1. While considering whether the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 1 of Article 69 of the Constitution from the aspect pointed out by the petitioner (i.e. because the impugned law provided for a general but not a special subsidy for municipalities for administering the national service), it is important to ascertain whether Paragraph 5 of Article 11 and Paragraph 2 of Article 6 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues regulate the relations of the procedure of legislation.

6.2. Paragraph 2 of Article 6 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999) provided as to what state institution and under what formula it calculates the expected size of the state budget general subsidy allocated to municipal budgets. It also provided that in order to carry out programmes approved by the Government or the Seimas, special targeted subsidies may be allocated to municipal budgets. Paragraph 5 of Article 11 of the same law established as to the cases when compensation of state budget general subsidy of respective size related to the changes in municipal budgets must be allocated in order to compensate the changes in the expenditures of municipalities in the same or subsequent year. A reference was made therein to the formula under which the amounts of the compensation of the state budget general subsidy, as well as the corresponding amounts taken from municipal budgets, related to the changes in the expenditures of municipal budgets, are calculated.

Thus, Paragraph 2 of Article 6 and Paragraph 5 of Article 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999) regulate different relations but not those of legislation procedure.

6.3. Thus, there are no grounds to assert that after the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) had allocated not general but a special subsidy for the administering of the national service, the provision of Paragraph 1 of Article 69 of the Constitution that laws shall be enacted in the Seimas in accordance with the procedure established by law was violated. The Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 1 of Article 69 of the Constitution from the said aspect pointed out by the petitioner.

7. On the grounds of the arguments set forth, the conclusion should be drawn that the Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) is in compliance with Paragraph 1 of Article 69 of the Constitution.

VII

On the compliance of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 with Paragraph 1 of Article 69, Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 and the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

1. By means of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 enacted on 23 December 1999, the main expected indicators were established (approved) for 2001, 2002 and 2003, which determine the size of municipal budgets as well as their levelling.

By means of the Law on the Amendment of the Annex of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 enacted on 20 April 2000, one of the indicators, i.e. the portions (in percentages) of the tax of revenues of natural persons, which were expected to be allocated to the budgets of all municipalities, was amended.

By means of Article 4 of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 enacted on 21 December 2000, the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 and the Law on the Amendment of the Annex of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 were recognised to be voided as of 1 January 2001. The impugned Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 established different indicators determining the size and levelling of revenues of municipalities.

Paragraph 2 of Article 3 of the 23 October 2001 Republic of Lithuania’s Law on the Methodology of the Determination of Municipal Budgetary Revenues provides that the impugned Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 shall become voided as of 1 January 2002.

2. The petitioner requests an investigation into whether the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 2 of Article 120, Paragraph 1 of Article 121, Paragraph 1 of Article 127 and the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

The doubts of the petitioner are based on the fact that under Article 10 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, the Government, having considered together with the Association of Municipalities of Lithuania the indicators determining the size and levelling of revenues of municipalities, shall submit them to the Seimas for approval for a three-year period. Such indicators were approved by the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002; in the opinion of the petitioner, under Articles 10 and 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues the indicators should not have been amended before the end of the three-year period, nevertheless, by means of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003, different indicators were approved for the subsequent three-year period.

It needs to be noted that the petitioner challenges not the indicators determining the size and levelling of revenues of municipal budgets but only the fact that the indicators established by the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 were amended before the end of the three-year period.

2.1. Paragraph 2 of Article 120 of the Constitution provides that municipalities shall act freely and independently within the limits of their competence which shall be established by the Constitution and laws, Paragraph 1 of Article 121 of the Constitution provides that municipalities shall draft and approve their own budget, while Paragraph of Article 127 of the Constitution stipulates that the budgetary system of the Republic of Lithuania shall consist of the independent state budget of the Republic of Lithuania and the independent municipal budgets.

2.1.1. While considering whether the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 2 of Article 120, Paragraph 1 of Article 121, and Paragraph 1 of Article 127 of the Constitution, it is important to ascertain whether the Seimas, when establishing new indicators determining the size and levelling of revenues of municipal budgets, was bound, under the Constitution, by the circumstance, that the indicators determining the size and levelling of revenues of municipal budgets had already been established by the previous law.

2.1.2. By means of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003, the main expected indicators determining the size and levelling of revenues of municipal budgets were established. The establishment of the said indicators is not identical with the provision for funds from the state budget to be allocated to municipalities.

It does not follow from the provisions of Paragraph 2 of Article 120, Paragraph 1 of Article 121, and Paragraph 1 of Article 127 of the Constitution and the length of the budget year defined in the Constitution that it is permitted to establish by law the indicators determining the size and levelling of revenues of municipal budgets for one budget year only—they may be established for a longer period than one year.

It also does not follow from the provisions of Paragraph 2 of Article 120, Paragraph 1 of Article 121, and Paragraph 1 of Article 127 of the Constitution and the length of the budget year defined in the Constitution that the legislature, while taking account of the economic or social situation, the needs and possibilities of the state and the society, the available or potential financial resources and the liabilities of the state and other important factors, may not, before the end of the time period for which certain indicators have been established, establish new indicators replacing the former ones.

In themselves, the establishment of the new indicators determining the size and levelling of revenues of municipal budgets before the end of the time period for which certain indicators have been established do not imply that the independence of municipalities in the sphere of their drafting and approving their budgets is violated.

While establishing the indicators determining the size and levelling of revenues of municipal budgets by the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003, one did not interfere with the independence of municipalities in the sphere of the budget which is established in the Constitution, and the provisions of Paragraph 2 of Article 120, Paragraph 1 of Article 121, and Paragraph 1 of Article 127 of the Constitution were not violated.

2.1.3. On the grounds of the arguments set forth, the conclusion should be drawn that the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 2 of Article 120, Paragraph 1 of Article 121, and Paragraph 1 of Article 127 of the Constitution.

2.2. Under Paragraph 2 of Article 131 of the Constitution, expenditures established by law may not be reduced as long as said laws are not amended.

2.2.1. While deciding whether the impugned Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with the articles of the Constitution pointed out by the petitioner, it is important to ascertain whether the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 established any expenditures which subsequently were reduced by the impugned Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003, as well as whether the Seimas was not bound and was permitted, under Article 10 and Paragraph 2 of Article 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues, to amend the earlier established indicators determining the size and levelling of revenues of municipal budgets before the end of the three-year period.

2.2.2. The funds (revenues and their sources) for municipalities are provided for in the state budget. While providing for such funds in the state budget, the Seimas is bound by the laws that it itself has adopted, including those defining as to how the funds of the state budget for municipalities are calculated, under what procedure they are allocated, the manner of planning for municipal budgets of tax-derived revenues and portions of taxes established by law etc.

The Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 did not provide for any expenditures.

2.2.3. Article 10 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999), which was in force at the time of the enactment of the impugned law, provided that the Government, having considered together with the Association of Municipalities of Lithuania the indicators determining the size and levelling of revenues of municipalities, shall submit them to the Seimas for approval for a three-year period; the said indicators were listed.

Paragraph 2 of Article 11 of the same law established which actually received funds are monthly allocated to municipalities and under what formulas they are calculated.

The aforementioned articles (paragraphs thereof) of the Law on the Methodology of the Determination of Municipal Budgetary Revenues do not contain any provisions that are binding on the Seimas so that it might not amend any earlier established indicators determining the size and levelling of revenues of municipal budgets before the end of the three-year period.

2.3. On the grounds of the arguments set forth, the conclusion should be drawn that the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with the provision of Paragraph 2 of Article 131 of the Constitution that expenditures established by law may not be reduced as long as said laws are not amended.

3. The petitioner challenges the compliance of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 with Paragraph 1 of Article 69 of the Constitution.

The doubts of the petitioner are based on the fact that in the course of the enactment of the impugned law, in his opinion, the then in force Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 and Article 10 and Paragraph 2 of Article 11 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999) were violated.

3.1. Paragraph 1 of Article 69 of the Constitution provides: “Laws shall be enacted in the Seimas in accordance with the procedure established by law.”

It has been mentioned that both the provision of Paragraph 1 of Article 69 of the Constitution and the provision of Article 76 of the Constitution that the structure and procedure of activities of the Seimas shall be determined by the Statute of the Seimas which shall have the power of law mean that the legislation procedure can be regulated by the Statute of the Seimas as well as other laws.

3.2. While deciding whether of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 1 of Article 69 of the Constitution, it needs to be noted that the petitioner does not challenge the compliance of this law with Paragraph 1 of Article 69 of the Constitution from the aspect concerning enactment of laws in accordance with the procedure established in the Statute of the Seimas.

3.3. It also needs to be noted that the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2000, 2001 and 2002 which had been in force until then regulated other but not relations of legislation procedure. Therefore, there are no grounds to assert that in the course of the enactment of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 Paragraph 1 of Article 69 of the Constitution was violated from this aspect pointed out by the petitioner.

3.4. Under Article 10 of the Law on the Methodology of the Determination of Municipal Budgetary Revenues (wording of 19 October 1999), the Government, having considered together with the Association of Municipalities of Lithuania the indicators determining the size and levelling of revenues of municipalities, had to submit them to the Seimas for approval for a three-year period.

It is clear from the case material that the Government had considered these issues with the Association of Municipalities of Lithuania. In the course of the enactment of the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 Paragraph 1 of Article 69 of the Constitution was not violated from this aspect, either.

3.5. On the grounds of the arguments set forth, it should be concluded that the Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with Paragraph 1 of Article 69 of the Constitution.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

1. To recognise that the Republic of Lithuania’s Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not specify allocations for each state higher school separately conflicts with Paragraph 3 of Article 40 of the Constitution of the Republic of Lithuania and the principle of separation of powers entrenched in the Constitution of the Republic of Lithuania.

2. To recognise that the Republic of Lithuania’s Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not point out allocations according to the targeted purpose for the work to be performed in the sphere of land reclamation conflicts with the principle of a state under the rule of law entrenched in the Constitution of the Republic of Lithuania.

3. To recognise that the Republic of Lithuania’s Law on Approving the Financial Indicators of the 2001 State Budget and Municipal Budgets (wording of 19 December 2000) to the extent that it does not indicate separately the allocations to perform the state functions transferred to municipalities conflicts with Paragraph 2 of Article 120 of the Constitution of the Republic of Lithuania.

4. To recognise that the Republic of Lithuania’s Law on the Approval of the Indicators Determining the Size and Levelling of Revenues of Municipal Budgets for 2001, 2002 and 2003 is in compliance with the Constitution of the Republic of Lithuania.

5. To recognise that Article 16 of the Republic of Lithuania’s Law on the State Regulation of Economic Relations in Agriculture conflicts with Article 129 of the Constitution of the Republic of Lithuania and the provision of Paragraph 2 of Article 131 of the Constitution of the Republic of Lithuania that expenditures established by law may not be reduced as long as said laws are not amended.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:                                                  Egidijus Jarašiūnas

Egidijus Kūris

Zigmas Levickis

Augustinas Normantas

Vladas Pavilonis

Jonas Prapiestis

Vytautas Sinkevičius

Teodora Staugaitienė