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Italy: Updated Legislation on Territorial Entities and their Financial Stability

(July 22, 2015) On June 20, 2015, Decree-Law No. 78, on sub-national territorial entities, entered into effect in Italy. (Decree-Law No. 78 of June 19, 2015, Urgent Provisions on Territorial Entities [D.L. No. 78], GAZETTA UFFICIALE, No. 140 (June 19, 2015), NORMATTIVA (in Italian).)

Fresh Funds for Disaster Relief

The new legislation approves the goals established by the Internal [Financial] Stability Pact for the years 2015 through 2018, which was signed at the State-Cities and Local Autonomies Conference held in Italy on February 19, 2015. (D.L. No. 78, art. 1(1).) Each of the objectives identifies sums to be allocated to each territorial unit through the Collection Fund for Underperforming Loans. (Id.) During each year, from 2015 to 2018, funds are allocated for some municipalities to alleviate the consequences of any disasters in their vicinity that have resulted in a declaration of a state of emergency. The funds are designated for work aimed at securing the structures of school buildings, ensuring the functioning of lead government agencies, and enforcing judicial decisions in cases related to structural failures or expropriations. (Id. art. 1(2)(a)-(d).)

In addition, D.L. No. 78 establishes urgent measures for speeding up the reconstruction efforts in the Abruzzo territory affected by the earthquake of April 6, 2009. (Id. art. 11(1).) Provisions are included to ensure legality and transparency in the use of the funds allocated to such efforts. (Id. art. 11(4)-(7).) In particular, anti-Mafia control mechanisms are set in place to prevent criminal organizations from infiltrating and spoiling reconstruction efforts. (Id. art. 11(8).)

For initiatives to reconstruct public property damaged during the earthquake, including buildings of artistic, historical, cultural, or archeological interest, each competent government agency must establish a multi-year operational program, with an accompanying financial plan. (Id. art. 11(9).) Catholic dioceses must be heard when the reconstruction of sacred places is involved. (Id.) The legislation creates the Single Contracting Station to coordinate reconstruction of government buildings damaged during the 2009 earthquake. (Id. art. 11(10).) Other provisions address reconstruction work to be carried out in the aftermath of the earthquakes that affected the Emilia, Lombardy, and Veneto regions on May 20 and 29, 2012. (Id. art. 13(1).)

New Funds to Tackle Regional and Municipal Deficits

D.L. No. 78 also appropriates funds to make up deficits arising from the national co-financing of structural funds of the European Union supported by the regions for priority work within the strategic infrastructure program of the Ministry of Infrastructure and Transportation and for other structural funds approved by the EU for infrastructure work throughout Italy. (Id. art. 1(8)(a)-(c).)

Provisions on Sounder Financial Management at the Provincial and Regional Levels

The new legislation creates mechanisms aimed at forcing territorial entities to perform a periodic review of their balance sheets, to eliminate budgetary deficits, and to secure liquidity to serve extant debts. (Id. art. 2(4)-(6).) To this effect, the law creates the Communal Solidarity Fund 2015, to be distributed from 2016 onwards among the municipalities of the regions “with ordinary statute” (that is, those regions created in 1970 that enjoy exclusive legislative powers in matters not reserved to the state), including Sicily and Sardinia. (Id. art. 3(1).) The law establishes a complex multi-step algebraic formula to allocate the funds to each local government, which includes elements such as revenue generated by each locality’s municipal taxes and the given locality’s proportion of funds derived from participation in the Communal Solidarity Fund for the year 2014. (Id. art. 3(4)(a)-(b).)

As a consequence of the financial adjustments to be implemented at the municipal level, provisions regulating staff relocation and transfer are included. (Id. art. 4(1)-(2).) The law also regulates the administrative aspects of the transfer of provincial police personnel to the municipal police. (Id. art. 5.)

Other provisions concern the renegotiation of mortgages by territorial entities (id. art. 7(1)-(2)) and increases in the funds for securing the liquidity of the payment of certain debts to benefit some of the territorial entities. (Id. art. 8).) Provisions to ensure the financial soundness of regional budgets for health facilities and local universities are also included. (Id. art. 9).)

Amendment of the National Registry of Resident Populations and the Electronic Identity Card

The law amends the current legal framework governing the National Registry of Resident Populations (ANPR, in Italian), and the Electronic Identity Card. (Id. art. 10.) The ANPR contains a national digital archive for the registry of the civil statuses of all residents, and municipalities are authorized to set up their own registries only when the ANPR, which is still in process, is completed, provided that these local registries are continuously coordinated with the ANPR. (Id. art. 10(1)(a)-(b).) The ANPR is operated by the Ministry of the Interior in conjunction with the Agency for Digital Italy. (Anagrafe nazionale della popolazione residente (ANPR), ANPR website (May 5, 2015); D.L. No. 78, art. 10(2).) In turn, the Ministry of the Interior designs and issues electronic identity cards. (Id. art. 10(3).)

Other Miscellaneous Provisions

The law also includes measures to foster the creation of employment throughout the country through the use of a complex mechanism that includes funding from the local, regional, national, and EU levels of governance. (Id. art. 15(1).) Finally, the law sets forth urgent measures to expedite bidding procedures for the granting of concessions for the operation of public cultural institutions and facilities. (Id. art. 16(1).)