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Russia: St. Petersburg Adopts City Road Fund Legislation

St. Petersburg, 25 September 1996 (RFE/RL) -- In a rare unanimous vote, St. Petersburg's Legislative Assembly adopted legislation this week creating a local road fund.

The bill means that the equivalent of $180 million a year that would have been sent to the federal government, and in the past has languished there, may remain in a special fund in the city for the purpose of road building and repair.

Of Russia's 89 regions and republics, only Moscow and St. Petersburg, due to their status as federal cities, have been denied the privilege of a local road fund. The Russian Constitutional Court ruled this spring that the two cities are as entitled as other jurisdictions to withhold tax revenues from the federal government for road building provided they pass the appropriate legislation.

One of the city's problems in municipal construction projects has been a dearth of federal funding. St. Petersburg sends 45 percent of its local tax revenues to the federal budget. One of the highest levies in the Russian Federation. Much of this money is returned to the city to finance projects that fall under federal jurisdiction such as the Metro and cultural monuments, and, until the new legislation takes effect, road building.

When and how much of this funding returns, is decided by the federal government. The funds, when they do return, are not indexed for inflation, resulting in a de facto interest free loan to Moscow. Former Federation Council Deputy Alexander Belyayev, who eventually declined an offer to head the city's Finance Committee, raised the issue during the recent gubernatorial election campaign.