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OPPORTUNITIES AND THREATS OF CONCENTRATION OF LOCAL SERVICES PROVISION IN HUNGARY.

TABLE OF CONTENTS
I.   Introduction
II.  The Frameworks of the Hungarian Local
     Public Service Delivery System
     II.1. The Starting Point: Concentration
           and Centralization in the Area
           of the Soviet-type Administration
     II.2. The Strongly Decentralized Model of the
           Act LXV of 1990 on the Local Self-Governments
III. The Time of Concentration in the Light of the European
     Tendencies and the Reforms in Hungary
     III.1. A Theoretical Outlook: Concentration,
            Centralization and Decentralization
     III.2. A European Outlook: Concentration Tendencies
            in the Public Service Provision in Europe
     III.3. Concentration of the Provision of Municipal
            Public Services in Hungary
IV.  After the Economic Crisis: The Age of Recentralization
     IV.1. The Transformation of the Frameworks of the
           Hungarian System After the Economic Crisis
     IV.2. Changes of The Provision of Local
           Public Services After 2010
V. Conclusion
References


I. INTRODUCTION

The public services and the services with general interest have great importance in the modern economies, as well as in the local public services. The paper is based on the European and Hungarian regulation and experience, therefore I would like to demonstrate the significance of these services and I would like to demonstrate the share of several services in the Hungarian GDP (see Table 1).

The regulation and management of these services have a great impact on the economic growth. As the subject of the paper is very complex and it could be a basis for several monographies and books (3), I would like to highlight only several elements of new challenges local public service management faces with in Hungary that is now the Member State of the European Union, but our economy and the society have several transition element as an Eastern Central European Country. (4) First of all, I would like to analyze the frameworks of the Hungarian public service delivery system.

II. THE FRAMEWORKS OF THE HUNGARIAN LOCAL PUBLIC SERVICE DELIVERY SYSTEM

11.1. The starting point: concentration and centralization in the era of the Soviet-type administration

After the World War II a Soviet Administrative System was set up in Hungary. The local governance of the municipalities was cancelled; in practice, the councils were the local and regional "agencies" of the central government. (5) This model changed after the reforms of 1968. The town areas (varoskornyek) were established by Act I of 1971 "On the Councils". In the 1960s a new tool of the concentration appeared: the municipalities merged. The main form of thas merging process was the formation of common village councils (kozsegi kozos tanacs). In that model the former municipalities preserved their formal independency, but their administrative structure was united. Therefore, a merged municipality was formed. Although merging communities were an important element of reforms, the intercommunal associations were reborn. The problem of cooperation between towns and villages was not solved by the merge of municipalities and town areas were not universal in the 1970s. Therefore, the town-village associations that can be classified as intercommunal cooperation were established by a normative tool. (6) Another important change was the elimination of the districts (jaras) in 1983. Under this reform the town areas became universal in the rural administration. This system existed until 1990. By the evolvement of new, democratic Hungary the former, concentrated structure was converted.

II.2. The strongly decentralized model of the Act LXV of 1990 on the Local Self-Governments

The Hungarian local public services delivery system was based on the Hungarian local municipalities after the Change of the Communist System. After 1990 a strongly decentralized municipal system evolved. In that system every community (villages, towns, county towns and the capital city and its districts) had the right to local self-government. It was declared by the amended Constitution that municipalities include a village, town, county, the capital and its districts. These municipalities had "fundamental rights" guaranteed by the Constitution. (7) Although these fundamental rights could be limited by an Act that was approved by the qualified (two-third) majority - the criteria of their limitation was very strictly defined by the Constitutional Court. (8) Second-tier municipalities, regional local self-governments (9), counties (megye) had mainly additional, intermediate public services provider tasks. Although local democracy was strengthened by this regulation, several dysfunctional phenomena arose.

The main problem with the broad competences of the local municipalities was the fragmented spatial structure in Hungary. Hungary has now more than 3 000 local municipalities and the majority (55,8%) of them have fewer than 1 000 inhabitants (see Table 2).

After 1990 local municipalities were primarily responsible for the provision and management of the water, sewage and waste facilities management, for the street lighting, for the district heating with regard to services of general interests. The tasks of management and provision of social care, health care, public cultural services (for example, local libraries and community centres), the majority of the public education tasks were assigned to the competences of these local municipalities. The Act LXV of 1990 "On the Local Self-Governments" allowed the (national) legislation to define mandatory municipal tasks by Acts of Parliament. The number of these tasks was defined by an Act of Parliament and increased steadily until 2010. In 2000s approximately 3000 municipal competences were regulated by such acts. (11)

As I have mentioned, counties play a subsidiary intermediate level services provider role. They were responsible for providing the intermediate level services of public education (grammar schools, youth hostels, vocational training), health care (inpatient care and professional outpatient care) and social care (residential care, residential child protection). This provider role was just a subsidiary one, because communities could take over the majority of these tasks.

As the fragmented spatial structure and the fragmented local public services delivery system were mainly locally centred, several problems with the economy of scale occurred during the 1990s. (12)

III. THE TIME OF CONCENTRATION IN THE LIGHT OF THE EUROPEAN TENDENCIES AND THE REFORMS IN HUNGARY

III.1. A theoretical outlook: concentration, centralization and decentralization

The theoretical framework of my analysis is the concentration and, to some extent, the centralisation of the public services. But before giving the detailed analysis, I would like to define these concepts, because my paper will be based on them. Decentralisation is referred to the principle of autonomy that is linked with self-governance as a guarantee that decentralised bodies act in the name and according to the will of the community to which powers are transferred by decentralisation. In modern administrative sciences decentralisation can be approached in various ways, for example: competitive and non-competitive, internal and external, vertical and horizontal, but a detailed analysis of these forms exceeds the framework of the paper. (13) In classical administrative jurisprudence centralisation is considered as the concept by which the unity of the administration is ensured, but at least political and administrative administration can be distinguished from aech other. (14) Centralisation is closely linked to the principle of deconcentration under which administrative activities are executed at a territorial (local or regional) level, but directed by central government. (15) The concept of concentration is at the same time linked with the concept of decentralisation, it can be defined as local public services delivery provided by concentrated local government units. 16 These concepts are the framework of my analysis.

III.2. A European outlook: concentration tendencies in the public services provision in Europe

The 1980s witnessed the triumph of decentralization. The changes were related to the reforms of the New Public Management (the NPM) in Europe. One of the main objectives of the NPM was to strengthen competition, and the decentralized services delivery system could fulfil that task. (17)

The NPM was a dominant paradigm but in the 1990s rather strong criticism of this concept has evolved. New paradigm formed the New Public Service, the Good Governance and the Neo-Weberian State (18) Concepts.

The core values of the NPM paradigm were competition and market-type mechanisms. Outsourcing, public-private partnerships (PPPs) and vouchers belonged to the most important market-type mechanisms. (19) Those tools had several dysfunctions as well. They were criticised because the transfer of the risks could be unequal, and if the programs were not well operated, it could result in efficiency loss, as well. As the problem was described, the main focus of these tools was the economic efficiency and other aspects that were taken into account limitedly. (20)

The transformation of the legal regulation and practice was forecast by critics. After several dysfunctional phenomena that were caused by the pure economic approach of the NPM the concepts concerning the major values of competition changed. For example, the concept of the best price was replaced by the "Best Value" in the British public procurements. (21) By that approach social impacts were partly taken into account.

The major change was the evolvement of the concept of the so-called in-house public procurements. The formation of this institute was related to the NPM paradigm as well, especially with regard to the German approach to the NPM, the so called "neues Steuerungsmodell" (the New Management Model). Under the German approach institutions were mainly governed by private law. Thus, in the 1980s and 1990s a significant number of public corporations (22) were transformed into corporations governed by private law (mainly, into private limited companies (Aktiengesellschaft) and into companies with limited liability (Gesellschaft mit beschrankter Haftung)). These private companies were owned by the public entities and they were responsible for providing public services, but they were managed by the tools of private law. Public entities were main shareholders and they were managed in this way. The new type of management was called "Investment Management" ("Beiteiligungsmanagement"). (23) This new way of public services management caused new problems.

The main problem was the requirement of providing public procurements. Municipal companies governed by public or private law could be considered as the participants of economic competition. If these entities were considered to be such subjects, then the public procurement should be conducted whatever public service was provided by an entity directed by a public body. (24)

The change of the approach in Europe was shown by the landmark judgements of the European Court of Justice (ECJ) with regard to the in-house public procurements and granting state aid for the providers. Thus, the services provision governed by public law was strengthened in Europe, and the practice of the European Court of Justice was changed. The exclusion of competition in the field of public services was permitted by the ECJ practice in a broader scope. The trend was firstly marked in Telekom Austria. (25) The in-house procurement, when a public entity is not obliged to fulfil a public procurement procedure, was confirmed in this case. But the criteria for granting the state (municipal) aid for these - practically private - providers were not developed. The landmark decision on the criteria of the permissible state aid was the case Altmark. (26) In Altmark case the criteria of the state aid for providing public services were defined by the ECJ. (27) This change can be considered as "silent revolution" because the former competition centred paradigm transformed into an approach under which the security of public services provision is the main value and the institutions of the public law are accepted. (28) This approach employed for local public services was provision was strengthened by the case Stadt Halle. (29) In this case in-house procurement and the state (municipal) aid for a (practically public) waste management provider were recognised. (30) The change of the approach was marked by these cases.

III.3. Concentration of the Provision of Municipal Public Services in Hungary

The regulation in Hungary transformed during the late 1990s and the 2000s. Transformation was consistent with the European trends. On the one hand, the framework of the services delivery was redefined by the new acts (for example the Act XLIII of 2000 on Waste Management, Act XLIII of 2003 on Gas Supply, Act XVIII of 2005 on District Heating Services Act LXXXVI of 2007 on Electricity) that were passed mainly as the result of the Hungarian legal integration into the legal system of the European Union and Hungarian legislature. harmonization The legal harmonization began after Hungary filed the Application for the Accession to the European Union in 1994, but Hungary had a legal alignment obligation from 1991 when the Association Agreement (European Agreement) between the European Community and Hungary was signed. (31) The legal harmonization procedure accelerated after 2000-2001. Hungary joined the EU in 2004.

On the other hand, the dysfunctional phenomena related to the fragmented spatial structure became obviously visible after the mid-1990s and, therefore, new tools have been created by the central legislation. In 1997 a French-type intercommunal cooperation system was created that was based on the institutional diversity. (32) The system was further developed in 2004 when the Act CVII of 2004 "On the Multipurpose Micro-regional Associations" was passed. Although according to the former Hungarian regulation only voluntary intercommunal associations could be formed, the new rules and the support given to the inter-municipal entities (see Table 3) by the central budget strengthened this new, concentrated form of public services delivery.

Thus, the number of these associations increased significantly. In the early 1990s the lack of this cooperation could be observed, but the inter-municipal associations became common by the mid-2000s (see Table 4).

Although the number of the inter-municipal association increased, several problems related to the fragmented structure cannot be solved by means of this instrument. Thus, the pricing of the services was a major problem. The Act LXV of 1990 "On the Local Self-Governments of Hungary" stated that the local governments were responsible for water and sewage management. The act that regulated these services provision stated that their prices are defined by the decree of a certain local government. This regulation was proper when the water management system was a separate one, but they are mainly regional systems. Disputes evolved when the common pricing approach to the regional systems was resisted by a member of municipalities. (35) The significance of the economy of scale problem was marked by the named disputes and dysfunctions.

After the mid-1990s different solutions evolved that have some elements in common. The major one was the concentration of the services provision. Thus, first, water, waste and sewage management was concentrated. The main aim of the concentration was the economy of these services. One of the concentration tools was the joined service provision by an intercommunal association. Therefore, inter-municipal associations were the first to evolve. This form of the inter-municipal cooperation was formed in the field of the water and sewage management and waste management because these services were provided formerly by joined companies. (36)

Another solution was that the municipalities contracted with the same companies to perform the named services. Thus, their provision was integrally organized by that company. Primarily and at the very beginning water management was provided in that way and it was based on the former provision model. The majority of the Hungarian communities took part in regional water management systems that were managed by public corporations before 1990. This integration has remained, but the corporations transformed into companies (that were governed by private law). (37) Another solution evolved in the waste management field. After the late 1990s the role of private capital became more important. During the pre-Accession process the European regulation on the waste management was implemented. Major improvements were required by the EU environment protection rules and the resources that municipalities possessed were not sufficient. Therefore, A major form applied in order to provide public services was outsourcing. (38)

Both of these solutions had shortcomings. First, intercommunal associations did not have complete competences. Thus, local communities had several powers by which the competences of common frameworks were limited. A good example was the problem of pricing that has already been considered above. The second solution applied in this model also had some problems, smaller municipalities - and not big, integrated entities - hade to make contracts with a more powerful provider company.

Similar changes evolved in the field of health care, social care, education and cultural services. From the early 2000s the public services provision - their concentration - was encouraged by the central government. As I have written above, the main form of the concentration of these services was a multi-purpose micro-regional association. Thus, this concentration was voluntary, as well, but the vast majority of Hungarian local municipalities took part in this cooperation. (39)

IV. AFTER THE ECONOMIC CRISIS: THE AGE OF RECENTRALIZATION

IV.1. The Transformation of the Frameworks of the Hungarian System after the Economic Crisis

This system was heavily affected by the economic crisis in 2008/2009. First, the concentration of these services was not a quick change. The impacts of the crisis were sometimes immediate. Moreover, the larger municipalities were indebted: they had large amount of local public debts to finance the developments of the local services provision significantly supported by the European Union. (40) The slow transformation of the system and the aftermath of the crisis was a great challenge to the legislation.

In 2010 the legislative background changed radically. The former right-wing opposition parties, the Fidesz and the KDNP gained the two-third majority in the Hungarian Parliament. This, they had the constitutional majority. The winning parties began to prepare the draft of a new Constitution in 2010 and the Proposal of the new Constitution (The "Fundamental Law of Hungary") was submitted to the Parliament in 2011. (41) As I have mentioned, the provision of the local services plays an important role in the Hungarian political and administrative system. Therefore, the resolution of the phenomenon of disfunctionality related to them was the part of the disputes with regard to this question during the constitutional process. (42)

Two main approaches have evolved in Hungary. The first approach was based on the concentration process acceleration by means of formation of the mandatory intercommunal associations. The main advantage of this approach is acting in favour of local interests. These associations are municipal bodies and their decisions are joined decisions of the communities involved. Thus, the decision-making process is relatively close to the local citizens. Although such decisions are grassroots, this means that the service provision units are relatively small. This type of cooperation is efficient for a micro-regional entity. (43)

The second method is a simpler one: nationalization of local services. In this case a service provision unit is a large one, i.e. the whole country. This advantage can be considered as a disadvantage, as well. A service provision unit is relatively large and the administration and management of this country-scale systems could have flexibility problems.

IV.2. Changes of the Provision of Local Public Services after 2010.

The problem concerning the application of these two approaches was not decided by the new Constitution, by the Fundamental Law of Hungary. Thus, they both may be applied. (44) The mandatory intercommunal Association--that can be established by an Act of the Parliament - has been institutionalised by Paragraph 2 Article 34 of the Fundamental Law of Hungary. These associations could be responsible for performing any mandatory municipal tasks. (45)

Although the frameworks of the further concentration of the local services provision were created by Fundamental Law of Hungary after 2012, the major approach of the Reform was the centralization of the public services.

In the field of infrastructural public services (especially water, sewage and waste management) several key competences were centralised. First, the pricing of these services belonged no more to the competences of the local municipalities, as that used to be before. Now the Minister for National Development and an autonomous public body, a regulatory authority, the Hungarian Energy and Public Utility Regulatory Authority are responsible for this task. (The price is mainly defined by the Minister Decree that is based on the decision of the regulatory authority). Thus, the local governments lost their pricing functions.

Several public services were nationalised and assigned to municipalities. Under the new Act on Waste the waste management companies were required to hold majority ownership and the national or municipal corporate governance rights. Thus, private companies can be only minority shareholders in these companies and were not allowed to have corporate governance. (46) Not only statutory nationalisation and municipalisation took place in Hungary: several municipalities (especially the Capital Municipality of Budapest) and the Hungarian State acquired shares and divisions of several public utility companies. (47)

The next level of centralisation of these services was the coordinated management of new companies owned by the State and by the local governments. A managing holding, the First National Utility Services Ltd., was established to coordinate publicly owned electricity and gas utility companies. In the field of the waste management, a statutory coordination has evolved: the National Waste Management Coordinator and Holding Ltd. The majority of the owners of waste management companies are the municipalities, but the new company - that is 100% state owned - has broad competences and broad management tasks.

Although basic health care, social care services, kindergartens and the maintenance of the educational infrastructure and the local cultural tasks are assigned to the responsibilities of local communities, the counties lost their roles as services and inpatient health care providers, the major part of residential social care and education were nationalized. (48) These services are provided by the central government and its agencies. (49)

This nationalization has several opportunities. The former fragmentation of the services provision system could be eliminated. Nationally uniform and more effective systems can be formed by centralized providers. Thus, the economy of scale problems can be solved by the new approach. The prices for these services (and, thus, the state expenditures) can be reduced by due to these benefits.

Although the opportunities of centralization are relatively significant, the risks are relatively enormous, as well. The new, centralised and large providers and maintainers could have several problems. For example, information flow problems could occur and the provision of the services could be more inflexible. They both are real threats. In the field of waste management the central government estimated great savings, which could be the benefit of centralization. Therefore the prices were strongly reduced. But the centralized system did not have enough benefit. Thus, the public providers have been indebted and they required significant state aids. The new holding structure has problems as well. The latest news is that a provider in Northern Hungary gave up the services provision and the involvement of a temporary provider is required. Second, the maintenance of the public education became more inflexible and objections have been raised against the centralized educational system.

An the last but not the least. Concentration tendencies have remained in the local administration, as well. Although the number of the intercommunal associations dropped (from 1185 to 709) , administration of small villages (less than 2 000 inhabitants) is based on a mandatory type of intercommunal cooperation of the common municipal offices. Thus, the only form of the mandatory intercommunal association is this common municipal office. (50)

V. CONCLUSION

In the field of local public services the tendency of concentration and of growing public influence could be shortly reviewed in Europe. Changes in Hungary fit the trend, but very strong centralization and concentration have evolved in the country, which gives great opportunities, as well as high risks.

References

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[4.] Bovis, Ch. H. (2012). EU Public Procurement Law. 2nd ed. Edward Elgar.

[5.] Chien, H. (2015). Beyond the Dichotomous Evaulation of the Public Value - PPP Relation: From PPP to PPX' Lex localis. Journal of Local Self-Governanment. 375.

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[7.] Fabian, A. and Hoffman, I. (2014). Local self-governments, in Patyi, A. and Rixer, A. (eds.). Hungarian Pubic Administration and Administrative Law. Schenk Verlag.

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[11.] Gyiran, Z. (2013). Az onkormanyzati adossagrendezes kerdesei (Issues of the municipal debt settlement), in Horvath, M. T. (ed.). Jelensegek (Events). Dialog-Campus.

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[13.] Hoffman, I. (2011). A helyi onkormanyzatok tarsulasi rendszerenek fobb vonasai (Main characteristics of the intercommunal cooperation). Uj Magyar Kozigazgatas. 24.

[14.] Hoffman, I. (2011). Behind the (EU) Scenes: The Role of the Self-Governments in the Waste Management Public Services. JLEICE, 22.

[15.] Hoffman, I. (2013). Main trends of the changes of the legal regulation on municipal organizations in the last decades. Annales Universitatis Scientiarium Budapestinensis de Rolando Eotvos Nominatae. Sectio Iuridica.

[16.] Hoffman, I. (2014). Waste Law in Hungary, in Tomoszkova, V. (ed.). Implementation and Enforcement of EU Environmental Law in the Visegrad Counties. Palacky University.

[17.] Horvath, M. T. (2002). Helyi kozszolgaltatasok szervezese (Management of local public services). Dialog-Campus.

[18.] Horvath, M. T. (2005). Kozmenedzsment (Public Management). Dialog-Campus.

[19.] Horvath, M. T. (2011). Csendes fordulat (Silent Turn). Jogtudomanyi Kozlony, 173.

[20.] Korkut, U. (2012). Hungary, in O Bechain, D., Sheridan, V. and Stan, S. (eds.). Life in Post-Communist Eastern Europe after EU Membership. Happy ever after? Routledge.

[21.] Kiraly, M. et al. (1998). AzEuropai Kozosseg kereskedelmi joga (Commercial Law of the European Community). KJK-Kerszov.

[22.] Kuhlmann, S. and Wollmann, H. (2014). Introduction to Comparative Public Administration. Administrative Systems and Reforms in Europe. Edward Elgar.

[23.] Kupper, H. (2010). A helyi onkormanyzas joga' (Right to local self-governance), in Amdras, J. Az Alkotmany kommentarja (Commentaries on the Constitution). Szazadveg.

[24.] Mezey, B. et al. (1996). Magyar alkotmanytortenet (History of the Hungarian Constitutional and Administrative Law). 2nd rev. ed. Osiris Kiado.

[25.] Nagy, M. and Hoffman, I. (eds.) (2014). A Magyarorszag helyi onkormanyzatairol szolo torveny magyarazata (Commentaries on the Act on Local-Self-Governments of Hungary). 2nd rev. ed. HVG-Orac.

[26.] Pollitt, Ch. (2005). Decentralization, in Ferlie, E., Lynn, L. E. and Pollitt, Ch. (eds.). The Oxford Handbook of Public Management. Oxford University Press.

[27.] Pollitt, Ch. and Bouckaert G., (2011). Public Management Reform. 3rd ed. Oxford University Press.

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[29.] Rusche, T. M. (2013). The Almunia package: Legal Constraints, Policy Procedures and Political Choices, in Szcyszak, E. and van de Gronden, J. W. (eds.). Financing Services of General Economic Interests. Reform and Modernization. Asser Press and Springer Verlag.

[30.] Ronellenfitsch, M. (2007). Vorausstezungen und historische Entwicklung privatwirtschaftlicher Betatigung der Gemeinden, in Hoppe, W. and Uechtritz, M. (eds.). Handbuch Kommunalen Unternehmen. 2nd rev. ed. Verlag Dr. Otto Schmidt.

[31.] Sonnevend, P., Jakab, A. and Csink, L. (2015). The Constitution as an Instrument of Everyday Party Politics: The Basic Law of Hungary, in von Bogdandy, A. and Sonnevend, P. (eds.). Constitutional Crisis in the European Constitutional Area. Theory, Law and Politics in Hungary and Romania. Hart Publishing.

[32.] Szente, Z. (2013). Hungary--Local government in Hungary: A creeping centralisation? In: Panara, C. and Varney, M. Local Government in Europe. The fourth" level in the EU multilayered system of governance. Routledge.

[33.] Szigeti, E. (2013). A kozigazgatas teruleti valtozasai' (Spatial changes of the public administration), in Horvath, M. T. Kilengesek. Kozszolgaltatasi valtozasok (Fluctuations. Changes of the public services). Dialog-Campus.

[34.] Wollmann, H. and Marcou, G. (eds.) (2010). The Provision of Public Services in Europe. Between State, Local Government and Market. Edward Elgar.

Istvan Hoffman (a, 1)

(a) Eotvos Lorand University, Budapest hoffman.istvan@ajk.elte.hu

(1) Author

PhD, dr. habil. Associate Professor, Eotvos Lorand University (Budapest), Faculty of Law, Department of Administrative Law Hungary, H-1053 Budapest, Egyetem ter 1-3.

(2) Source: Hungarian Central Statistical Office, http://www.ksh.hu/docs/hun/ xstadat/xstadat_eves/i_qptoo2c.html, accessed on May 5th 2016.

(3) One of the latest books on the public service provision in Europe is Hellmut Wollmann and Gerard Marcou (eds.), The Provision of Public Services in Europe. Between State, Local Government and Market (Edward Elgar, 2010)

(4) Umut Korkut, 'Hungary' in Donnacha O Bechain, Vera Sheridan and Sabina Stan (eds.): Life in Post-Communist Eastern Europe after EUMembership. Happy ever after? (Routledge 2012) pp. 86-87.

(5) Mezey et al., Magyar alkotmanytortenet (2nd revised ed.) (History of the Hungarian Constitutional and Administrative Law) (Osiris Kiado, 1996), p. 399.

(6) See Joint statement of the Minister for Building and Urban Development and of the Office of the Cabinet responsible for the Councils No 24. of 1976. (24/1976. MTTH. kozlemeny)

(7) Herbert Kupper, 'A helyi onkormanyzas joga' (Right to local self-governance) in Jakab Amdras, Az Alkotmany kommentarja (Commentaries on the Constitution) (Szazadveg, 2010) pp. 1506-1507.

(8) See Resolution No 4 of 1993 (published on February 12th) and Resolution No. 64 of 1993 (published on December 22nd) of the Hungarian Constitutional Court.

(9) The average area of a county is approx. 4870 [km.sup.2] and the average population of these entities is approx. 428 000 inhabitant (inclusive the county towns).

(10) Source: Szigeti Erno, 'A kozigazgatas teruleti valtozasai' (Spatial changes of the public administration) in Horvath M. Tamas, Kilengesek. Kozszolgaltatasi valtozasok (Fluctuations. Changes of the public services) (Dialog-Campus, 2013), p. 282.

(11) Hoffman Istvan, Onkormanyzati kozszolgaltatasok szervezese es igazgatasa (Management of municipal public services) (ELTE Eotvos, 2009), pp. 172-176.

(12) Szente Zoltan, 'Hungary - Local government in Hungary: A creeping centralisation?' in Carlo Panara and Michael Varney, Local Government in Europe. The fourth" level in the EU multilayered system of governance (Routledge, 2013), pp. 169-172.

(13) Chritopher Pollitt, 'Decentralization', in: Ewan Ferlie, Laurence E. Lynn, and Christopher Pollitt (eds.) The Oxford Handbook of Public Management (Oxford University Press, 2005), pp. 372-375.

(14) Sabine Kuhlmann and Hellmut Wollmann, Introduction to Comparative Public Administration. Administrative Systems and Reforms in Europe. (Edward Elgar, 2014), p. 12 and Anna Forgacs, 'The Regulatory Powers of Agencies in the United States and the European Union', European Networks Law and Regulation Quarterly [2015] 11, p. 19.

(15) Berenyi Sandor, Az europai kozigazgatasi rendszerek intezmenyei (Institutions of the European public administration systems) (Rejtjel, 2003), p. 243.

(16) Horvath M. Tamas, Helyi kozszolgaltatasok szervezese (Management of local public services) (Dialog-Campus, 2002), p. 177-178.

(17) Horvath M. Tamas: Kozmenedzsment (Public Management) (Dialog-Campus, 2005), p. 35-37.

(18) Christopher Pollitt - Geert Bouckaert, Public Management Reform (3rd ed.) (Oxford University Press, 2011), pp. 12-19.

(19) Jon Blondal: 'Market-type Mechanisms and the Provision of Public Services', OECD Journal on Budgeting [2005] 79.

(20) Herlin Chien, 'Beyond the Dichotomous Evaulation of the Public Value - PPP Relation: From PPP to PPX' Lex localis - Journal of Local Self-Governanment [2015] 375, p. 376.

(21) Andrew Arden, Christopher Baker and Jonathan Manning, Local Government Constitutional and Administrative Law (2nd ed.) (Sweet & Maxwell, 2008), pp. 1007-1010.

(22) In the German law the so-called Regiebetribe and the Eigenbetriebe could be considered as public corporations. These corporations are governed by the public law and they are public entities which are directed (almost partly) hierarchically. See more: Wilfried Erbguth, Thomas Mann and Mathias Schubert, Besonderes Verwaltungsrecht. Kommunalrecht, Polizei- und Ordnungsrecht, Baurecht (12th rev. ed.) (C. F. Muller, 2015), pp. 141-142.

(23) Michael Ronellenfitsch, 'Vorausstezungen und historische Entwicklung privatwirtschaftlicher Betatigung der Gemeinden' in Werner Hoppe, Michael Uechtritz (eds.) Handbuch Kommunalen Unternehmen (2nd rev. ed.) (Verlag Dr. Otto Schmidt, 2007), p. 11.

(24) Christopher H. Bovis, EU Public Procurement Law (2nd ed.) (Edward Elgar, 2012), pp. 327-328.

(25) Teleaustria Verlags Gmbh and Telefonadress GmbH v. Telekom Austria AG, C-324/98, ECLI:EU:C:2000:669

(26) Altmark Trans GmbH and Regierungsprasidium Magdeburg v. Nahverkehrgesellschaft Altmark Gmbh, C-280/00, ECLI:EU:C:2003:415

(27) Thus a state aid is permissible if, (1) the recipient undertaking must actually have public service obligations to discharge, and the obligations must be clearly defined; (2) the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner, to avoid it conferring an economic advantage which may favour the recipient undertaking over competing undertakings. (3) The compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations. (4) where the undertaking which is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with the necessary means, would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging the obligations. See more: Tim Maxian Rasche, 'The Almunia package: Legal Constraints, Policy Procedures and Political Choices' in Erika Szcyszak, Johan Willem van de Gronden (eds.) Financing Services of General Economic Interests. Reform and Modernization (Asser Press and Springer Verlag, 2013), pp. 116-117.

(28) Horvath M. Tamas, 'Csendes fordulat' (Silent Turn) Jogtudomanyi Kozlony [2011] 173.

(30) Istvan Hoffman, 'Behind the (EU) Scenes: The Role of the Self-Governments in the Waste Management Public Services' JLEICE [2011] 22.

(31) Kiraly Miklos et al. Az Europai Kozosseg kereskedelmi joga (Commercial Law of the European Community) (KJK-Kerszov, 1998), pp. 345-356.

(32) Fazekas Marianna et al., Kozigazgatasi jog. Altalanos resz I. (Administrative Law. General Part Vol I.) (2nd rev. ed.) (ELTE Eotvos Kiado, 2015), p. 294.

(29) Stadt Halle and RPL Recyclingpark Lochau GmbH v. Arbeitsgemeinschaft Thermische Restabfall- und Energiewertungsanlage TREA Leuna, C-26/03, ECLI:EU:C:2005:5.

(30) Istvan Hoffman, 'Behind the (EU) Scenes: The Role of the Self-Governments in the Waste Management Public Services' JLEICE [2011] 22.

(31) Kiraly Miklos et al. Az Europai Kozosseg kereskedelmi joga (Commercial Law of the European Community) (KJK-Kerszov, 1998), pp. 345-356.

(32) Fazekas Marianna et al., Kozigazgatasi jog. Altalanos resz I. (Administrative Law. General Part Vol I.) (2nd rev. ed.) (ELTE Eotvos Kiado, 2015), p. 294.

(33) Source: Hoffman Istvan 'A helyi onkormanyzatok tarsulasi rendszerenek fobb vonasai' (Main characteristics of the intercommunal cooperation) Uj Magyar Kozigazgatas [2011] 24, p. 31.

(34) Source: Ministry of Interior of Hungary.

(35) See Resolution GVH VJ-62/2006/14 of the Hungarian Competition Authority.

(36) Pump Judit, 'Kozerdek, kozszukseglet es kozszolgaltatas a hulladekgazdalkodasban' (Public interest, public need and public service in the waste management) in LitkeyJuhasz Orsolya and Trombitas Gabor (eds.) A telepulesi hulladekgazdalkodas valsaga (Crisis of the municipal waste management) (Alapveto Jogok Biztosanak Hivatala, 2012), pp. 166-169.

(37) Hoffman, supra note 10 at pp. 258-260.

(38) Hoffman supra note 29 at pp. 259-261.

(39) Hoffman supra note 10 at pp. 380-381.

(40) Gyiran Zoltan, 'Az onkormanyzati adossagrendezes kerdesei' (Issues of the municipal debt settlement) in Horvath M. Tamas (ed.) Jelensegek (Events) (Dialog-Campus, 2013), pp. 109-111.

(41) Pal Sonnevend, Andras Jakab and Lorant Csink 'The Constitution as an Instrument of Everyday Party Politics: The Basic Law of Hungary' in Armin von Bogdandy, Pal Sonnevend (eds.) Constitutional Crisis in the European Constitutional Area. Theory, Law and Politics in Hungary and Romania (Hart Publishing, 2015), pp. 43-45.

(42) Fazekas et al. supra note 31 at pp. 262-263.

(43) Hoffman supra note 10 at pp. 381-382.

(44) Fazekas et al. supra note 31 at pp. 294-295.

(45) Istvan Hoffman, 'Main trends of the changes of the legal regulation on municipal organizations in the last decades' Annales Universitatis Scientiarium Budapestinensis de Rolando Eotvos Nominatae. Sectio Iuridica [2013], pp. 301-303.

(46) Istvan Hoffman, 'Waste Law in Hungary' in Veronika Tomoszkova (ed.) Implementation and Enforcement of EU Environmental Law in the Visegrad Counties (Palacky University, 2014), pp. 142-143.

(47) The Capital Municipality of Budapest bought the 25% of the shares of the Capital Water Management Co. and the Capital Sewage Management Co. The Hungarian State bought several divisions of the ELMU Co. and EMASZ Co. (electricity companies) and the EON Hungary Co. (electricity and gas companies).

(48) Adrian Fabian, Istvan Hoffman, 'Local self-governments' in Andras Patyi, Adam Rixer (eds.) Hungarian Pubic Administration and Administrative Law (Schenk Verlag, 2014), p. 333.

(49) Janos Fazekas 'Central administration' in Andras Patyi, Adam Rixer (eds.) Hungarian Pubic Administration and Administrative Law (Schenk Verlag, 2014), p. 299.

(50) Nagy Marianna, Hoffman Istvan (eds.), A Magyarorszag helyi onkormanyzatairol szolo torveny magyarazata (Commentaries on the Act on Local-Self-Governments of Hungary) (2nd rev. ed.) (HVG-Orac, 2014), pp. 299-300.
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