Last year Latvian municipal reform was completed and the merged municipalities work with the new budgets from January. However, residents and local governments have already faced a steep energy price hike. The situation has not become easier due to the green course that provides for new restrictions. What can local governments and residents expect this year? LETA interviewed Environment Protection and Regional Development Minister Arturs Toms Pless (For Development/For).

How successful has the merger of municipalities been? Have municipalities been able to harmonize their regulations, agree on support to residents?

Overall, the process has been quite successful. Local governments are on different development stages in relation to revision of expenditure and optimization of administrative structures, harmonizing their regulations. Those municipalities that used their time wisely until July 1, thinking about how work will be organized in the new territorial framework, show the best results. It is reflected in saving resources that can now be used for different kinds of social support.

Speaking about regulations, the final deadline for harmonizing all regulations is June 1, 2022. Many municipalities have been working hard and have adopted the new regulations, but some others have not yet completed their work on it.

There have been reports that residents of some new municipalities will receive lower benefits after the merger. What can people do if they are dissatisfied with the situation?

I think that first they have to turn to their own local government to learn about the reasons why these benefits have been reduced. We have pointed out that the new local governments should strive to keep the services at the level that provides the best results. In many cases it means not to reduce the size of social benefits. This situation clearly shows which municipalities have done their home tasks.

How big have financial gains been for local governments after mergers? Are there municipalities where the gains have not been as big as hoped?

The most important aspect is how timely the local governments have been able to plan how to use the tax-payers’ money in the most efficient way. In Valmiera, for example, we see that at least EUR 500,000 have been economized on the account of administrative structure. Ogre municipality also has saved EUR 200,000-300,000. I think that when local councils adopt their budgets, we will see the situation better.

It is clear that this heating season local governments will have an additional task to provide support to their residents in overcoming the energy crisis. On the part of the state, we have made significant steps to ease this tough winter for residents. Several local governments have also made decisions on support to their residents, for example, in Olaine and Ropazi municipalities and others. The situations, however, will be different.

Several municipalities turned to the Constitutional Court, asking not to allow mergers. The Constitutional Court also tasked the government to solve the situation with development centers in Ventspils, Rezekne, Augsdaugava, Saulkrasti, Varaklani, Dienvidkurzeme and Jelgava municipalities. Are the solutions for these municipalities ready?

Saeima has made a decision that the merger of the state cities and the adjourning territories will take place in 2029. The ministry is not happy about such a decision because it would have been better to merge the state cities and their territories at once or in 2025, but it is a better decision than no decision at all. We see already now that cooperation between the state cities and the adjourning territories is very close. People mostly work in the city that is a development center, use its services, and it is only logical that all resources and the budgets are planned jointly. We see that in Europe cities are developing more successfully only where there are the so-called functional regions, where the city is together with a rural territory, where development and investments are planned together. The current EU planning period focuses on this element - not to scatter money in small projects, but invest in functional territories in order to win return from development of business and in the context of residents.

You just took part in a discussion on Riga metropolis and said that Riga should plan beyond its administrative borders. Can this be done from the legal point of view because municipalities may not invest in a territory that belongs to another municipality?

Already now local governments have the rights to cooperate in several areas, jointly plan development and investments. The Riga area has a huge economic potential as Riga produces about 60% of the gross domestic product (GDP), therefore planning should be joint. For example, public transport development, public utilities should be planned jointly. Also, in the current EU funds period, functional territories will have a better access to resources.

Why has this cooperation not been successful? Already last year there were talks about three extended routes by Rigas Satiksme to Pieriga municipalities. Even though Riga and Rigas Satiksme claim that everything is ready, passengers are not being transported on these extended routes.

It is an important question how municipalities may cooperate, communicate and plan development. It is clear that more than half of people living in municipalities around Riga, work in Riga and use its services. It is just logical that the infrastructure that is used jointly is also maintained jointly. Moreover, it is important from the perspective of development. Looking at other capitals or metropolises, we see that the public transport network is integrated, and transport to the city and the city border is convenient.

At present there are problems in many municipalities for residents to get to the center of their own municipalities. Such problems have been reported in Marupe and Ropazi municipalities, for example. How can this be solved?

It is a matter of municipalities to arrange everything so that residents can easily get where they have to get. On the part of the ministry, we can help with different investment programs that we have implemented last year and this year at the amount of EUR 30 million in the form of grants and EUR 70 million in the form of loans. There should be an initiative, understanding and vision what local governments want to implement. They are the closest ones to their residents and their needs.

It was reported recently that among all government members you have the largest number of different aides? Why is it so?

Some of the aides are not regular staff, they do not receive a wage. Therefore, this number might be deceiving. Understanding how many areas the ministry is in charge of, and how big political role these issues on the strategic and long-term development play not only in Latvia, but also in the EU and on global level, it is clear that a strong team is necessary. It is necessary so that we are able to actively participate in environment protection and regional development issues, provide the necessary vision so that changes can be implemented successfully. I think that our performance has demonstrated that we are able to ensure results in these directions - by implementing the administrative territorial reform, introducing the packaging deposit system. What we have achieved shows that the team is working. It is what matters.

There have been heated discussions about the fight of municipalities against gambling. How many municipalities now are working on restricting gambling?

We do not have such comprehensive information about all the municipalities working on such regulations or local planning to curb gambling in certain territories. We do not collect such information. We are reviewing the regulations that are adopted by the local councils and come to the ministry.

As I said, in recent months there have been many such regulations on different topics - keeping of pets, social issues, territorial planning, property tax discounts, advertising, etc. This is the usual procedure how we supervise local governments. If there are problems with legislative compliance, we point them out.

Why did regulations of Kekava municipality council, banning opening of new gambling halls in the territory, came into force and then you cancelled them? Why did the ministry not suspend them sooner?

At the moment when Kekava municipality adopted these regulations - in September 2021 - the ministry, assessing the regulations, pointed out to the municipality that there are problems with compliance of the regulations with legislation, and they should correct them if they wish to curb gambling in their territory. I still am not sure why the municipality after consultations with the ministry’s lawyers still chose the path that did not comply with the legislation. There was nothing else for me to do than to annul the regulations.

In your opinion, how should local government act in order to curb gambling in their territories?

We already pointed the directions of actions when consulting Kekava municipality for the first time and when we annulled the regulations. In Kekava’s case - their regulations were not in compliance with other regulations and territorial planning in general. As we said, if the local government wants to curb gambling in its territory, these are the rights of the local council. In that case, however, local planning should be changed. Salaspils municipality is one of the positive examples - as it seems right now - that listened to the ministry’s consultations and made the necessary steps.

What about the decision of Riga to allow gabling only in five-star hotels? Does it meet the legislative requirements?

Riga has adopted territorial planning that has been prepared in a period of eight years. By February 15, we will wait for complaints or objections from the residents, businessmen and NGOs. Only after February 15, we will start to assess this territorial development plan. We are given six months to assess the document on more than 1,000 pages. Then we will provide our opinion on that.

Do I understand it correctly that those municipalities who wish to completely ban gambling in their territories will face problems? Meanwhile., those, who manage to find territories where gambling is allowed, will succeed in approval of such legislation?

It is one of the elements. The law does not allow municipalities to ban gambling in its whole territory.

On February 1, the new packaging deposit system will be launched. Will it start working without any delays?

I should say that I am very happy that the deposit system will finally start work. In believe that the whole Latvian society has been waiting for this event for a long time already. The decision to introduce the packaging deposit system one year sooner than initially planned meant huge workload for the State Environment Service, the deposit system operator. I can confirm that the deposit system will start working on February 1. There had been some delays with construction authorities in some specific locations, but this will not affect operations of the deposit system. In total, there will be 1,400 points where beverages packaging will be accepted, and more than half of them will be automated packaging deposit machines. Thus, residents in every city and town across Latvia, purchasing a beverage in a bottle or can, will be able to return it. It is important to say that there is a transition period planned in the law - from February 1 until July 31. During this time, there will beverages in stores with the deposit label and without it, but starting from August 1, the stores will be selling beverages with the deposit label only.

Is the number of packaging deposit machines sufficient, and there will be no blank spots on the map?

The deposit point number will be broad. This was one of the preconditions we had on the part of the ministry. If the deposit system is launched, every Latvian resident, when purchasing a beverage bottle, should have a chance to return it. About 1,400 packaging deposit points in the whole territory of Latvia will ensure that. It is not excluded that this number might increase in the future.

The Saeima this year might adopt the law on municipalities. What is the most important thing that will change in the work of local governments?

At present, the Saeima responsible committee is revising the bill for the second reading. More than 300 proposals have been submitted. This bill will bring changes in the work of the local governments, also in the context of the administrative territorial reform. The most important thing is to re-define functions of local government, for example, establish municipal police, ensure sobering services, promote care for environment, attract young people to decision making process. The institutions of councils, competence of officials will be defined. Local residents will be engaged in decision making on the local level more actively.

You mentioned municipal police. Many municipalities do not have such structures. Will there be any criteria for the new municipal police?

The main problem is that so far there has been much uncertainty about how to organize public order. Some municipalities established municipal police, others established public order units or some other institutions, which have much less rights and authority. The new bill will provide that every municipality should have municipal police. Thus, there will be a unified understanding, functions and people will be able to feel safe.

What is happening with one of the biggest priorities of the ministry - digital transformation?

Last year we started several activities to transform public administration in information and communication technologies framework. The main direction is to head towards more centralization - so that many different data centers are not fragmented. We have made a clear step, making a decision that we are moving towards competence data centers.

Another important element is provision of services closer to residents. We have started work on development of state and municipal customer service centers. At present there are more than 200 such centers, but by the end of the year this number will increase to 400. These will be about 70 percent of the overall service centers where people will be able to submit their income statements to the Revenue Service, receive services from the State Social Insurance Agency. They will not have to go to the administrative center or Riga to receive these services. They will be able to go to the local library as a one-stop agency, and access all state and municipal services.

What other assistance from the state can municipalities expect?

This year, municipalities will have access to a broad range of financial resources for investments in development. For example, EUR 37 million will be available in municipal grants for significant initiatives. In addition, a EUR 70 million loan program to finance projects in ten directions, for example, the road network, hygiene requirements in education institutions, renovation of education institutions, investments in renewable energy resources and others

Does this support help municipalities to transform their boiler rooms, chaning the type of fuel and giving up natural gas?

The big cities - Riga, Rezekne, Daugavpils - have the biggest problems with use of natural gas. Such a loan program, worth EUR 70 million would not be sufficient because there are also other needs. I think that it is necessary to cooperate with the Economics Ministry to understand the direction and support instruments to understand how we are able to make a transition from natural gas to biomass. In addition, I have tasked the ministry experts to work on development of a support program for replacing gas boilers with biomass boilers, heat pumps, solar panels, wind generators, allowing residents to choose much more efficient solutions.

Solar panels in Latvia have become popular in recent years, while in other countries, such as Australia, they have been in use for years. Now they are ringing alarm bells about how to utilize the used solar panels. Do we have ideas what to do with solar panels after 20-25 years?

Solar panels are one of the types of electric appliances, levied with natural resource tax. It is clear that their popularity will grow. Looking ten years back, we see that there were different kinds of waste that we did not know what to do with it. Technologies are developing and the situation is different now. In 20-25 years, it will become clear for us how to use this equipment repeatedly or find another solution. This also refers to batteries in electric cars.

What do you think about state support to purchase of electric cars?

I believe that the government is heading in the right directions. It is important to reduce greenhouse gas emissions in the transport sector. One of the ways to do it is to decarbonize the private car park.

What do you think about Riga’s attempts to introduce low emission zones and improve air quality?

It is important that local governments take care of air quality and climate change mitigation, as cities, especially large ones, indirectly produce 80 percent of greenhouse gas emissions. Therefore, not only the state, but also the local government has a big role in ensuring a good quality of life for its residents. According to international organizations, air pollution is a direct cause of premature death for people all over the world, so such steps must be taken. It is needed to assess the extent to which the burden on the population is proportionate. There must be a transition and investment programs to implement much more what is envisaged in the common green course. The transition must be socially responsible and fair. If such decisions are made that restrict residents' ability to change their boilers, the municipality should also come up with support mechanisms to help, otherwise the effect may be the opposite. This heating season has clearly shown that the green course and the transition to climate neutrality, as well as the wider use of renewable resources, is not a whim but a necessity. It is a necessity to reduce the heating and electricity bills of residents in the coming seasons. If we do not invest in energy efficiency, if we do not switch to renewable energy sources, then the cost of energy will be expensive enough for us all.