Dismissal of the Rēzekne State City Local Government Council Complies with the Constitution
The Constitutional Court delivered a judgement in Case No. 2024-20-01. The Court declared Section 1 of the Law on Dismissal of the Rēzekne State City Local Government Council, which dissolved the Rēzekne State City Local Government Council, to be compatible with Article 1 and Article 101 of the Constitution. The Constitutional Court emphasised that a democratic state governed by the rule of law was obliged to take actions necessary to prevent a local government from acting contrary to the legal interests of the inhabitants of the municipality and the whole society.
The case was initiated based on the application of the dismissed Rēzekne State City Local Government Council. The Applicant views its dismissal as disproportionate and in violation of the local government principle because it prevents it from the right to govern its administrative territory in the interest of the population.
The Constitutional Court concluded that the Applicant had violated laws and regulations which establish the basic requirements for the budget of a local government for a long time and on several occasions – both with regard to the elaboration and approval of the budget for 2023 and 2024. The Applicant has entered into commitments exceeding its available financial resources and has delayed obtaining a State loan, thus creating a risk of further losses.
Irēna Kucina, the President of the Constitutional Court, emphasises: “The local government budget cannot be seen in isolation from the overall national budget system. If a local government manages its budget in a way that does not comply with the requirements set out in laws and regulations and ends up in a financial situation that requires a large commitment of public resources, the overall financial stability and long-term development of the country is affected, with adverse consequences for all citizens. Consequently, the materiality of the breaches of laws and regulations in the field of the budget of a local government should be assessed in relation to the threat to the performance of the autonomous functions of the local government and the impact not only on the residents of the local government, but on the society as a whole. Local government is not a country within a country.”
The materiality of the breaches of legal provisions by a local government council is not only evidenced by the consequences that have already resulted from the breaches, but also by the consequences that these breaches may have. The State has a duty to prevent a local government from being placed in a financial situation where it lacks the means to carry out its autonomous functions. The State must be able to act in time, without waiting for significant damage to occur.
The Constitutional Court emphasised that the Applicant’s actions in the aggregate, in particular in the situation when the Rēzekne State City Local Government had significant financial difficulties, could have endangered the performance of the autonomous functions of the local government, causing damage to the interests of both its residents and the whole society. The Constitutional Court recognised that the infringements committed, when assessed in their totality, had to be recognised as significant, and thus the grounds for dismissal of the local government council provided for in the Local Government Law had been established.
When assessing whether the dismissal of the Rēzekne State City Local Government Council was necessary, the Constitutional Court concluded that the State had used both the mechanisms available to it for monitoring the activities of the local government in order to ensure the legal functioning of the Applicant, as well as financial resources in order to improve its financial situation. However, the Council’s actions were generally counterproductive to the objective of ensuring legal action in the interests of the residents and regularising the financial situation. The Constitutional Court concluded that the Applicant was unable to properly perform the administrative tasks entrusted to it and, therefore, the functioning of the local government as a subject of public law was impaired. However, the fact that the Applicant had already adopted the 2024 budget at the time of adoption of the contested provisions does not, in the circumstances, indicate that it would have been able to ensure the legality of its activities in the future. In the light of the above, the Court held that the dissolution of the Rēzekne State City Local Government Council was necessary in a democratic state governed by the rule of law as a means of post-legislative review of the legality of the local government’s activities.
The judgement of the Constitutional Court is final and not subject to appeal; the judgement shall enter into force as of the date of its publication in the official gazette Latvijas Vēstnesis.
Linked case: 2024-20-01