Gov't cuts regional project funds

The government will slash funding for a program designed to partner with regions in pursuing European Union development grants. Regional leaders say this will force them to make up the difference, limit future projects and risk losing millions of euros in future grant money from Brussels.

As part of the EU Economic and Social Cohesion Policy, national governments can apply for grants with Brussels to finance projects improving transport infrastructure, developing tourism and protecting historic sites, among other things. The EU foots the bill for 85 percent of the projects. Until recently, the national government and a regional partner each kicked in 7.5 percent of the total cost to access the grant money.

Prime Minister Petr Nečas' government originally insisted it would end all its contributions to the projects, but in a shift Sept. 23, backtracked and said it will issue some money, though half as much next year as this year. In 2012, that money will be halved again.

"We are glad the government changed its decision and found money. We are grateful, but now we need to find some extra money, which we don't have at the moment," said Marta Sargánková, a spokeswoman for the Southeast Cohesion Region, where there are now 200 development projects with a shortfall of 400 million Kč ($7.4 billion) in funding that was meant to come from Prague.

"The government's approach is that the region would cover all expenses, [but] for a region to cover several hundred million crowns in such a short period is impossible," Sargánková said.

In the Moravia-Silesia Cohesion Region, federal funding was expected to be 1.25 billion Kč for all the current regionally operated projects (ROPs) and now will be 240 million Kč, according to David Sventek, a spokesman for the region.

"Regions with ROPs will have to react quickly and decrease their rate of support for future proposals," Sventek said. "Unfortunately, due to the Czech government's decision, all regions will lose billions of crowns."

The ministry would not disclose how much is allocated for co-financing ROPs, but regional officials said after meetings they learned that 1.1 billion Kč will be allotted in 2011, and 400 million Kč in 2012. This year, the government provided 2.4 billion Kč. The future cuts will leave the regions holding the bag on work that has been already contracted, with about one-third of the total costs on such projects now unaccounted for.

"The beneficiaries could sue us. We promised them the money through contracts," Sargánková said. "There were a few city mayors who told me already that if they don't get the money, they will sue. So there are threats already, and they're right: They need money. They counted on it, and they have their financial plans based on contract, so it's quite understandable."

Grants for such projects come from the EU Regional Development Fund and the Social Fund, which is meant to reduce the development gap between member states. The Czech Republic was allocated the most funding under this program of any of the 27 member states: more than 26 billion euros for the period 2007 through 2013.

Between 25 percent and 30 percent of projects have the regional government as the main applicant, according to Liberec regional officials. The rest are pursued by NGOs, municipalities and entrepreneurs.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com