SUPREME SOVIET OF THE LITHUANIAN SOVIET SOCIALIST REPUBLIC                  
                                                                                
                               LAW                                              
                                                                                
             ON THE FUNDAMENTALS OF LOCAL GOVERNMENT                            
                                                                                
(Adopted at  the Seventeenth Session of the Supreme Soviet of the               
Lithuanian SSR, Eleventh Convocation, 12 February 1990)                         
                                                                                
                            Chapter 1                                           
                                                                                
                        General Principles                                      
                                                                                
                                                                                
     Article 1. Concept and Legal Regulation of Local Government                
                                                                                
     1. Local  government shall  be the  independent activity  on               
resolving local  issues and  implementing the  decisions  adopted               
under law  as  carried  out  by  the  citizens  residing  on  the               
territory of  administrative-territorial units of the Republic of               
Lithuania and  by the  bodies of  local government accountable to               
them.                                                                           
     2.   Local government  shall be  the unity  of the  citizens               
residing on  the territory of the administrative-territorial unit               
and the bodies of state power and government formed by them.                    
     3.   Local governments of the Republic shall be regulated by               
the Constitution  (Basic Law)  of the Republic of Lithuania, this               
Law and  also laws  of the  Republic of Lithuania or of the local               
government of  rural territorial  units, settlements,  towns  and               
regions, and also by other laws of the Republic of Lithuania.                   
                                                                                
     Article 2.  Principles of Local Government                                 
                                                                                
     The underlying  principles of  local government  shall be as               
follows:                                                                        
                                                                                
     1) direct  participation of  the citizens of the Republic of               
Lithuania in  the preparation,        consideration, adoption and               
implementation of  decisions on  public life  matters that are of               
importance for them;                                                            
       2)  supremacy of the representative state power bodies and               
their officials  to the  citizens, and  control exercised  by the               
citizens;                                                                       
     3) accountability  of  local  government  bodies  and  their               
officials to the citizens, and control exercised by the citizens;               
     4) economic independence;                                                  
     5) openness and response to public opinion;                                
     6) social justice;                                                         
     7) law and its enforcement; and                                            
     8) priority  given to  contractual relations in the activity               
of local government bodies.                                                     
                                                                                
     Article 3.  Territorial Foundations of Local Government                    
                                                                                
     1.   The foundation for the organisation of local government               
shall be  administrative-territorial units  of  the  Republic  of               
Lithuania established  and altered  by the Supreme Council of the               
Republic of Lithuania.                                                          
     2.   There shall  be two  levels of  local government:   the               
lower level and the higher level.                                               
     The lower  level of local government shall embrace the rural               
territorial units, settlements, and regional cities.                            
     The higher  level of  local government shall embrace regions               
and towns under the Republic's jurisdiction.                                    
     3. Taking  into consideration  the interests and requests of               
the citizens residing on the territory, the  appropriate councils               
of people's  deputies (hereinafter:  councils of local government               
or councils)  authorised by  the Presidium of the Supreme Council               
of  the   Republic  of  Lithuania  may  divide  their  respective               
territory into smaller units to better organise their government.               
                                                                                
     Article 4.  Means for the Implementation of Local                          
               Government                                                       
                                                                                
     1. Local  government shall  be implemented through the forms               
of direct and representative democracy.                                         
     2.   The most  important forms  of direct  democracy through               
which local  government is implemented shall be civic initiative,               
participation of citizens in the discussion and resolution of all               
significant  questions,   election  of   representation   bodies,               
participation in  the implementation  of  adopted  decisions  and               
possibility to  exercise  control  over  the  activity  of  local               
government bodies.                                                              
     3. The  basis of  representative democracy  of  local  self-               
government  shall  be  local  government  councils    elected  in               
accordance with  the Law on the Election of Deputies to the Local               
Councils of People's Deputies.                                                  
     Local  government   councils  shall  form  executive  bodies               
subordinate and  accountable to  them, govern  them  and  control               
their activity.                                                                 
                                                                                
                                                                                
                            Chapter 2                                           
           State Governing Bodies of Local Government                           
                                                                                
     Article 5.  Councils of People's Deputies                                  
                                                                                
     1.   The councils  of people's deputies shall constitute the               
representative state  power body  of  local government within its               
territory; it  shall  coordinate  the  activity  of  other  local               
government  bodies,   direct  the   local  economy  and  cultural               
activities, concern  itself with rational exploitation of natural               
wealth and  protection of the environment, with the observance of               
laws and  implementation of  government  directives,  and  ensure               
public  order   and  protect   citizens'  rights  and  legitimate               
interests.                                                                      
     2.   Local governments  shall have    the  rights  of  legal               
person.                                                                         
                                                                                
     Article 6.  Sessions of the Council                                        
                                                                                
     1.   The basic  form of  work of  the Council  shall be  its               
session.                                                                        
     2.   The first session of the newly elected council shall be               
convened by  the appropriate  electoral committees not later than               
two weeks  after the  elections, provided no less than two-thirds               
of the deputies of the council are elected.  The first session of               
the council  shall be  opened by  the chairman  of the  electoral               
committee who  shall preside  over the session until the election               
of the chairman of the council. (Amended 5 April 1990)                          
     Subsequent sessions  of the council shall be convened by the               
chairman (presidium)  of the  council on his own initiative or on               
the demand  of no  less than  one-third of  the deputies  of  the               
council, expressed  in writing  with the  indication of questions               
which need  to be  considered, as  well as on the proposal of the               
executive body of the local government. The chairman  (presidium)               
of the  council shall  convene the  session not later than within               
two weeks  from his  receipt of the deputies' demand to do so. If               
the session  is not  timely convened,  it may  be convened on the               
decision of  no less  than  one-third  of  the  deputies  of  the               
council.                                                                        
                                                                                
     3.   A session  of the  council shall  be  valid  if  it  is               
attended by  no less  than two-thirds  of all the deputies of the               
council.                                                                        
     If the  session did  not take  place,  or  if  not  all  the               
questions were considered at it owing to the absence of a quorum,               
a new  session on  the basis  of the prior agenda, or sittings on               
unconsidered questions  shall be  valid if attended by a majority               
of the council deputies.                                                        
     Decisions of the council shall be adopted by a majority vote               
of all  the council  deputies if there is a quorum, or a majority               
of the  number of the council deputies, except in cases where the               
law provides otherwise. (Amended 19 July 1990)                                  
                                                                                
     Article 7.  Exclusive Competence of the Council                            
                                                                                
     The council  shall be  empowered to  discuss and resolve all               
issues that  are within  its competence  under the  laws  of  the               
Republic of Lithuania. Exclusively at sessions the Council shall:               
                                                                                
     1) affirm the powers of the deputies and revoke their powers               
before the  expiration of  their term  in the cases prescribed by               
law;                                                                            
     2) elect  or release from duties the chairman of the council               
and his deputies;                                                               
     3) form  standing and  other committees,  groups of deputies               
and other  bodies of  the council  and make  alterations in their               
composition;                                                                    
     4) form  the auditing  committee and make alterations in its               
composition;                                                                    
     5) form  execution bodies  subordinate to  the  council  and               
approve their regulations;                                                      
     6) consider the accounts of bodies of the council;                         
     7) consider  the inquiries  of deputies  and adopt decisions               
on them;                                                                        
     8) approve the rules of procedure of the council;                          
     9) establish basic trends of economic and social development               
of the local government and evaluate the results of their work;                 
     10) approve the budget and the report on its implementation;               
distribute additional  budgetary resources  and approve estimates               
of and reports on the utilisation of nonbudgetary resources;                    
     11)   establish    statutory   rules    of   ownership   and               
administration of  objects owned  by local  government,  exercise               
control over  their  exploitation  and  resolve  other  questions               
related to property;                                                            
     12) revoke permits to engage in economic activity or suspend               
the work of enterprises,                                                        
     institutions and  organisations in the event of violation of               
laws on environmental                                                           
     protection, land  use, exploitation of local natural wealth,               
sanitation and health                                                           
care, and safety of utilisation of labour resources;                            
     13) establish  reductions of  taxes, duties  and  deductions               
into the Council budget paid by natural and legal persons;                      
     14) establish local duties, issue voluntary loans;                         
     15) approve the symbols of the appropriate local government;               
     16) approve  contracts concluded  by the executive bodies of               
local government  in accordance with the procedure established by               
law with  other local  governments, legal  and  natural  persons,               
foreign  firms   and  also  with  local  governments  of  foreign               
countries;                                                                      
     17) submit  for consideration  proposals on  administrative-               
territorial division and adopt decisions in accordance with law;                
     18) consider  and resolve other issues which are assigned by               
the council  within the  limits of  its powers  to its  exclusive               
competence.                                                                     
                                                                                
     Article 8. Chairman of the Council                                         
                                                                                
     1. The  work of  the  council  shall  be  organised  by  the               
chairman of  the  council  or  by  his  deputy,  and  with  local               
governments of the higher level - the presidium of the council;                 
     2. The  chairman and deputy chairman of the council shall be               
elected at  the session  of the  council by secret ballot for the               
term of office of the council but for no longer than two terms in               
succession.                                                                     
     The chairman of the council shall:                                         
                                                                                
     1) represent the council in the relations with state bodies,               
social organisations and other                                                  
     public bodies and citizens;                                                
     2) organise  the preparation  of the  session of the council               
and of issues submitted to it for                                               
     consideration, also  of control  over the  implementation of               
the resolutions adopted by the council;                                         
     3) inform  the deputies and the public of the place and time               
of the convocation of the                                                       
session and of the issues submitted for consideration;                          
     4) coordinate  the work of standing and other committees and               
groups of deputies formed by the council;                                       
     5) sign  the records  of the  session of  the  council,  the               
resolutions of the council and inform the public of them; and                   
     6) fulfill  other assignments  of the  council  and  perform               
other powers prescribed by law.                                                 
                                                                                
     The chairman  of the  council shall  be accountable  to  the               
council. When  the chairman  cannot perform his duties, or in his               
absence his  functions shall  be exercised by the deputy chairman               
of the council.                                                                 
     The chairman of the council shall adopts decisions on issues               
that are within the limits of his competence.                                   
     The council  shall have the right to revoke the decisions of               
the chairman of the council.                                                    
     On the  decision of  the council, the chairman or his deputy               
may  be   dismissed  from   their  respective  posts  before  the               
expiration of their terms of office.                                            
     The council shall consider the issue of the dismissal of the               
chairman or his deputy from their respective posts at the session               
of the  council either at their request or at the request no less               
than one-third of council deputies.                                             
     The decision  to dismiss  the chairman of the council or his               
deputy from  their respective  posts shall  be adopted  by secret               
ballot.                                                                         
     The decision  of the council on the election of the chairman               
of the  council or his deputy, as well as on their dismissal from               
their respective  posts shall  be signed  by the deputy presiding               
over the  session (at  the first  session of  the  newly  elected               
council, during  the election of the chairman of the council - by               
the chairman of the electoral committee).                                       
                                                                                
     Article 9. Committees and Groups of Deputies of the Council                
                                                                                
     1. Committees and groups of deputies of the council shall be               
formed for  preliminary  consideration and preparation of issues,               
also for  assisting to  implement the resolutions of the council,               
exercising control  over the  observance of  laws of the Republic               
and resolutions  of the  council by enterprises, institutions and               
organisations located  on the  territory of the local government.               
The council  may form  standing and  other committees,  groups of               
deputies or other bodies.                                                       
     2. The  competence of   said  bodies shall be established by               
the  council   within  the  limits  its  powers.  They  shall  be               
responsible and accountable to the council which elects them.                   
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
               Local Government of the Lower Level                              
                                                                                
     Article 10. Institutions of Local Government of the Lower                  
               Level                                                            
                                                                                
     Institutions of  local government  of the  lower level shall               
be:                                                                             
     body of power - council of people's deputies;                              
     executive body  - chief local executive of rural territorial               
unit or settlement, and mayor of regional town;                                 
     the auditing committee.                                                    
                                                                                
     The specific  powers of the above bodies of local government               
and the  organisation of  their activity  shall be established by               
this Law,  the laws  of the  Republic of  Lithuania on  the local               
government of rural territorial units, settlements and towns.                   
                                                                                
     Article 11. Council of Local Government of the Lower Level                 
                                                                                
     The  council   of  rural  territorial  unit,  settlement  or               
regional town  shall exercise  the  powers  conferred  on  it  by               
Article 7  of this  Law. Furthermore, exclusively at sessions the               
council shall:                                                                  
                                                                                
     1) appoint  the chief local executive or the mayor and their               
deputies and consider their                                                     
        dismissal from their respective posts, establish salaries               
of said officials, and also                                                     
         supplementary  amounts payable  to the  chairman of  the               
council or his deputy in accordance                                             
         with the salaries list approved by the Government of the               
Republic of Lithuania and within                                                
        the limits of the established pay-roll fund;                            
     2) determine  the sum  total of appropriations for the chief               
local executive  or the  mayor, their  respective  deputies,  and               
their staff; and                                                                
     3) assign  plots of land to legal and natural persons in the               
appropriate cases  and according  to the procedure established by               
law.                                                                            
                                                                                
     Article 12. Executive Bodies of Local Government of Rural                  
               Territorial Unit, Settlement and Regional Town                   
                                                                                
     1. The  chief local  executive of  rural territorial unit or               
settlement and the mayor of regional town shall be elected by the               
appropriate councils  by secret  ballot for the term of office of               
the council.  At the  recommendation of the chief local executive               
or the  mayor the  council shall  appoint deputies  to the  chief               
local executive or the mayor.                                                   
                                                                                
     2. Any  citizen  of  the  Republic  of  Lithuania  shall  be               
eligible to  be appointed to the post of chief local executive or               
the mayor and their respective deputies, provided he or she is 21               
years of  age and over and has command of the state language. The               
chief local  executive or the mayor and their respective deputies               
may not, at the same time, be deputies of the council that elects               
or appoints them.                                                               
                                                                                
     3. Executive  bodies of  local government  shall function in               
accordance with  the laws  of  the  Republic  of  Lithuania,  the               
resolutions of  the Government of the Republic and resolutions of               
                                                                                
the appropriate  council, and  ensure the  implementation of  the               
government function of the local government.                                    
                                                                                
     4. The  chief  local  executive  and  the  mayor  and  their               
respective deputies  shall be  responsible and accountable to the               
council that  elects or  appoints them.  At the  proposal of one-               
third of  the deputies  the issue  of their  dismissal from their               
respective posts  before the  expiration of  their term of office               
shall be presented for consideration at the session.                            
     Within the  limits of their powers the chief local executive               
and the  mayor shall  issue regulations and exercise control over               
their implementation.                                                           
     The chief  local executive  and the  mayor shall  employ  or               
release from  office members of their respective staff, fix their               
salaries in  accordance with  the salaries  list approved  by the               
Government of  the Republic of Lithuania and within the limits of               
the established payroll fund.                                                   
                                                                                
     Article 13.  Auditing Committee of Local Government of the                 
               Lower Level                                                      
                                                                                
     The council  of local  government shall  elect the  auditing               
committee whose chairman or deputy chairman shall be the deputies               
of the council that elects them.                                                
     The auditing  committee  shall  exercise  control  over  the               
implementation of  the council  resolutions by  the  chief  local               
executive and the mayor, and  audit their financial activity.                   
                                                                                
                                                                                
                                                                                
                            Chapter 4                                           
                                                                                
      Institutions of Local Government of the Higher Level                      
                                                                                
     Article 14.  Institutions of Local Government of the Higher                
               Level                                                            
                                                                                
     1.   Institutions of  local government  of the  higher level               
shall be:                                                                       
                                                                                
     body of power - council of people's deputies                               
     executive institutions  - regional  manager  and  the  board               
headed by  him, and  the mayor  of the  town under the Republic's               
jurisdiction and the board headed by him the auditing committee.                
                                                                                
     2.   The specific  powers and  organisation of  work of  the               
above bodies  shall be  defined by  this Law, and the Laws of the               
Republic of  Lithuania on  Regional Local  Government and  on the               
Local Government of Towns under the Republic's Jurisdiction.                    
                                                                                
     Article 15.  Councils of Local Government of the Higher                    
               Level.                                                           
                                                                                
     The regional  council and  the council of the town under the               
Republic's jurisdiction  shall exercise  the powers  conferred on               
them by  Article 7  of this  Law.  In  addition,  exclusively  at               
sessions, the council shall:                                                    
                                                                                
     1)  form   the  presidium  of  the  council  and  alter  its               
composition;                                                                    
     2) elect  the regional  manager and  the town mayor, appoint               
their respective deputies and secretaries  of   the  council  and               
relieve them  of their  respective posts,  approve and  alter the               
composition of the regional and town boards;                                    
     form  departments   and  other   divisions  of  boards,  and               
establish their powers;                                                         
     approve  the   appointment     chief  executives,  with  the               
exception of cases provided by law; (Amended 30 July 1990)                      
     3)  establish  the  sum  total  of  appropriations  for  the               
chairman of  the council  or his  deputy, the  secretariat of the               
council, the board, its departments and other divisions;                        
        establish the salaries of the chairman of the council and               
his deputy,  the regional  manager, the mayor, their deputies and               
the secretary,  and of  staff members  of the  secretariat of the               
council in  accordance with  the salaries  list approved  by  the               
Government of  the Republic of Lithuania and within the limits of               
the established pay-roll fund.                                                  
                                                                                
     Article 16.  Presidium of the Council                                      
                                                                                
     1.   The presidium of the council shall organise the work of               
the regional  council and  of the  council of  the town under the               
Republic's  jurisdiction,   and  also   perform  other  functions               
prescribed by law.  The presidium of the council shall consist of               
the following  members: the  chairman of the council, his deputy,               
and chairmen  of the  standing committees  of  the  council.  The               
council may  decide to  add other  members to  the presidium  who               
shall be chosen from among the other deputies of the council.                   
     2.  The presidium of the council shall:                                    
                                                                                
     1) organise  and call  sessions of  the council;  direct the               
preparation of  issues to  be submitted  for consideration to the               
council;                                                                        
     2) coordinate  the work of committees formed by the council,               
or groups of deputies and other bodies of the council;                          
     3) assist  deputies in  exercising their powers; supply them               
with the necessary information;                                                 
     4) ensure openness of the work of the council;                             
     5) organise  public-opinion polls and also public discussion               
of the  draft resolutions of the council and of other significant               
issues;                                                                         
     6) organise the fulfillment of resolutions of the council;                 
     7)  resolve   questions  related   to  the  organisation  of               
elections as prescribed by law, and also                                        
         prepare proposals concerning suspension of the powers of               
deputies before the expiration of their term of office; and                     
     8) carry  out other  assignments of the council and exercise               
powers assigned to it by law.                                                   
     3.   The sessions  of the  presidium of the council shall be               
called when necessary, and shall be presided over by the chairman               
of the  council. Other  deputies of  the council  as well  as the               
regional manager, the mayor, their deputies and the secretary may               
take part in the session without the right to vote.                             
     Resolutions of the presidium of the council shall be adopted               
by  a  majority  vote  of  all  the  members  of  the  presidium.               
Resolutions of  the presidium  of the  council shall be signed by               
the chairman of the council.                                                    
     4.  The council and the presidium shall be assisted in their               
work by  the secretariat  of the  council.  The  presidium  shall               
establish the  structure of the staff of the secretariat and also               
appoint and dismiss its staff members.                                          
                                                                                
     Article 17.  Regional Manager and Mayor of the Town under                  
               the Republic's Jurisdiction                                      
                                                                                
     1.  The regional manager and the mayor of the town under the               
Republic's  jurisdiction  shall  be  elected  by  the  respective               
councils by  secret ballot  for the term of office of the council               
and for  no  longer  than  two  terms  in  succession.  Upon  the               
recommendation of  the regional  manager and  the town mayor, the               
respective councils  shall appoint deputies to the manager and to               
the mayor, and also to the secretary.                                           
     2. Any  citizen  of  the  Republic  of  Lithuania  shall  be               
eligible to  be appointed  to the posts of regional manager, town               
mayor, their  respective deputies  and the secretary, provided he               
or she  is 25  years of age or older and has command of the state               
language.  The regional manager, the town mayor, their respective               
deputies and  the secretary  of the  council may not, at the same               
time, be  deputies of  the council  that elects or appoints them.               
Thy shall  be responsible  and accountable  to the  council  that               
elected them.  The issue of their dismissal from their respective               
posts before  the expiration  of their  term of  office shall  be               
submitted for  consideration at the session of the council at the               
request of one-third of deputies.                                               
     3. The  regional manager  and the  town  mayor  shall  issue               
instructions within  the limits of their powers and control their               
implementation.                                                                 
                                                                                
     Article 18.  Regional Board and the Board of the Town under                
               the Republic's Jurisdiction                                      
                                                                                
     1.   The regional  board and  the town  board are collective               
executive bodies that shall be comprised of the regional manager,               
the town  mayor, their  deputies, the secretary, and also members               
of  the  board  appointed  by  the  respective  councils  on  the               
recommendation of the manager or the mayor for the term of office               
of the  council.  Members of the board may not, at the same time,               
be deputies of the council that elected them.                                   
                                                                                
     2. Regional  and town  boards of  local  government  of  the               
Republic shall  collectively resolve questions if the legislation               
of the  Republic, directives of the Government of the Republic of               
Lithuania or   resolutions of the appropriate council provide for               
same, or  if the  questions are submitted by the regional manager               
or the  mayor. With  the aim  of considering  such questions  the               
regional manager or the town mayor shall convene a session of the               
regional or  town council,  respectively. Minutes  of the session               
shall be  taken, while  the adopted  decisions shall be issued in               
the form of directives of the manager or the mayor.                             
         If  there  is  a  disagreement  on  the  question  under               
consideration   or the  adopted act  between the  manager, or the               
mayor and  the board, the dispute shall be settled by the council               
of the local government. (Amended 30 May 1990)                                  
     3. The  functions of  the board in specific spheres shall be               
performed by  its  departments  and  other  divisions  headed  by               
executives who  are appointed  and dismissed  from their posts by               
the board.                                                                      
     4.   In their work the executive bodies of local governments               
shall guide  themselves by the laws of the Republic of Lithuania,               
directives  of   the  Government   of  the   Republic,  and  also               
resolutions  of   their  respective   councils  and   ensure  the               
implementation of the functions of local government.                            
                                                                                
     Article 19.  Auditing Committee of the Region and of the                   
               Town under the Republic's Jurisdiction.                          
                                                                                
     1.  The council of local government shall elect the auditing               
committee. The chairman and deputy chairman of the committee must               
be deputies of the council.                                                     
                                                                                
     2.   The auditing  committee shall exercise control over the               
implementation of  decisions of  the council  by the manager, the               
mayor and the board, audit their financial activity, and also the               
financial activity of the secretariat of the Council.                           
                                                                                
                                                                                
                                                                                
                            Chapter 5                                           
                                                                                
               Economic Basis of Local Government                               
                                                                                
                                                                                
     Article 20.  Economic Basis of Government.                                 
                                                                                
     1.   The economic  basis of local government is comprised of               
the property  of  local  government,  objects  of  local  economy               
assigned to  the local government, resources of the local budget,               
non-budgetary and other resources of the local government.                      
     2.  Enterprises (associations) and organisations functioning               
on the territory of the local government that are not assigned to               
the local  economy thereof  shall  pay  a  prescribed  amount  of               
compulsory budget payments to the local government.                             
     Enterprises  (associations)  and  organisations  having  the               
rights of  legal persons  shall in addition also pay to the local               
government a part of compulsory budget payments for the dependent               
structural units subordinate to them.  The payments shall be made               
to the local government on whose territory the units are located.               
     3.   The rights  of local  government to the land, bodies of               
water, forests  and other  natural resources shall be established               
by the laws of the Republic of Lithuania.                                       
                                                                                
     Article 21.  The Property of Local Government.                             
                                                                                
     1.   The property  of local government shall be the property               
that belongs  it and  on its  behalf is  owned and  used  by  the               
appropriate council  or other legal or natural persons authorised               
by it.                                                                          
     A control  office shall  be established  at the council that               
shall control  the legality  of the  utilisation of financial and               
material resources, the efficiency thereof, and the protection of               
the council's  property. The  functioning of  the control  office               
shall be regulated by law. (Amended 20 November 1990)                           
     2. Local  government may  have the right of ownership to the               
following objects:                                                              
     social housing fund enterprises and establishments of a town               
(settlement), fixed and current assets of enterprises assigned to               
the local  government, objects of infrastructure, and the capital               
of local government invested in shares and other securities.                    
     3.  Local government shall acquire rights to ownership when:               
                                                                                
     1) objects  of state  property are  turned over to the local               
government according to the procedure established by law;                       
     2) new objects of property are produced;                                   
     3) contracts  are concluded, and also in other ways provided               
by law.                                                                         
                                                                                
     4.   Realising its  ownership rights  the Council  of  local               
government shall:                                                               
     1) found  enterprises, institutions,  organisations to which               
it can  transfer property  according to the procedure established               
by law;                                                                         
     2) lease  the piece  of property  or turn it over for use to               
work collectives, public organisations, cooperative    societies,               
organisations  of   lease-holders,  associations,   and  also  to               
citizens in accordance with the procedure established by law;                   
     3) use the property and dispose of it according to law.                    
                                                                                
     5.   Local government  shall   have the right of priority to               
acquire according  to the  procedure established  by law:  public               
buildings, facilities  and other objects located on its territory               
which can be of use to the local economy.                                       
                                                                                
     Article 22.  The Local Economy.                                            
                                                                                
     1.  The   local  economy   is  comprised   of   enterprises,               
institutions and  organisations with different types of ownership               
located on  the territory of local government and catering mainly               
to the needs of local enterprises and the population.  Their work               
is controlled by the council of the local government according to               
procedure defined by law.                                                       
     2.  As   a  rule,   enterprises  of  industry,  agriculture,               
construction, repair,  housing,  transport,  road-building,  land               
reclamation   installations,    trade,   communications,   public               
catering, environmental  protection and  forestry, establishments               
of education,  culture and  cinematography, health  care,  social               
welfare and  sporting facilities,  and also  enterprises, offices               
and organisations  serving other  purposes as specified in part 1               
hereof shall be assigned to the local economy of.                               
     3.  Enterprises, offices and organisations shall be assigned               
to the local economy by the Councils of Ministers of the Republic               
of  Lithuania,  taking  into  consideration  proposals  of  local               
governments.  Enterprises, offices and organisations of the local               
economy may  not be  assigned to  the  higher  level  of  control               
without the consent of the local government.                                    
                                                                                
     Article 23.  Financial Resources of Local Government.                      
                                                                                
     1.  Financial   resources  of   local  government  shall  be               
comprised of the budget, non-budgetary funds and the resources of               
the local government.                                                           
     2. Every  local government  shall annually draft and approve               
its budget independently.                                                       
     3. The  relations between  the state  and local  budgets, as               
well as  between the  budgets of  local governments of the higher               
and lower  levels shall  be regulated by the laws of the Republic               
of Lithuania on  budgeting and taxation.                                        
     4. The  budget revenues  of local  governments of  the lower               
level shall be formed from sources of revenue assigned by law and               
from state  tax and  revenue deductions in accordance with stable               
norms established  by councils of the higher level, and also from               
subsidies.                                                                      
     5. The  budget revenues  of local  government of  the higher               
level shall be formed from sources of revenue assigned by law and               
from state  tax and  revenue deduction  in accordance  with fixed               
norms established by law, and also from subsidies.                              
     6. Norms  of deductions  to the budgets of local governments               
shall  be   established  and   subsidies  shall  be  provided  in               
accordance with  the approved  system of  calculation.   In these               
cases, the  longer term  deduction norms  still being  valid  the               
revenues and expenditures of local budgets  undergo changes owing               
to decisions  passed by  the Government of the Republic or by the               
executive bodies of local government, the sums of differences are               
compensated for.                                                                
     7. Local  governments of  the higher  and lower  levels  may               
accumulate and use non-budgetary resources and funds according to               
the procedure  established by  law. Non-budgetary  funds  may  be               
formed from voluntary contributions to the budget by enterprises,               
organisations  and   citizens,  compulsory   payments   for   the               
exploitation of  local natural  resources, for  the employment in               
enterprises of persons who are not living on the territory of the               
self-government, for  the violation  of environmental  protection               
regulations,  for   the  damage   inflicted,  for  administrative               
offenses and from other resources.                                              
     8.  Local   government  may  raise  bank  credits,  conclude               
contract and grant loans, issue shares and hold lotteries.                      
                                                                                
     Article 24.  Basic Socioeconomic Rights of Local Government                
                                                                                
     1. Local  government  shall    also  resolve  the  following               
issues:                                                                         
                                                                                
     1)  work  our  the  basic  trends  of  economic  and  social               
development  of   its  territory,  long-term  (five-year  period)               
programs and  forecasts,  taking  into  consideration  production               
capacities, financial  labour  resources,  social  and  financial               
norms;  local  government  shall  have  the  exclusive  right  to               
establish priorities of social activity;                                        
     2)  coordinate   and  approve   the  projects   of  work  of               
enterprises, irrespective  of their  status, with  regard to  the               
spheres of  construction, utilisation  of labour force, local raw               
materials, land,  water  and  forest,  environmental  protection,               
services to  local residents  and other spheres within the limits               
of powers of local governments;                                                 
     3) work  out and  submit proposals on long-term programs for               
the development  and distribution  of productive forces, work out               
and approve town and settlement development plans, organise their               
implementation,  participate   in   the   preparation   and   the               
realisation of national programs;                                               
     4)  found   and  reorganise  enterprises,  institutions  and               
organisations of  the local  economy, regulate the functioning of               
the  local   economy,  coordinate  the  issues  of  founding  and               
reorganising other enterprises, institutions and organisations;                 
     5) issue  licences to  engage in economic activity, register               
enterprises, offices, organisations and associations;                           
     establishes requirements for the construction, extension and               
reconstruction of  all objects  located on  the territory  of the               
local  government,   for   the   formation   of   landscape   and               
architecture, and control their observance;                                     
     6) solve  questions related to the planning and construction               
of all  objects of  social and industrial infrastructure, and may               
directly perform the function of builder;                                       
     7) distribute  resources formed  on a  centralised basis for               
the enterprises of the local economy, organisations and citizens;               
     8) allocate  plots of  land, exercise  state management  and               
control over  land use, land protection and solve other questions               
in accordance with the procedure defined by law;                                
     9) jointly  with other  state bodies  work out and implement               
measures for  the rescue  of population  and  protection  of  the               
national  economy   in  cases   of  accidents,  catastrophes  and               
natural disasters;                                                              
     10)  define   on  the   territory   of   economic   activity               
requirements for  environmental protection  and exploitation  and               
control their implementation;                                                   
     may suspend  economic activity  if the  requirements are not               
followed;                                                                       
     11) suspend  or terminate  production and sale of foodstuffs               
and  consumer  goods  in  cases  when  sanitation  standards  and               
requirements are not observed;                                                  
     12) advance proposals for the foundation of protected areas,               
organise their  protection and  help to  establish rules of their               
exploitation;                                                                   
     13) designate  protected areas of local importance, national               
monuments or  architecture, nature, history and culture, organise               
registration of national monuments and protect them;                            
     14) coordinate  and regulate  on its territory the location,               
structure and  activity  of  objects  of  social  infrastructure,               
establish  their  exploitation  regulations  and  resolve  issues               
related to the provision of citizens with housing;                              
     15) create  and expand establishments of health care, social               
welfare,  education,   culture,  physical  education  and  sports               
facilities and  other social  establishments  and  organisations,               
ensure their continued functioning;                                             
     16) regulate the distribution of labour resources, migration               
processes, organise  rational employment  of citizens, retraining               
and training of workers and employees;                                          
                                                                                
     17) regulate  within the  limits  of  established  procedure               
prices and  tariffs of  services to the population offered by all               
the enterprises  located on its territory, of services offered by               
the enterprises  of the  local economy to other organisations and               
also prices  of goods  produced by  the enterprises  of the local               
economy;                                                                        
     18) announce  local voluntary  loans, hold  lotteries, issue               
shares;                                                                         
     19) grant reductions of payments to its budget, determine in               
accordance with  the Government-approved  system  the  amount  of               
payment (compensation)  for the  allocated plots of land, for the               
use of  installations of  town and  township  economy  and  other               
objects, and  also for  persons living  on the  territory of  the               
self-government who  are employed  in enterprises  located on the               
territory other local governments;                                              
     20) approve  according to  the procedure  established by law               
the payroll  fund of  offices and  organisations maintained  with               
budget resources;                                                               
     21)  conclude   contracts  and  cooperation  agreements,  as               
necessary, with enterprises, offices,  and organisations assigned               
to the  local economy,  other local  governments,  foreign  firms               
and local government authorities of foreign countries;                          
     22) work  out and  implement measures  to balance out income               
and expenditure of the population;                                              
     23) form  and use  currency reserve  in accordance  with the               
procedure established by law; and                                               
     24)  organise   appropriate  measures   to  guarantee  state               
security and  public order,  to protect  property of  natural and               
juridical persons,  to  ensure  traffic  management;  direct  the               
activity of internal affairs bodies subordinate to it and of fire               
brigades.                                                                       
     2.   Socioeconomic rights  outlined herein  are defined  for               
local governments of different levels in other laws.                            
                                                                                
                            Chapter 6                                           
              Legal Guarantees of Local Government                              
                                                                                
     Article 25.  General Questions of Legal Guarantees of Local                
               Government.                                                      
                                                                                
     1.   Resolutions of  local government bodies, adopted within               
the limits  of their powers, must be observed by all enterprises,               
institutions and  organisations on  its territory,  as well as by               
officials and citizens.  Refusal to observe the resolutions shall               
be punishable under the laws of the Republic of Lithuania.                      
     2.   The statutory  rights of  local governments  may not be               
violated or curtailed, except in the event of national necessity.               
     3.   The bodies  of local  government shall  exercise  their               
powers independently.  By mutual agreement they may delegate part               
of their  statutory rights  (along with  resources necessary  for               
their realization)  to local  governments of a different level or               
to other bodies.                                                                
     4.  Functions not established by law may be delegated to the               
bodies of local government exclusively on the basis of agreements               
between a state body and a local government body.                               
                                                                                
     Article 26.  Ensuring the Realisation of the Rights of Local               
               Government.                                                      
                                                                                
     1.  Higher state bodies, while considering issues related to               
the  interests  of  local  governments,  must  inform  the  local               
government of  these deliberations.  The  council  of  the  local               
government shall  present its proposals that should be considered               
by the higher state bodies.                                                     
                                                                                
                                                                                
     2.   The  council  of  the  local  government,  taking  into               
consideration the  interests of  the citizenry   shall  have  the               
right to:                                                                       
                                                                                
     1) suspend  the implementation of decisions adopted by legal               
persons on  its territory  if they  contradict the  laws  of  the               
Republic  of  Lithuania  until  the  issue  is  considered  by  a               
competent state body.  If the implementation of decisions adopted               
by the  legal person  is suspended unlawfully and this results in               
damage, a legal action may be taken against the local government;               
     2) cancel  the coordination of projects for the construction               
of objects  on its  territory or  a decision on the allocation of               
land for construction, or prohibit construction if the builder or               
the user of land violates the contracts concluded with the bodies               
of local government or the laws of the Republic of Lithuania.                   
     In the  period between  the  sessions  of  the  council  the               
executive body of local government may                                          
     Suspend the  implementation of  the abovementioned decisions               
and subsequently  submit its decision for approval at the session               
of the council;                                                                 
                                                                                
     3)  require  or  organise  additional  ecological  or  other               
investigations by  experts to  be carried  out on the site of the               
objects under construction or functioning objects;                              
     4) enhance  within the  procedure established  by  law,  the               
measures of environmental protection implemented on its territory               
and impose economic sanctions for their violation.                              
                                                                                
     Article 27. Appeals against the Acts of Local Government                   
                                                                                
     1. The  legality of  activities of  the executive  bodies of               
local government  shall be  supervised by the bodies of procuracy               
and also controlled by other authorised state bodies.                           
     Decisions adopted  by the  executive bodies and officials of               
local government may be revoked by the appropriate council.                     
     2. Legal  and natural  persons may  in accordance  with  the               
procedure established  by law  appeal against  the  decisions  of               
executive bodies  and officials of local government to the court,               
arbitration or appropriate council;  appeals against the unlawful               
decisions of  the council  shall be  lodged with  the council  of               
local government of the higher level.                                           
     3. The  council of local government of the lower level shall               
have the  right to contest at the Supreme Council of the Republic               
of Lithuania decisions adopted by the council of local government               
of the higher level on issues assigned to the exclusive powers of               
local government of the lower level.                                            
     4. The council of local government of the higher level shall               
have the  right to  suspend the  decisions of the bodies of local               
government of  the lower level if they contradict the laws of the               
Republic of  Lithuania. In  the event  of disagreement  the final               
decision on  the issue  is taken  by the  Supreme Council  of the               
Republic of Lithuania.                                                          
     5. The  Council of Ministers of the Republic of Lithuania is               
entitled to  appeal to  the Supreme  Council of  the Republic  of               
Lithuania  against   the  decisions   of  the  council  of  local               
government of the higher level if they contradict the laws of the               
Republic of Lithuania.                                                          
     In the  cases prescribed   by  the laws  of the  Republic of               
Lithuania the  Council of  Ministers of the Republic of Lithuania               
may suspend  and appeal  against the  decisions of  the executive               
bodies of  local government of the higher level to the council of               
the local  government. In  the event  of disagreement,  the final               
decision on  the issue  shall be  taken by the Supreme Council of               
the Republic of Lithuania.                                                      
                                                                                
     Article 28. Dissolution of the Council of Local Government                 
                                                                                
     1. The  council of local government may be dissolved and the               
activity of  its executive  bodies  suspended  in  the  following               
cases:                                                                          
                                                                                
     1) if  the  activity  of  the  bodies  of  local  government               
contradicts the Basic Law of the Republic of Lithuania;                         
     2) if  the bodies  of local  government grossly  violate the               
laws of  the Republic  of Lithuania  or constitutional  rights of               
citizens, disregarding the demands of the authorised state bodies               
of the Republic of Lithuania to terminate illegal action.                       
                                                                                
     2. The council of local government shall be dissolved by the               
motivated decision  of the  Supreme Council  of the  Republic  of               
Lithuania adopted  on the  basis of  conclusions presented by the               
specially formed committee of deputies of the Supreme Council.                  
     3. Upon  the dissolution of the Council of local government,               
the Supreme Council of the Republic of Lithuania shall adopt  one               
of the following decisions:                                                     
                                                                                
     1) to  hold within  three months  extraordinary elections to               
the appropriate council, empowering an authorised official of the               
Government to perform the governing functions;                                  
     2) to  suspend the laws of local government on its territory               
and to  introduce administrative  rule for  a period of up to one               
year  in   accordance  with  special  laws  of  the  Republic  of               
Lithuania;                                                                      
     3) as necessary, administrative rule may be prolonged.                     
                                                                                
     4. The council of  local government may be also dissolved if               
the minimal  required number  of deputies prescribed by law fails               
to convene for the session for three times in succession.                       
     The proposal to dissolve the council of the local government               
shall be  submitted to  the Supreme  Council of  the Republic  of               
Lithuania by  the Chairman of the Presidium of the Council of the               
local government.                                                               
     In  this  case  the  Supreme  Council  of  the  Republic  of               
Lithuania shall  adopt a  resolution to hold special elections to               
the appropriate council within three months.