Staffers of Tirahut Rural Municipality have been deprived of their salaries since the start of the fiscal year 2021-22, because the local government has yet to present the budget for the new fiscal year.

It is one of the two dozen local governments that are yet to present the budget for the current fiscal year. Most of the governments that have defaulted on budget presentation are from Province 2.

As per the Intergovernmental Fiscal Arrangement Act-2017, local governments were required to present their fiscal budgets for the fiscal year 2021-22 by Asar 10 (June 24) at their village or municipal assemblies.

“Our staff have not received their salaries since mid-July,” said Hemanta Kumar Behadkher, the chairman of the Tirahut Rural Municipality.

But his rural municity had held a village assembly meeting on June 24 and also presented the annual policies and programmes. “As our cheques to be paid to suppliers, contractors and service providers had not been cleared, we could not present the budget on time,” said Bahadkher.

He now plans to present the budget after the Dashain festival. “The delay in budget presentation has affected development projects,” he said. Ever since their election in 2017, the local governments have continuously defaulted on the budget presentation deadline.

But officials at the Ministry of Federal Affairs and General Administration say that there has been some improvement but the problem continues.

“The local governments where the mayor or chairperson does not have a majority support have basically failed to present the budget on time,” said Basanta Acharya, spokesperson for the ministry.

Legally, governments—federal, provincial and local—cannot spend without passing their budgets. The budget is essentially a law whose endorsement from parliament at the centre, provincial assembly and village or municipal assemblies at the local level is a must for spending the funds.

The country witnessed a government shutdown after the bill to replace the budget ordinance was not passed by the House of Representatives and National Assembly on time.

The replacement bill should have been endorsed by both houses of parliament by September 15 but the meeting of the lower house was adjourned until September 20 amid obstruction of the house meetings by the main opposition CPN-UML.

The replacement bill was passed by the lower house on September 20 and it was endorsed by the Upper House on September 23 paving the way for the federal government to spend the budget.

However, Acharya said that many local governments that failed to present the budget on time still spent funds without any legal basis. “In fact, there is no law to stop the central government from providing grants to the local governments failing to present a budget in time,” he said.

In July, the Federal Affairs Ministry had asked the Finance Ministry to bar local governments from spending funds until they present their new budgets. But the Finance Ministry has not taken any decision on the request, according to officials.

The National Natural Resources and Fiscal Commission has made a timely presentation of the budget by the local governments as one of the conditions for allocating grants from the centre since last year.

On a 100 point scale, timely budget presentation and approval alone will ensure a local government 10 points. The budget should be passed by the end of the fiscal year. Based on the score received by a local government, the commission recommends the amount of fiscal transfer to be made to the local government by the federal government.

But Acharya said local governments, however, insist that the federal government has no authority to halt the funds allocated to them and the centre should do more to empower local governments.