Problems of the ownership supervision by local government organizational units of the public finance sector

Abstract

This article presents how the ownership supervision enforced on the level of local government units has evolved due to the ownership and organizational transformations in the so-called process of corporatization. The essence of pursuing economic activity by local governments applying different organizational possibilities is also discussed. Advantages and disadvantages of various approaches to the issue in the context of the budget – economy rules and the financial situation of the local governments are also presented in this article. Having considered economic efficiency and public utility the optimal of the numerous solutions must be chosen. Besides there is the analysis of the ownership supervision performed by local authorities over organizational units of the local government and commercial law companies with the government’s participation. The institutional bases of applying the ownership supervision and the issues of the Public Finance Law as well as the Code of Commercial Partnerships and Companies are also addressed.

The main matters are: different institutional circumstances of the ownership supervision before and after the transformation, and the lack of changes in the property structure. The analysis of the problems is based on the case study of the transformation of a budget entity into a limited liability company established to handle the waste management in the municipality.

A conclusion of the presented article is the necessity of more detailed identification and analysis of the institutions and supervisory mechanisms adequate for the public sector (including local government sector). This area demands additional attention due to more intensified transformations over the last few years. The analysis of the described transformation presents also several matters of general concern related to the problem in question.