Cost Estimation of Municipal Services of South East Europe
As a result of the awareness of the new needs for local authorities in South East Europe, the NALAS Task Force on Fiscal Decentralization gathered experts and resources to develop cost estimation model of mainstream municipal services. This publication offers methods of cost estimation of municipal services that include operational (investment) costs,are simple and relatively easy to apply and still allow country-specific adjustments.
Decentralization is a process of transfer of services and powers from a state to its municipalities. The provision of new services requires adequate financial resources. The shift from hierarchical subordination of municipalities to equal relations with the state implies that the quantity of such resources should be agreed at the negotiation table. In order to uphold local interests, the representatives of municipalities should be equipped with knowledge and tools so as to come up with the actual (full) costs for rendering decentralized services. Some of the cost elements are often hidden in other functions (e.g. administrative costs) or they are simply omitted in the negotiation process. The lack of such information and knowledge has adverse impact on the state transfer system and frequently leads to unfunded services at local level.