Act on the implementation of the reform of financial equalization and the division of tasks between the Confederation, the Canton and the Municipalities - Purpose

1. The present law aims to establish the principles for the implementation of the reform of financial equalization and the division of responsibilities between the federal government, cantons, and municipalities (hereinafter: Project NFA II) at the cantonal level and to carry out the first stage of this implementation.

**1. The NFA II Project aims to achieve the following five objectives:**

a) Decoupling of responsibilities between the canton and the municipalities to simplify procedures and enhance efficiency in their mutual relations;

b) Granting the municipalities the greatest possible decision-making freedom in local matters, provided the municipalities can efficiently and effectively fulfill this responsibility;

c) Elimination of mechanisms that lead to suboptimal allocation of public funds in the legislation on subsidies and financial equalization;

d) Reduction of the financial and administrative burden on both the canton and the municipalities;

e) Legal establishment of the provisions that were provisionally introduced with the decree on amendments to enactments as part of the implementation of the reform of financial equalization and task distribution between the federal government and cantons dated September 13, 2007.

1. The NFA II project must be implemented in such a way that it ultimately does not cause significant additional costs for either the canton or the entirety of the municipalities. The transfer of burdens must therefore be adequately compensated.

2. The new allocation of responsibilities must be clearly defined. The transfers of burdens between the canton and the municipalities must be recorded in detail, and an overall balance must be drawn up for each municipality.

1. This present Act, along with the other laws passed simultaneously, constitutes the first stage of the implementation of Project NFA II.

2. The implementation of the subsequent phases must be completed no later than January 1, 2012.

3. This implementation must be carried out in such a way that all affected areas are reviewed, subject to certain points of lesser importance.

1. Following the implementation of Project NFA II, the objectives of this project must be adhered to by the various competent authorities within the framework of future legislation.

1. After a period of four years from January 1, 2012, the Council of State shall prepare a report in 2016 for the attention of the Grand Council regarding the implementation of the NFA II project.

2. This report shall provide detailed information particularly on

a) the status of the implementations of the NFA II project;

b) the development of the financial situation of the canton and the municipalities resulting from the NFA II.

3. The report shall propose corrective measures if necessary.

4. The present law is subject to an optional referendum, with the exception of the following provisions

a) Law on Management and Financial Budgeting and its Control of June 24, 1980 (Art. 30a);

b) Cantonal Road Law of September 3, 1965 (Art. 16 Para. 1 and Art. 80 Para. 1);

c) Implementation Act to the Federal Law on Old-Age and Survivors Insurance of November 12, 1998 (all amendments);

d) Law governing the application of the Federal Law on Disability Insurance of November 9, 1993 (all amendments);

e) Implementation Act to the Federal Law on Supplementary Benefits to AHV/IV of September 29, 1998 (all amendments).

5. The Council of State shall determine the date of the entry into force of the present law.