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City potentials - complexity and difference?

City potentials

A research called City Potentials, conducted by Deloitte in collaboration with The Centre for Democracy and Law "Miko Tripalo", a non-governmental organisation, has revealed complexities and differences in the local self-government systems across the Republic of Croatia. The research included 61 cities. The survey results show that, on the one hand, a majority of city governments in Croatia are committed to strategic planning, while on the other hand, there is a permanent awareness of the need to achieve best possible results within the given resource limits. The City Potentials research has highlighted the quality of managing finances and other activities from the areas of competence of local governments as a key success factor.

The results of the research into the functioning of the cities in Croatia were presented in today's press conference. The main topics covered were ways to find new financing and local and regional self-government managing models, and the role of the cities in the economic development, both as part of a process intended to identify the necessary changes in the functioning of the entire local self-government system.

The conference was attended by mayors of many Croatian cities and towns, as well as representatives of legal and financial institutions.

"In Croatia, the time is ripe for redesigning the local-self government system. There are four main directions of those changes: to increase the accountability of local authorities, to change the territorial distribution and regionalism, to change the financing system, and to improve operational efficiency", emphasised professor Josip Kregar, Ph.D., Chairman of the Steering Committe of the Centre for Democracy and Law "Miko Tripalo" at the Faculty of Law.

It is interesting that the majority of the cities and towns having developed their strategic plans on the basis of their competitive advantages have identified those advantages to be anchored mainly in tourism and geo-traffic positions. The already established industrial and entrepreneurial zones and communal infrastructure are found to form only a small part of the cities' competitive advantages.

Budget planning has evolved into the key factor of the overall strategic planning ever since the cities have turned to enhancing their competitive advantages. Only a small portion of the cities and towns, 15 percent, use both the bottom-up and the top-down approaches in developing their annual budgets. Simultaneous application of the two approaches is currently seen as the best practice. The budgets are generally prepared on an annual basis, whereas only a very small percentage of the cities elaborate their annual budgets further on a monthly basis.

As many as 58 percent of the city governments have experience in EU funding, which is still a small percentage considering that so far Croatia has been utilising all the EU pre-accession programmes. The fact that almost one half of the respondents have no experience whatsoever with EU funding raises concern, as this will significantly reduce their absorption capacity once Croatia becomes a full EU member and gains access to much larger funds available for various projects. "It is encouraging that almost 84 percent of the cities plan to use EU funding as a key source of financing their development and infrastructure projects. Still, individual EU fund beneficiaries have before them a complex process of applying for those funds. The application process is intricate because the applicable terms and conditions are defined by many EU and national rules", pointed out Tamara Obradović Mazal, a director at Deloitte Business Advisory Services.

Over 80 percent of the respondents from the surveyed city governments believe to have integrated information systems in place, which is an improvement by almost 30 percent compared to the results obtained from an identical survey Deloitte conducted two years ago. However, the number of those assigning adequate attention to the IT function by setting up separate IT units that would provide sufficient support to the business users obviously cannot be described as large (merely 10 percent).

Today we are witnessing a shift of focus to efficient management of assets that are key to all organisations - their people. As many as 72 percent of the respondents undertake employee performance assessments, of which 93 percent do it on an annual basis. In this respect, human resource policies and procedures are an important aspect. Only 52 percent of the city governments confirmed having such policies and procedures in place.

"The aim of the City Potentials Conference was to help identify new financing and financial management models for cities as well as raise the issue of public administration reforms and it was organised at the point at which the global crisis pushes the pursuit of solutions to these issues even more to the forefront,“ emphasises Tamara Obradović Mazal.