The Slovenia Times

Emergency flood relief and reconstruction bill passed

Post-flood clean-up in Mežica, north Slovenia. Photo: Boštjan Podlogar/STA

The National Assembly passed an emergency bill on 31 August to provide for reconstruction and aid after the devastating floods that hit large parts of north and central Slovenia in early August, along with the budget revision for 2023 needed to kick-start funding.

This is the second emergency bill passed in the wake of the disaster, after the first one, amending the Natural Disaster Relief Act, dealt with the immediate clean-up effort.

The latest law comprises four sets of measures: one set aimed at the affected households, one at businesses, one at municipalities and one entailing measures to repair and rebuild public infrastructure, watercourses and ensure flood safety.

The latter set will be upgraded with a reconstruction bill that is yet to be drawn up by the government. In addressing the parliament, Prime Minister Robert Golob assessed the reconstruction would take at least five years and up to €7 billion would be invested for the purpose.

The goal would be not only to restore the flooded areas to their previous state, but to rebuild them to make them "significantly more resilient to similar natural disasters".

While €520 million is being provided through a revision of this year's budget, European funds are expected to be the most important source, totalling around €2 billion, including €400 million in grants from the Solidarity Fund.

Controversy over mandatory contribution

The most contentious measure involves a mandatory contribution to the reconstruction fund that is being founded with the same bill and will also pool funds from the state budget, EU funds and other sources, such as donations.

The contribution, to be charged in 2024 and 2025, amounts to 0.8% of pre-tax profit for companies and 0.3% of income tax for individuals. The bill allows for an alternative contribution by way of forfeited earnings from two "solidarity Saturdays" worked in 2023 and 2024.

The opposition argued there was no need to reach into people's wallets, given that the extent of the damage is not clear yet and that people have already shown and will continue to show a lot of voluntary solidarity, including by helping on weekends.

The Democrats (SDS) wanted all additional levies removed from the proposal, with the party leader Janez Janša arguing all other solutions should be examined first, including EU funds.

He said the damage assessments could prove exaggerated and there would be ample time to amend the bill with the contributions later if this proved necessary.

"The solidarity contribution definitely must not become a permanent tax," Matej Tonin, the leader of New Slovenia (NSi) said, but his party backed the bill, although "through gritted teeth".

In the end, SDS MPs abstained from the vote, so the bill was passed with 56 votes of the coalition, the NSi and the two minority MPs. Nobody voted against.

Aid for households, businesses

The bill also brings a 12-month moratorium on loan repayments for individuals an legal entities affected, emergency cash solidarity assistance of up to €11,600 for a family of four, and exemptions from the payment of electricity bills, utility bills and the like.

The bill also provides for inclusion of all unemployed in public works programmes, facilitates employment of foreign workers and introduces unlimited work for pensioners who wish to help out. It also offers help to farmers, including by reducing cadastral income for damaged land.

There are a few tax perks as well, most notably a reduced 5% VAT rate for firefighting vehicles and equipment. Businesses which provide temporary shelter to flood victims will have more favourable tax treatment.

The aid also includes furlough subsidies for businesses. Employees who cannot go to work because the company is flooded or roads to the workplace are damaged will be entitled to 80% of their wages, of which 80% will be covered by the state.

Employees of flooded companies who have helped clean-up their companies during their work time will get full August wages even though the companies suspended their business.

To aid in the reconstruction effort, the unemployed will be financially incentivised to join public works programmes while pensioners will be allowed to work up to 90 hours per month, up from 60.

The self-employed who lost at least 25% of their annual revenue due to floods will also eligible for aid.

Municipalities affected by the floods and landslides will be able to borrow money beyond the maximum limit.

To speed up the reconstruction efforts, the environmental impact assessment required under law is being temporarily scrapped and procedures are being simplified for the state buying land to build the necessary facilities.

Budget tweaks

The MPs unanimously backed the required supplementary budget for 2023 to allocate €520 million for flood relief measures.

While €300 million of the total sum will mainly come from unused reserves for potential recapitalisations of state-owned companies, an increase in government budget expenditure was required for the remaining €220 million.

Finance Minister Klemen Boštjančič promised the funds would be spent prudently, and stressed that "at this point in time, the envisaged changes to the budget do not require any additional borrowing".

The opposition agreed the changes were needed, but the SDS and NSi had expected much more. The SDS's Suzana Lep Šimenko said all ministries and their bodies should have tried to find potential internal reserves and redirect them toward this effort.

Coalition MPs in turn pointed out that the bulk of the funding for reconstruction will not come from the 2023 budget but from the budgets for the coming two years.


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