Then the 16-year-old high school student from Luka nad Jihlavou, a community of 2,600 in the Vysočina region, heard the news on the radio: The nearby town of Jihlava was offering 2,000 Kč to anyone willing to register as a resident. By attracting several hundred more people, Jihlava was hoping to boost its population above 50,000 and thus qualify for up to 24 million Kč in extra state funding.

The offer was under fire from surrounding municipalities, which stood to lose income if their residents bolted. They accused the town hall of unethical conduct, disloyalty and worse.

But with Christmas approaching fast and his financial situation unlikely to improve any time soon, Krátký was not too troubled by the ethics.

So, last Wednesday, he and three friends skipped their first classes of the day to register among the first of hundreds sought as the new residents — all living, at least officially, in a 110-square-meter (1,200-square-foot) apartment at Legionářů 2 in downtown Jihlava.

They knew that the registration was only on paper and they wouldn't have to move an inch from their real residences. But that was fine with them as long as they were getting cash.

"The town needs money, we need money," said Krátký, who wants to spend his windfall on decorative candles and ceramic mugs for his parents and grandparents. "This is mutual assistance. ... I don't know how I would pay for Christmas otherwise."

For the second year in a row, Jihlava is spending the last days before Christmas shopping for new residents and raising controversy in the process.

Last December, it offered 3,000 Kč to make up for a shortfall of some 700 residents. Within a week, it signed up 1,035.

This year it was hoping to avoid similar measures, said Radek Tulis, spokesman for the Jihlava town hall.

But the town's population started dropping below 50,000 soon after the new year — it turns out that many of Jihlava's newly acquired residents tend to bail soon after collecting their money.

Desperate measures

And attempts to draw more people in during the year, such as by trying to merge with a sizeable community nearby, failed.

Hence, last Wednesday, Jihlava went on a shopping spree again, opening Legionářů 2 to anyone from anywhere in the country in the hopes of attracting between 350 and 400 new residents.

At press time, the town had signed up many new town residents but it was not yet clear whether it would score the state funding once again.

Surprisingly enough, although state finance officials know very well what Jihlava is up to, the city can generally get away with this practice without fear of penalties or investigations and has faced no legal challenges over its instant residents.

But not everyone is convinced that the town is operating in a legal gray area.

The Interior Ministry has issued a press statement warning that Jihlava could be in violation of law because the apartment can in no way accommodate the hundreds of citizens it is meant for. "Our view is that the Jihlava Town Hall does not proceed entirely in line with the law on resident registration and relevant hygienic norms," it reads.

Viktor Wölfl, mayor of Luka nad Jihlavou, the small town that took the largest hit from Jihlava's resident signup last year, losing 55 of its townsfolk and an estimated 300,000 Kč in income, is also dubious about the program.

"Try registering 500 Ukrainians at a single apartment in Prague and getting away with it," he said.

But Veronika Hovorková, spokeswoman for the Finance Ministry, said Jihlava's conduct was "unethical" but not in violation of "any legal norms."

Jihlava spokesman Tulis defends the action as "not illegal" and the only quick solution available under the current funding rules.

"Some tell us that it is fraud," he said, "but I claim that the current allocation of funds is fraud on municipalities."

Under the law, state funding for cities, towns and villages ensures that a portion of income and value-added taxes collected nationally goes to local administrations. The larger the municipality, the more money per resident it is entitled to.

Last year, 114 billion Kč was distributed, an amount that is expected to increase slightly this year.

The problem is that the per-resident funding does not increase on a continuous scale; instead, it conforms rigidly to 14 population levels, starting with communities of 100 and under and ending with Prague, which is in a category of its own.

This benefits communities in the lower part of each level, but towns like Jihlava, the population of which stood at 49,739 last Tuesday, 262 residents short of a higher level, lose out. If the town can grow to the next level, its income per resident is roughly 400 Kč higher.

Jan. 1 residency figures are used to establish who falls at what level for any given year.

Tulis defends the practice as not as deceptive as it sounds, pointing out that many actual residents of Jihlava aren't legally registered there.

"We wouldn't be doing it if the state gave us leverage that would force people living in Jihlava to register," Tulis said, "or if the system were not set up in such a away that one person can decide ... about tens of millions of crowns."

Besides, he said, "We are not saying this is a long-term solution or that it is a moral solution. But it helps us, and it can help people from surrounding municipalities who will be able to ride in better trolley buses on quality roads."

But that doesn't justify Jihlava's current actions, said Zdeněk Jirsa, mayor of Dolní Cerekev, a community of 1,220 some 12 kilometers (7.44 miles) southwest of Jihlava.

Jirsa, who estimates that his community lost 112,000 Kč after 18 of its residents signed up with Jihlava last year, said, "The pie is given. If someone gains extra, the other is robbed. At the very least, it's immoral."

Jirsa adds that the lost revenue would have been enough to pay for 250-300 meters (825-990 feet) of sidewalk or to subsidize a local movie theater for a year.

Luka nad Jihlavou Mayor Wölfl, who has appealed to his townspeople to put their community first, blames disloyal ones. "If they do it as speculation, it's sad," he said. "They should be ashamed."

But, Wölfl says, financial compensation from Jihlava is all that's needed to restore good neighborly relations.

"There is not a single reason for us to be treating each other this way," he said. "If the origin is the current law, then there should at least be some kind of a financial settlement. The moment we make such a deal, there is nothing more to talk about."

Jihlava has repeatedly pledged a willingness to compensate those injured by its actions. But it recently announced that the earliest talks can begin is next spring, when official figures for 2006 become available.