Is the conflict container full? – Some financial aspects for the assessment of the situation and the transformation of the system

Abstract

It sounds like a cliché, and a fact proven from several aspects to state that the Hungarian system of municipalities that was established in 1990 is characterized by excessive decentralization and the role of the conflict container, as well as the contradiction between the constitutional situation and the financial regulation. What can be concluded from all this is that the advantages of decentralization described in normative economics were not fully realized in practice. Although it cannot be denied that the Hungarian reforms of public finances based on the decentralization of conflicts significantly alleviated the pains caused by the crisis of transition, we also have to see that the reserves of this public policy approach have been exhausted and this does not only jeopardize the utilization of the advantages of EU accession. The condition of the Hungarian system of municipalities does not even allow the implementation of a social policy that is able to prevent the peripherization of the country, nor can it guarantee the minimum level of social cohesion and the competitiveness of the economy. If we narrow our statement exclusively to the direct financial threats, we have to see that the indebtedness of the municipality sector is one of the threats to fiscal stability.