In Hungary there are 3,175 local governments, thirteen times more than in Sweden. While New York with a population of over eight million has five boroughs, Budapest with less than two million people has twenty-three districts. Each district (kerület) has its own mayor and deputy mayor. There is, of course, the mayor of city (főpolgármester), Gábor Demszky, who has occupied this post since 1990. He also has several deputies (alpolgármesterek). The chaos in Budapest is monumental: different parking rules in different districts, different local taxes depending on which district one lives in, for some streets the district is responsible while others belong to the center. Some buildings or lots are owned by the districts, some are under the jurisdiction of Budapest's central government. Each district has its local council, and the center also has a governing body. I hate to think how many people work for just the city of Budapest. Far too many. Apparently there is one local government employee for every thirty-one Hungarian citizens. Every little village, some of them with only a few hundred inhabitants, has a functioning local government although the next village with a similar number of inhabitants might be just down the road, about two or three kilometers away.
Péter Róna, an American trained economist and investment banker, talked about the incredible waste of this system. Gábor Demszky who, I'm sure, is sick and tired of his twenty-three little district mayors, seconded it and said that he was sure the Hungarian system of local governments could be entered in the Guiness Book of World Records. In 1990 the "founding fathers of democracy" believed that real democracy should be based on local governance and initiative. I'm sure that this is a good idea, but they went a bit overboard with the numbers. Running the 3,175 local government costs 3,500 billion forints a year. This figure doesn't include the rather large debt load local governments carry. Forty percent of the cost of running these local governments comes from the central budget. The rest from other sources. For example, most of the hospitals are owned by the local governments but their expenses are covered by the central Health Fund. Out of the 3,175 local governments just last year 700 were in financial trouble. Or, less politely said, they would have been bankrupt without the helping hand of the central government. Twice a year a local government can turn to the central government and explain that they are in trouble due to no fault of their own. Just last year 8 billion forints were paid out to local governments in financial straits.
Then there are those who issue bonds and try to raise money that way. The debt load of these towns is 488 billion forints. When the Hungarian national debt is calculated, the debt of local governments is not included in the total. Some of the money received from issuing bonds is spent not on infrastructure but on the daily running of the local institutions. Often, the local governments can't function well because both the mayor and the council members are elected by popular vote on the basis of party affiliation. So it can easily happen that the mayor belongs to one party while the majority of council members belongs to another. Cooperation becomes difficult and in some cases impossible.
Fifty-five percent of all local governments serve fewer than 1,000 people, 75 percent fewer than 2,000 and 91.5 percent fewer than 5,000 people. The cost just to run "town hall" is 2,400 billion forints. That includes salaries, building maintenance, heating and electricity, official cars, etc. Apparently every Hungarian citizen pays about 631,000 forints yearly for the services of his or her local government. That is about $3,200. (And for those in the U.S. who see the lion's share of their local taxes go to education, that's not the case in Hungary. The central government pays.) Incredible. Moreover, the whole system as it functions right now is not only very expensive but also a "hotbed of corruption" as Péter Róna called it.
Róna at the National Summit claimed that 1,000 billion forints could be saved by reforming the whole system. Not every little burg has to have a town hall, a mayor, a whole slew of clerks. Fidesz won't hear of any change because most of the local governments are in Fidesz hands. The government made several attempts at reform but since such a change demands a two-thirds majority, without Fidesz support nothing can be done. Moreover, not everybody is in favor of reform. One doesn't have to be a local representative of Fidesz. The person easily can belong to MSZP or SZDSZ. Because, after all, the twenty-three district mayors and district deputy mayors who would lose their jobs are not going to be terribly enthusiastic. Erzsébet Gy. Németh (MSZP) who has been active in Budapest local government and at one point ran unsuccessfully for mayor sure didn't like Róna's suggestion. She was also present at the National Summit and contended that "running local governments" doesn't cost as much as Róna claims and therefore there is no way that the country can save 1,000 billion forints by reforming the system. Maybe not, but I'm sure the savings would be huge.