In Garkalne Region, which is the richest among Latvian municipalities with a per capita income of 1,460 euros (2018), the population-paid taxes are spent without justification and even wasteful. After the audit, the State Audit Office has discovered such mismanagement, whose causes are related to deficiencies in management issues of the region largely.
The findings of the audit, as well as the actions and attitudes of the representatives of the regional government lead to the conclusion that the management of Garkalne Regional Government has not complied with the principles of good governance in their actions such as openness, equality, and legitimate expectations, and has violated statutory provisions in several cases, which the State Audit Office has already reported to the Corruption Prevention and Combating Bureau (CPCB).
Municipal budget as a personal wallet
Although by law only the municipal council may approve the municipal budget and budget amendments, the management of Garkalne Regional Government spent even 3.4 million euros more in total in 2017 and 2018 than the council had approved. In addition, approved budgets for 2017 and 2018 are not publicly available. At least 16 decisions of the Regional Council have not been published concerning, inter alia, allocation of financial support, undertaken long-term commitments, and wages of the employees of the Regional Council.
When acting in that way, the leadership of the regional government spends money not only behind the back of their population but also of their councillors. For example, in an audio recording of the Garkalne Regional Council meeting of 30 January 2018, where they informed the councillors to the actual budget spent in 2017, they admitted, “… what can we ask, then we are to blame because we spent money in the way we did”.
Without setting clear criteria, one granted various reliefs and benefits to the population and businesses of Garkalne Regional Government that raise doubts among the auditors on impartiality in decision-making. For example, in 2016, 2017, and 2018, the Regional Government granted real estate tax relief without complying with its own binding regulations. As a result, the municipality has not received revenue totalling 137,000 euros. In its turn, in 2017, 2018, and the first quarter of 2019, one has granted financial support for sports activities totalling 315,000 euros without clear criteria. The aid granted ranges from 11% to 133% of the amount claimed by the applicants and one cannot trace the justification for such differences. Such an approach does not imply equal treatment of all beneficiaries.
It turns out that employees of the administration of the Garkalne Regional Government are also paid generous premiums without proper justification. Thus, according to orders issued in 2017 and 2018, the cost of remuneration was increased by almost 217,000 euros unjustified. Possible instances of conflicts of interest were also discovered in the awarding of premiums and cash prizes, which the State Audit Office notified to CPCB.
In 2017 and 2018, the Regional Government has spent more than 215,000 euros in fuel compensation to employees and councillors without keeping track of fuel usage, which would enable ascertaining the relationship between the fuel usages and fulfilling one’s job duties. There were more than 27,000 euros also spent on missions, without specifying any objectives or specifying only general mission objectives.
Expensive municipal police and weird water management
Garkalne Municipal Police is one of the most expensive municipal polices near Riga. The cost per police officer is 33,322 euros per year (for instance, those are 12,803 euros in Ropaži Regional Government), but the performance of the municipal police does not reflect the return corresponding that generous financing at all. The number of crime, road accidents, and fires is increasing opposite to the projected reduction in the Development Program.
The managing of capital companies in Garkalne is also very formal. Although one has established supervision of the execution of 26 contracts signed with capital companies, one has not enforced it actually.
During the audit, the State Audit Office also could not obtain justification why the provision of water management services was entrusted to three different capital companies: Garkalnes komunālserviss Ltd, Garkalnes inženiertīkli Ltd, and Garkalnes ūdens Ltd. In addition, water management tariffs differ from actual service costs significantly. In 2018, the actual cost of the water supply service that Garkalnes ūdens Ltd provided exceeded the tariff more than twice. Therefore, the provision of services results in losses for the capital companies. According to the auditors’ estimate, losses exceeded 208,000 euros in 2018 by creating an additional burden on the municipal budget and reducing the financial resources available for other community-significant needs.
It is also not clear why Garkalnes ūdens Ltd practices a different attitude towards its customers. In Ādaži Region, it provided water management services at lower tariffs, which resulted in undue reduction of the corporate income by at least 5,549 euros in 2017 and 2018. However, water management tariffs for customers in Garkalne Region are up to 35% higher than for customers in Ādaži Region starting from May 2019.
Development Program: paper won’t blush
The Development Program drafted by the Regional Government, which should satisfy the needs of the community and provide the development of the region, resembles a wish list more rather than a real action-planning document. The projects included in the Development Program are not implemented at all, or their deadlines are being extended most frequently. Only seven of 23 projects initially included in the Investment Plan or 30.4% of the projects have been completed within the planned timeframe between 2014 and 2018. Nobody actually monitors the implementation of the Development Program.
“The Garkalne Regional Government seems to have forgotten that the municipal budget should serve as a tool for achieving the goals set in the Development Program, because the budget of this regional government is not drafted in connection with the Action Plan of the Development Program and the current year projects envisaged in the Investment Plan,” indicated Auditor General Elita Krūmiņa.
For example, the Regional Government has not completed any of the two initially planned projects in 2017. The reconstruction of Upesciems School and the establishment of a kindergarten at the primary school were postponed to 2019, whereas the Garkalne Regional Government did not even start three planned projects in 2018 including the construction of an open-air stage in Mākoņkalns, the construction of the Baltezers Western bypass, and the connection of bicycle paths to the Riga bicycle path.
Although the Regional Government has identified acute problems together with the local community, including those related to the lack of transparency of information, the Development Program already mentioned does not even provide any solutions to that problem.
Until the preparation of the audit report, information system for monitoring the Development Program had not been established in the Garkalne Regional Government, but the responsible officials were not able to present either the annual monitoring reports or the annual reports for three years on the implementation of the Development Program to the auditors. The monitoring results of the Development Program would enable the population to obtain comprehensible information on why several projects are being abandoned or postponed, taking into account budgetary possibilities, as it has happened with the construction of Berģi Primary School of Music and Arts.
After the audit, the State Audit Office made 14 recommendations to the Garkalne Regional Government. The State Audit Office will monitor the progress of their implementation and inform the population about the implementation thereof regularly.
Besides, the State Audit Office will notify the Chairperson of the Public Expenditure and Audit Committee of the Saeima, the Minister of Environmental Protection and Regional Development, the Minister of Finance, and the Chairperson of the Latvian Association of Local and Regional Governments.