Dhanauji Rural Municipality in Dhanusa is yet to present its budget for the current fiscal year, four and half months after its statutory deadline to do so.

The Intergovernmental Fiscal Arrangement Act-2017 says municipalities and rural municipalities need to present their budget for the next fiscal year by Asar 10 (June 25) every year.

Badri Narayan Singh, chairperson of Dhanauji Rural Municpality said the budget couldn’t be presented on time due to excessive demand for funds from the wards. “Due to reduced fiscal transfer from the federal government, we were compelled to reduce the size of the budget. But demand for funds kept on increasing,” he said.

He said that the policies and programmes of his local government hasn’t been passed yet. Even during the previous fiscal year, Dhanauji officials had presented the budget for the previous fiscal year, only in November.

Dhanauji is one of the three dozen local governments that have received a warning from the federal government for having failed to present a budget or notify the central government about the presentation of a budget. If things don’t change, federal grants to these governments will be halted, officials said .

In a letter to the local governments, the Ministry of Federal Affairs and General Administration said that as per section 32 of the Intergovernmental Fiscal Arrangement Act, the local government is obliged to submit detailed updated information on its budget to the federal government. Otherwise, the federal government can halt fiscal transfer to local governments concerned.

The ministry has also notified that local governments can neither collect revenue nor spend a penny without getting its budget approved by the municipal assembly.

“The letter was issued as a warning,” said Basanta Adhikari, spokesperson for the ministry. “We have already started discussions with the Finance Ministry and other stakeholders over potentially halting fiscal transfers to such local governments,”

He said that as many as 37 local governments have been collecting tax and spending funds without making relevant laws. “Constitutionally, no tax can be collected against the law,” he said

Government employees including teachers, health post and agriculture office staffers, among others at the Rajgadh Rural Municipality, Saptari, haven’t received their salaries as the local government concerned is yet to present its budget.

Salary for federal government staffers at the local level comes from the centre as a conditional grant. By incorporating the federal grant, the local government needs to present its budget as per which salary of federal staff and local staff are also distributed.

Not only Dhanauji, Rajgadh Rural Municipality of Saptari is also failing to present the budget so far. “We have not distributed the salary for staffers yet this fiscal year,” said Parmananda Yadav, chairperson of the Rajgadh Rural Municipality.

According to Singh, the rural municipality has been collecting local taxes such as land and rental taxes. “We have been charging taxes at the same rate as the last fiscal year as we are yet to present the budget for the current fiscal year,” Singh said.

“We have not been able to provide salaries for the last four months,” admitted Singh. “Government staffers have warned us repeatedly that they would launch protests,” he said.

Rajgadh Rural Municipality had presented the budget of the last fiscal year in January 2020 and it is delayed this year too. Yadav, however, blamed the Covid-19 pandemic for the delay. “I myself suffered from Covid-19,” he said. “We had to close the office of the rural municipality.”