Draft Act Determining Intervention Measures for Flood and Landslide Recovery of August 2023
The recently adopted amendments to the Natural Disaster Recovery Act are not sufficient in the current situation to deal with the extent of the emergency situation and to provide and send adequate assistance to those affected. The proposed solutions and measures, on the one hand, amend and supplement the existing Acts, while on the other hand, they temporarily introduce special measures or derogate from the systemic regulation in several areas. The proposed measures are aimed at the urgent reconstruction of damaged or completely destroyed public infrastructure, and at simplifying a number of procedures and processes for acquiring permits. The Act further contains measures to help municipalities, economic operators and residents, in terms of both material damage suffered by those directly affected and preserving jobs.
The solutions in the area of natural resources and the environment provide for urgent intervention, rehabilitation and preventive measures for flood and landslide recovery, as well as the introduction of maintenance works for the public benefit regarding watercourses and existing community infrastructure.
Additional funds and their efficient use are being provided for the implementation of all the measures described above.
Intervention legislation provides for a remedial municipal detailed spatial plan. This will provide municipalities and citizens with quick and high-quality solutions, as reconstruction can only be carried out under the proper supervision by the architectural and engineering professions and no building permits will be needed.
Technical offices are being set up to speed up the implementation of the reconstruction itself and to ensure coordinated implementation between the various promoters of the measures. The necessary advice and assistance will also be provided in the reconstruction procedures and in obtaining State budget funds for the reconstruction, as well as in the preparation of the required documentation.
The Act stipulates that projects required for disaster recovery shall not be subject to an environmental impact assessment.
The costs of waste management resulting from floods and landslides shall be borne by the Republic of Slovenia.
The solutions adopted in the energy sector exempt consumers whose buildings were completely destroyed and who cannot use electricity or gas at all due to damage to the electrical installations or the gas pipeline network, from paying electricity or natural gas bills in the period from 1 August 2023 until the restoration of the supply.
Gas and district heating consumers will also have the right to withdraw from the contracts on mandatory connection to or mandatory use of energy-generating products if supplies cannot yet be provided by 1 October, so as to allow them to prepare for winter on their own. The Act also provides for solutions for the reconstruction of destroyed or damaged energy utility infrastructure so that all the necessary supply lines can be installed as soon as possible to supply the population in the affected areas.
The Government is aware that the circumstances have caused temporary liquidity constraints for borrowers and is therefore proposing a temporary measure in the area of bank lending under the Act Determining Intervention Measures for Flood and Landslide Recovery. The measure imposes an obligation on banks and savings banks, including branches established in the Republic of Slovenia, to grant a loan deferral of up to 12 months to borrowers who have suffered damage as a result of floods or landslides. Both legal and natural persons are eligible for a deferral, subject to certain criteria regarding the amount of the damage suffered. Beneficiaries must apply to their banks by 31 December 2023 at the latest.
The Act specifies the content of the application according to the type of beneficiary, which, however, has been simplified as much as possible, especially for natural persons. During the grace period, interest may be charged on the deferred part of the principal up to a maximum of 12-month Euribor + 0% or, if more favourable to the borrower, at the regular interest rate agreed at the time of conclusion of the contract.
The Act provides for a derogation from the Consumer Credit Act, so that the borrowers will be able to claim a deferral of the loan payment due to the property damage caused by the August floods for a period of up to 24 months. Borrowers can submit relevant applications to the lenders until 31 December 2023.
For the economic sector, the amended Act also mitigates the provision on aid for damage, so that advance payments of aid of up to 10% of the estimated damage to companies will no longer have to be secured by a bank guarantee. Regarding the measure on aid to the self-employed (self-employed, partners and farmers), the condition bound to a fall in net turnover for aid eligibility has been lowered, so that aid will now be granted to all those whose net turnover has fallen by 25% on an annual basis in 2023 compared to 2022.
By way of derogation from the Fire Service Act, it is now provided that voluntary fire brigades operating in municipalities affected by floods and landslides may, during the period from 4 August 2023 to 30 September 2023, collect and distribute financial and other resources to natural persons affected by floods and landslides. Recipients will not be obliged to pay income tax on these resources.
With regard to the Value Added Tax Act, until the relevant regulation is made in this Act, a lower VAT rate of 5% is set for the supply of standardised fire-fighting vehicles, special protective and rescue equipment and tools for the performance of fire-fighting tasks, normally intended for use in interventions, which are supplied to public fire-fighting services or to volunteer fire-fighting units in fire-fighting brigades, in accordance with Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax (OJ L 107, 6.4.2022, p. 1). The list of the abovementioned will be determined by the Minister responsible for finance in agreement with the Minister responsible for the fire service.
Other financial and fiscal solutions: to ensure more favourable tax treatment for persons who have been forced to find new or temporary accommodation and for legal persons/sole traders who provide accommodation for these persons; for properties that have been severely damaged, municipalities will be able to waive the building land use allowance revenue in favour of the taxpayer.
Solidarity aid: an increase in the monthly/annual amount of extraordinary cash social assistance to seven times the amount of the extraordinary cash social assistance of the census
In order to cover the extraordinary costs caused by floods, the amount of solidarity aid for 2023 and 2024 is increased to seven times the amount of the census. Solidarity aid is not repayable or inheritable and can also be claimed by those who are not otherwise socially disadvantaged. The aid may be paid in a lump sum and the 30-day spending period and 45-day deadline for submitting proof will start on 1 January 2024.
Granting of solidarity aid to cover the costs of rented housing
An individual or family who has been made homeless by the floods and who has rented housing to cope with their housing problems will be entitled to receive, in addition to the aid in the amount of up to seven minimum incomes to cover the extraordinary costs caused by the floods, the aid in the amount of two minimum incomes to cover the costs of the rented housing.
Market rent subsidy and disregard of assets and of the requirement to register permanent/temporary residence
Flood victims are guaranteed the right to a market rent subsidy. Applicants who apply for the right to a market rent subsidy during the period from 4 August 2023 up to and including 31 January 2024 will not have their assets (other than savings and securities) taken into account in determining their financial situation. The requirement that the tenant of a market rent housing must have a registered permanent or temporary residence at the address of the market rent housing in order to qualify for the market rent subsidy will not be applied.
Implementing amendments to the annual rights to access public funds
For the annual rights to access public funds (child benefit, reduced preschool fees, state scholarship, school meals subsidy), it is possible to report and take into account changes in the value of the property. Persons eligible to annual rights who have suffered damage to their immovable property affecting its value may notify a Social Work Centre (SWC) of the change by 31 December 2023. If the change affects the amount of the annual rights already granted, the SWC will make a new decision on the entitlement.
Additional (co-)financing of public social assistance programmes and programmes to support families
The consequences of the floods have led to a marked increase in the risk of poverty, to more people needing assistance in day centres, accommodation programmes and to increased financial hardship for individuals and families. A number of acute cases of individual hardship are to be expected, which makes it essential to ensure rapid and effective intervention by professional staff. The additional funding of up to 15% for 2023 reinforces public family support programmes and programmes for assistance in distress run by social welfare institutions.
Solidarity aid for staff providing personal assistance
Solidarity aid is provided to personal assistants and other employees of personal assistance providers who are employed in personal assistance activities. They do not have a collective agreement and would therefore not be entitled to solidarity aid payments under the current regulations.
Until 31 December 2023, employers exceeding the quota of employees with disabilities, sheltered workshops and employment centres are also allowed to use public funds held in account number 96 to repair the damage caused by the floods and landslides in August 2023 in order to purchase equipment that has been damaged and reparation materials up to the amount of the non-depreciated value, as shown in the accounting records, before the damage occurred.
Faster recruitment of foreign workers
Administrative matters are being speeded up to enable faster recruitment and commencement of work of foreign workers who will be able to start working on the basis of an issued work permit. The procedure will apply only to occupations needed to eliminate the consequences of the floods and to foreigners coming from the countries for which visas for entry and stay in the Republic of Slovenia are not required. The Employment Service of Slovenia will prioritise the procedures for issuing work permits and consents to single permits for the employment and work of foreign workers so that the procedure will take a maximum of 10 days.
Public works programme Assistance with flood and landslide recovery
A special public works programme – Assistance with flood and landslide recovery – will be set up to engage persons registered as unemployed to help with flood recovery and reconstruction. This applies to unemployed persons without health restrictions, regardless of the level and type of education obtained. Remuneration for programme participants with level I up to and including level IV education or qualification will be increased to the minimum wage amount, as the income of these people is below the minimum wage.
Temporary measure of partial reimbursement to employers for the salaries of workers helping with flood recovery
Employers whose workers are helping with flood recovery will be eligible for the reimbursement of salaries paid to these workers. This right can be exercised by any employer in the Republic of Slovenia, registered on 2 August 2023 at the latest, with exceptions provided by the Act. The measure will be in force from 3 August 2023 to 3 September 2023. The employer will be entitled to the reimbursement of a full salary (gross I) up to the maximum amount of the average monthly salary in May 2023.
Prohibition of dismissals
Employers who decide to take advantage of the measure of partial salary reimbursement for the duration of temporary lay-off will be required to retain the worker’s employment even after they stop receiving the reimbursement, namely for the period of the same duration as they received the partial salary reimbursement.
Solutions concerning education
Under the Act, parents whose children have been absent from kindergarten since 4 August 2023 due to floods or flood recovery will be exempt from payment for the kindergarten for the duration of the child’s absence.
In order to make flood recovery and reconstruction as easy as possible for parents who suffered material damage as a result of the floods, pupils and students will be entitled to free lunch in the 2023/2024 school year. Free lunch will be provided based on a decision issued by the Social Work Centre.
Solutions concerning higher education
Due to the August floods that could affect the fulfilment of study obligations, the intervention measures adopted will allow higher education institutions to amend conditions for advancement in study programmes or repeating a year.
Students will also be able to extend their status if they are unable to fulfil their study obligations regularly and on time due to the damage suffered as a direct consequence of the floods or due to active participation in recovery efforts.
To help alleviate mental health issues and other psychosocial distress caused by the floods, public social assistance programmes will be co-financed to ensure additional support for counselling and psychosocial support.
Emergency accommodation: appropriate living conditions and care will be ensured to persons aged 65 or older and adults with special needs who, due to their old age, disability or chronic illness, are unable to take care of themselves and cannot be provided non-institutional care due to the consequences of floods.
Another priority is ensuring housing for those affected in the floods whose homes have been destroyed or are unliveable and in need of extensive renovation before they are fit for habitation again.
Solutions in agriculture, forestry and food introduce a derogation from the Agriculture Act regarding the application of force majeure and exceptional circumstances for agricultural policy measures. If the Agency for Agricultural Markets and Rural Development itself is able to detect an occurrence of force majeure (particularly on surfaces), it will initiate the force majeure procedure ex officio. Other eligible persons will be able to report their case by 2 November 2023 at the latest.
Providing a tax relief for farmers due to the damage caused to their land, the Act envisages a derogation from the Personal Income Tax Act regarding the calculation of cadastral income, namely setting the 2023 tax base from potential market income from production on land that suffered 50 or more percent of damage at 50% of the cadastral income, as established on 30 June 2023.
Persons who hold pension and disability insurance as farmers are a vulnerable population group. In addition to damage to their agricultural products caused by natural disasters in 2023, they also suffered property damage. Their agricultural facilities, machinery and equipment were damaged, and they lost their livestock. To facilitate damage repair or deal with this emergency, the introduction of solidarity aid modelled after a similar measure in the public sector and the self-employed in culture and journalism is proposed. Farmers who, on the day of the entry into force of this Act, hold compulsory pension and disability insurance based on Article 17 or paragraph five of Article 25 of the Pension and Disability Insurance Act (ZPIZ-2) in the amount of EUR 668.21, which is equal to the amount of solidarity aid in the public sector for 2023, are eligible for this aid. A claim for solidarity aid must be filed within 60 days of the occurrence of the case or the moment when the eligible person is able to file it. Supporting documents proving the occurrence of damage must be enclosed with the claim.
The Act also provides for aid to inland fisheries management concessionaires by exempting those that suffered damage due to the flood and landslides in August 2023 from the concession fee in 2023 and the first instalment in 2024.
Certain amendments are envisaged to make it easier for the Government to quickly purchase the land needed to build infrastructure for natural disaster recovery, while the investor in such infrastructure will be exempt from paying compensation due to the conversion of agricultural land to other uses.
The Act also includes several changes in public procurement. In certain cases and under specific conditions, it allows derogations from the application of the rules laid down by the Public Procurement Act (ZJN-3) and provides for accelerated public procurement procedures where EU rules so allow.
Derogations from the Financing of Municipalities Act allow the municipalities affected by the floods that cannot balance the implementation of the budget due to an uneven inflow of receipts to borrow liquidity funds in budget years 2023 and 2024 up to 10% (instead of 5%, as currently applicable) of all expenditure according to the last budget adopted.
The municipalities affected by the natural disaster will also be able to borrow funds for investments in 2023 and 2024 up to 15% of realised revenues planned in the accounts of revenues and expenditures of the municipality's budget in the year prior to the year of borrowing, decreased by grants received, transfers of revenue from the state budget intended for investments and funds obtained from the budget of the European Union and by public utility unit revenues (instead of 10%, as currently applicable).
After the adoption of the programme for natural disaster recovery, additional budgetary funds for natural disaster recovery can be provided to the affected municipalities in budget year 2023. The amount, conditions for allocation, intended use and the procedure for the allocation of additional funds will be determined by the Government.
The Government also enabled municipalities to easily use donated funds collected under a special heading for donations. They will not be required to produce revised municipal budgets for this year for this purpose.
Furthermore, the municipalities will be also be able to use the budgetary reserve funds to finance the expenditure on natural disaster recovery in other municipalities this year, which is not possible under current rules. This way the municipalities not affected by the floods can help the affected municipalities. The amount of aid will not be limited.
The share of funds that municipalities may set aside for budget reserve in 2023 and 2024 is not limited. This allows the municipalities to set aside more than 1.5% of budget receipts for budget reserve, as the cost of natural disaster recovery will be high.
The Act establishes the Fund for the Reconstruction of Slovenia, which is intended for co-financing the comprehensive measures and projects related to the floods and landslides. Funds from the state budget, EU funds and funds from other sources will be collected in this Fund. The operation of the Fund will be governed by the articles of association.
Under the Act, the holders of certain official documents destroyed or damaged in the floods will be exempt from paying for printed material when replacing such documents. The costs will be covered from the state budget. The exemption from administrative fees in such cases already applies.
Since participation in natural disaster recovery can result in some public employees being overburdened and consequently in staffing problems, which can also affect the smooth provision of public services, the Act provides for a temporary transfer of a public employee within the same or to another public sector employer.
In order to prevent the receipts from not achieving their purpose, the provisions concerning justice provide for all receipts that will be paid to a debtor under this Act and other Acts governing intervention measures for recovery from the August floods to be exempt from enforcement and tax enforcement and excluded from bankruptcy estate in personal bankruptcy proceedings. The Act also provides that parties are exempt from court fees for land registration that will be necessary to regulate the land registry status after the floods. The duration of this arrangement is related to the duration of measures under intervention legislation.
With regard to digital transformation, electronic identification and trust services:
Natural persons whose permanent or temporary residence was damaged in the floods and landslides will be able to use video identification. Municipalities and schools whose basic computer equipment required for their work (desktop or portable computers and the associated equipment) was destroyed or damaged in the August floods will be provided with new equipment.
A short code number 114 will be set up for direct contact with the call centre for assistance in flood and landslide recovery.
With regard to accepting donations, the Act allows the representations of the Republic of Slovenia outside the EU or SEPA area to accept donations for the mitigation of damage caused by the floods and landslides until the end of 2023 and transfer them to a special state budget sub-account open for donations from abroad.
An obligatory contribution is proposed, which is to be paid by all sectors of society, companies, natural persons, farmers and self-employed persons, and will be transferred to the Fund for the Reconstruction of Slovenia. The alternative to this obligatory contribution will be a Solidarity Saturday, when, if the employees and employers agree, the obligatory contribution could be substituted by work and the profits of the day paid to the Fund for the Reconstruction.