Municipal solidarity balancing funds and additional municipal solidarity balancing funds do not have the nature of grants, but entail measures by which the legislature rectifies objective differences between municipalities. These funds are in their entirety the own funds of municipalities and are calculated for an individual municipality on the basis of criteria determined by law. Therefore, the regulation of appropriate expenditure by the Financing of Municipalities Act does not place municipalities in a subordinate position in relation to the state.
With regard to the financing of municipalities, the second sentence of Article 142 of the Constitution established a special regulation in relation to the general principle of equality before the law determined by the second paragraph of Article 14 of the Constitution. In light of the procedural legal basis for a municipality to lodge a request in accordance with Article 91 of the Local Self-Government Act, allegations of an inconsistency with the principle of equality before the law may only constitute an additional argument supporting an alleged interference of the state with the constitutionally determined autonomy of local communities, but cannot entail an independent basis for a review of the challenged regulation.
Municipalities are public law entities that exercise predominantly authoritative functions at the local level. The Constitution protects their autonomous position in relation to the state. In order to be able to protect this position from state interference, the Constitutional Court Act and the Local Self-Government Act provide municipalities with legal remedies that ensure them a privileged position in proceedings before the Constitutional Court in instances of an inadmissible state interference. When municipalities act in their non-authoritative capacity, their position is protected by constitutional procedural safeguards, and therefore in such instances municipalities may also lodge constitutional complaints against individual acts by which their rights have been decided on, subject to the conditions determined by Articles 50 through 60 of the Constitutional Court Act.
Municipalities and the state share the obligation to formulate and implement the economic and fiscal policy of the Republic of Slovenia. Article 148 of the Constitution imposes the obligation to strictly observe the fiscal capacities of the state. In this regard, the state must observe the principle of proportionality between the financial resources and the tasks of municipalities within restricted fiscal frameworks. As the state enacted special measures to this end and the applicants failed to demonstrate that the Government did not proceed from the legally determined data in the procedures for the conclusion of agreements regarding the determination of the lump sum allocation [i.e. the per capita funds allocated to municipalities for the financing of their statutorily determined tasks] for an individual budget year, the second paragraph of Article 11 of the Financing of Municipalities Act is not inconsistent with Articles 138 and 140 of the Constitution.
The Rules on Determining Sub-programmes for Calculating the Average Costs for an individual budget year do not guarantee that these sub-programmes refer only to activities of municipalities that are determined by law. Therefore, the Rules were inconsistent with the second paragraph of Article 120 of the Constitution and the Constitutional Court abrogated them. As the Rules constitute the basis for determining the lump sum allocation, their abrogation shall take effect following a one-year suspensive time limit.
The constitutionally determined autonomy of municipalities does not guarantee that they may retain a surplus of funds exceeding the amount of appropriate expenditure. From the perspective of the principle of proportionality between the financial resources and the tasks of municipalities, it could be problematic if the amount of own sources for financing appropriate expenditure were reduced to such an extent that under the new regulation of their financing municipalities would have to compensate for the missing funds required to exercise their constitutional and statutory tasks with fiscal balancing funds from the state budget. However, the request failed to demonstrate such a reduction of funds with regard to the challenged Article 55 of the Implementation of the Budget of the Republic of Slovenia for 2016 and 2017 Act, and therefore this provision is not inconsistent with Articles 140 and 142 of the Constitution.
The voluntary nature of the right of municipalities to associate determined by Article 86a of the Local Self-Government Act allows municipalities to establish an association also in instances when the central purpose of the association is to pursue their special interests. Associations of municipalities that unite only specific municipalities with regard to their special interests are established on a different foundation than associations of municipalities that are open to all municipalities, and therefore their respective positions also differ. It does not follow from the legislative materials that the legislature had reasonable grounds for determining the same criteria for obtaining the status of a representative association as regards all associations of municipalities, including those that differ from each other, nor do such grounds follow from the reply of the National Assembly or the opinion of the Government. As with regard to the status of a representative association the legislature failed to demonstrate reasonable grounds deriving from the nature of the matter for the equal treatment of associations of municipalities that are different, the Constitutional Court held that the seventh paragraph of Article 86a of the Local Self-Government Act is inconsistent with the second paragraph of Article 14 of the Constitution.