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Russia: Shedding Some Light On St. Petersburg's 'Black Hole'

St Petersburg, Russia; 2 December 1996 (RFE/RL) -- Generations of American politicians have had to accustom themselves to a favorite joke at their expense. When passing a poster featuring a politician's earnest face, someone will typically comment: "Do you trust that man enough to buy a used car from him?" Amid laughter, the general answer is "No!"

In St Petersburg, Russia's second city, a similar quip might be "Do you trust your Legislative Assembly deputies with nearly a million dollars each to spend on good works at their own discretion".

St. Petersburg governor Vladimir Yakovlev apparently did not, and last month he vetoed a bill which would have given each of the 50 deputies 4,800 million rubles (about $875,000) to spend on pet projects of their own.

The city's lawmakers first created the "reserve fund," as it is called, earlier this year, during the administration of former mayor Anatoly Sobchak. At that time they carved out five percent from every budget expenditure except social programs, thus allowing each deputy a cool 5,600 million rubles in discretionary spending.

Officials in Yakovlev's finance committee however complained that the reserve fund was a "black hole," that in fact much of the money was being spent capriciously and with little accountability.

In a well-publicized use of reserve fund money, one deputy spent 4,000 million rubles on an excursion to Alicante in Spain for "workers in the arts, sciences and mass media." Newspaper reports said the deputy had interests in a hotel in Alicante.

The governor's 1997 draft budget thus eliminated the reserve fund. Deputies were of course immediately angered at the prospect of losing so much money with which to endear themselves to their electorates.

The deputies passed a draft law re-creating the fund, trimming it to 4,800 million rubles per deputy. But Yakovlev returned this unsigned, effectively vetoing it, during debate on the first reading of the city's budget on November 20. The matter thus became an issue threatening to delay passage of the 1997 budget.

Then the chairman of the legal affairs committee, Dmitri Kozak, appeared before the assembly last Wednesday and offered an olive branch from the administration. This was that the total reserve fund be cut further to 220,000 million rubles, or 4,400 million for each deputy; that it be financed from cuts in expenditures of the administration's choosing rather than an across the board as previously; and the deputies should only spend money from the fund on social programs.

The 220,000 million figure represents two percent of budget revenues. Additionally, one percent of revenues or 110,000 million rubles would be placed in a reserve fund for the administration's use.

Each of these amendments was approved except for the requirement that funds be spent only on social programs. Instead, the lawmakers passed an amendment stipulating that the 1997 budget name precisely what type of spending from the fund is allowed.

Deputy speaker Sergei Mironov pushed for closure of the issue, and requested a vote on the revised bill. The deputies passed the measure at 17:25 (5:25 p.m.), five minutes before the end of the session.

Mironov and Kozak, approached by an RFE/RL correspondent in the corridors of the Mariinsky Palace, agreed that the issue represented a compromise between the governor and the legislature.

"Of course it was a compromise," said Kozak adding that resulting from some of the unaccountable spending from the fund this year, the administration would be vigilant in monitoring spending in 1997.

"I am always happy when the executive and legislative branch can agree," a smiling Mironov added.

The atmosphere in the city's finance committee, where opposition to the fund has been strongest, was one of resignation.

"Of course I would be much happier without the fund at all, but we needed to compromise," said Boris Vishnevsky, assistant to the finance committee chairman. "We need to pass this budget and the deputies need to show something to their voters."