Bulgaria to Recategorize Municipalities Based on New Criteria

All municipalities in Bulgaria will be reclassified according to new criteria based on the 2021 census. This recategorization is crucial for various municipal financing systems, including building taxes, allocation of funds under new investment programs, and regulations supporting state-delegated activities.

An inspection by "Sega" media revealed that new criteria for categorizing municipalities and settlements were voted on at the end of last year. Following a November 2023 Court of Justice decision, a six-month deadline was set for preparing a categorization methodology, which has now been approved. However, evaluation of individual municipalities using this methodology is still ongoing.

Significant changes in municipality categories are anticipated due to the dynamic nature of the indicators used in the assessment. The evaluation criteria are divided into four categories: demographic status (population, age dependency, changes since the last census), economic potential, infrastructural development, and territorial potential. The methodology includes maps for each indicator, with municipalities rated on a scale from 1 to 5, where higher scores indicate poorer performance. The final categories, to be approved by the regional minister, are not yet listed in the methodology, though the dynamics of the indicators are notable.

Noteworthy shifts have been observed in population indicators. Data shows an increase in the number of smaller municipalities and a decrease in larger ones, though this grouping is merely illustrative of the dynamics involved.

Currently, the Ministry of Regional Development and Public Works (MRDPW) is finalizing agreements with municipalities under the 2024 investment program, based on their categories. The maximum funding available to a municipality is determined by its category: 50 million leva for category 1, 30 million leva for category 2, 15 million leva for category 3, etc. The largest cities, with populations exceeding 180,000, can receive up to 100 million leva. It is expected that some municipalities may be reclassified into lower categories due to deteriorated indicators, although agreements may already be in place before the regional minister issues the order with new categories. The timeline for this order remains unclear.

The new categories will influence various budget allocations and funding standards, including property tax assessments, municipal administration financing, emergency response standards, and educational supplements for schools and kindergartens in small and remote areas.

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