STRATEGIC PLANNING IN HUNGARIAN MUNICIPALITIES (I).

• Author: Barati-Stec, Izabella

Plans are useless, but planning is everything.

Dwight D. Eisenhower

1. Introduction

   Implementing strategic planning is getting more and more widespread in public entities and local governments as well. Incentives for strategic planning include factors inside and outside of the jurisdiction, such as the changing of the economic or political environments, changing citizen expectations and as a consequence the desire to adapt to the environment, to benefit from arising possibilities, to be ready to counter threats, to offer better or additional services. Literature also lists some illegitimate reasons for strategic planning. These include the stress from media highlighting the need for strategic planning, administrative rules mandating strategic planning, or simply when a new political appointee wants to change everything his or her predecessors did.

   Strategic planning as part of settlement development has major importance in the lives of the inhabitants of a particular settlement. Settlement development itself is a complex system if we take into account the complexity of tasks to be carried out, as it comprises finding answers simultaneously for environmental, technical, and economic challenges. Besides responding to these challenges coming from outside the community, a strategic plan also comprises a response to community concerns. A strategic plan itself is a response to change and also provides steps to be followed when change is needed, that are in line with the long term vision of the local government. Strategic planning can help today's governments to become more effective.

   Effective local governments are able to respond to citizens' needs for sustainable service delivery; they are resistant to shocks and able to alleviate hardships on citizens caused by economic or environmental crises.

2. Strategic planning in a centralized setting

   In countries where there is a continuing threat of social upheaval and during crises, there is a tendency to give fewer discretionary powers to local governments (Bahl, 2004). Also, one naturally finds higher centralization in countries where the GNP per capita is low. There are reasons for that, since creating bigger units means (i) reaching economies of scale, (ii) better control of central deficit, (iii) the stabilization policy is protected as the use of fiscal policy tools are in one hand (1), (iv) infrastructure investments are centrally supervised, and finally, (v) interregional disparities can be treated easier, as decentralization has a counter equalization aspect. (2) In centralized countries there is little or no room for local strategic planning. Investments are planned and realized centrally and local borrowing is often subject to direct approval from a higher level government.

   According to the IMF (2015) the new wave of centralized investment planning after 2008 '(....) is to target scarce funds to key infrastructure bottlenecks, ensure that investment projects comply with rigorous standards of evaluation; establish a pipeline of strategically important projects to be financed through public, private, or hybrid financing mechanisms; share expertise in project management; and track project execution.'

3. Strategic planning in post-communist settings

   Post-socialist countries in Europe can be divided into two groups. Those that joined the EU or had strong EU influence started their decentralization in the 1990s. The post-soviet and Balkan countries started their decentralization process at the beginning of the 21st century, after revolutions or wars of independence.

   In countries with a shorter history of democracy and recent decentralization, the first stage of decentralization, the first wave of legislation usually creates the framework for a decentralized public administration system. The second stage, the second wave of legislation focuses on ensuring enhanced public accountability and transparency.

   According to a definition on the UN website, 'good governance promotes equity, participation, pluralism, transparency, accountability and the rule of law, in a manner that is effective, efficient and enduring'. Centralized governments assume responsibility for ensuring public goods as they have been determined by the state.

   In post-communist countries, the heavy planning economy of the past has left its heritage on the planning practices of today. Plans focused on rural development and in many cases on directly suppressing development in rural areas.

   3.1. Planning between 1945-1990--the example of Hungary

   After 1945 the small villages, being at the bottom of the settlement-hierarchy, were deprived from development funds. Central development plans only considered sectoral, industrial perspectives, while regional differences were ignored. In 1971, the 'National Settlement Development Concept and Regional Development Principles' ended this practice, but they still did not solve the problem of the already declining regions. It was a town development concept, supposing that towns, as centers of development, will have a positive effect on their rural surroundings.

   3.2. Planning between 1990-2010

   Soon after 1990, after becoming independent, municipalities--at the very beginning mostly as an (i) outcome of foreign aid, (ii) a requirement of the European Union before the accession, (iii) eventually, as a recognized need--started to develop investment plans and to involve the private sector and...