Governor Matviyenko Paints Rosy Picture

Staff Writer

Published: April 1, 2005 (Issue # 1057)

Governor Valentina Matviyenko painted a rosy picture of St. Petersburg in her annual address, saying she would like to see it as a prosperous European city in which the incomes of its citizens grow steadily.

In her second address delivered to the Legislative Assembly on Wednesday, Matviyenko ignored the fact that official statistics show that the strengthening ruble and rising inflation slowed income growth in 2004. She focused on figures suggesting the city has been successful in improving the investment climate.

"The arrival in the city of some of the country's biggest tax payers will raise city revenues by 5 billion rubles ($180 million)," she said. "And that is a conservative estimate."

In 2004, City Hall succeeded in convincing several large enterprises, most of which have strong connections to the federal government, to re-register their head offices from other regions, mainly Moscow, to St. Petersburg. The companies include Vneshtorgbank, Sovkomflot, Transnefteprodukt, the Northwest Federal Network Co. and Territorial Generating Company No. 1.

LUKoil and Rosneft have also opened branch offices in the city.

The total volume of investments in the city grew 40 percent to an estimated $900 million, according to City Hall statistics.

"The main thing here is not the figures, though the statistics are at record levels," Matviyenko said. "The investment landscape has been changed. We are no longer being treated as an economic province, as a city that is merely a source for pleasure because of its culture sites, where it is impossible to operate big business."

Among the biggest projects launched in the city in 2004 Matviyenko mentioned electronic equipment production plant Elcotech, a Knauf plant making construction materials, the Tinkoff brewery, Gillette, Pepsi, Russky Standart, Yarovit Motors and First Furniture Factory. Investments in these projects ranged from $20 million to $100 million.

While the investments are growing, the average income of city residents stayed practically the same last year, going up by about 13 percent in face value compared to 2003, or about the same amount as inflation, according to official statistics presented in the local media. In 2003, city incomes grew about 32 percent.

But Matviyenko said the average city income grew 26.5 percent in 2004 to about 8,665 rubles ($311) a month.

"These are good results," the governor said.

While the federal government wants the public to pay in full for communal housing services in the next few years, Matviyenko said she would like to postpone full payments from Jan. 1 2006, to one year later.

"Despite the demands of the federal legislation that such practice should be implemented in Jan. 1, 2006 we should carefully weigh all the social consequences," Matviyenko said.

"It would be correct, in my opinion, to raise the payments to 90 percent or 95 percent from Jan. 1, 2006 and to 100 percent from Jan. 1, 2007."

City residents now pay 82 percent of the cost of communal services, the rest of which is subsidized from the budget.

Vadim Tyulpanov, the Legislative Assembly speaker, appeared swamped by information when he left the Mariinsky Palace where the Legislative Assembly meets after the governor's speech.

"The address was so broad-ranging and touched on so many different issues that I will only be able to get the point when I read a printed version of it," Tyulpanov said at a short briefing Wednesday.

"The address will form the basis of planning our city budget but the address is not detailed enough to determine the social and economic development of the city because that itself has not been sufficiently developed," Deputy Governor Mikhail Brodsky said.

Before the address, Legislative Assembly deputies passed amendments to the City Charter that bring the main city law in line with federal legislation that allows President Vladimir Putin to appoint regional governors.

The amendments imply that the Legislative Assembly will confirm the next city governor after the president nominates them.

Lawmakers also introduce other amendments to the City Charter that allow them to fire a governor if the Legislative Assembly loses confidence in them.

This could occur if the governor signs legislation that is a clear breach of the law or if a governor fails to fulfill their obligations, according to the amended City Charter.

On March 23, lawmakers failed to pass the amendments as they sought a tradeoff with City Hall over how Legislative Assembly lawmakers should be elected. This week, they reportedly dropped their demands after being threatened by the Justice Ministry that it could disband the assembly if it did not bring local laws in line with federal ones.