Hungary is a republic and a parliamentary democracy. The unicameral Parliament is the National Assembly (Országgyűlés). The Head of State is the President of the Republic, who is elected indirectly by the Parliament for a five-year term and can be re-elected once. The Government is led by the Prime Minister[1].

Hungary is a unitary State organised on a decentralised basis; the Fundamental Law recognises local governmental system (Art. 31-35). There are three levels of governance: the central, the regional (county), and the local. The adoption of the Act on Local Governments of 1990[2] was the starting point of the decentralisation process. Furthermore, a new Act on Local Governments was adopted in 2011[3], which brought about important changes to the territorial organisation and distribution of competences, since it re-centralised a number of competences.

Hungary comprises 19 Counties (megye) and 3154 Municipalities (település). The municipal level is organised by localities, which include 2809 Communities (község), 322 Towns (város), 23 Towns with County rank (megyei jogú város), and the capital City of Budapest (Budapest Főváros)[4]. Budapest is further divided into 23 Districts (kerület).

In addition, there are seven statistical Regions, which were created in 1999. As of 2019, the NUTS1‑level division of the country includes the following regions: Közép-Magyarország (Central Hungary), Dunántúl (Transdanubia) and Alföld és Észak (Great Plain and North). The NUTS2-level covers the following statistical Regions: Budapest, Pest, Közép-Dunántúl (Central Transdanubia), Nyugat-Dunántúl (West Transdanubia), Dél-Dunántúl (South Transdanubia), Észak-Magyarország (North Hungary), Észak-Alföld (North Great Plain) and Dél-Alföld (South Great Plain)[5], while the NUTS‑3 level consists of the 19 counties and Budapest. The LAU1-level (LAU – Local Administrative Units, using the Eurostat terminology) covers 174 statistical small regions and the LAU2-level – 3152 localities.

The principle of local government is enshrined in the Fundamental Law. Local governments shall function to manage local public affairs and exercise local public power[6]. There is no hierarchy between the two levels of local government (County and Municipality). The Counties are responsible for services which the Municipalities are unable to provide. The Counties and the Municipalities have mandatory and optional competences. The Municipalities have the right to adopt local government decrees to regulate local social relations of a given Municipality according to Section (2) of Art. 32 of the Fundamental Law.

Beside the Fundamental Law of 2011, the Act CLXXXIX of  2011 on Local Governments[7] describes the territorial organisation and the vertical division of powers.

The Act CXXVI of 2010 saw to the establishment of County (and Capital) Government Offices (CGO). These offices deal with different administrative issues such as driving licences, IDs, birth certificates, family and child protection, certain asylum‑related arrangements, local constructions, municipal sanitary, individual entrepreneur licences, minor infractions etc. They are headed by government commissioners appointed by the Prime Minister. The Government Decree 218/2012. saw to the establishment of District Government Offices (DGO) that subordinated to County Government Offices. DGO directors can be appointed from either local or national politicians or civil servants.

In 2012, municipal development councils that oversaw the regional development system were abolished and alternative consulting bodies, appointed by the central government, were established instead.

In the years 2012-2016, the government nationalised public utilities by buying back shares from foreign investors and local government units. Additionally, the central government is now regulating entire industries[8].

In accordance with the Act of 2011 on Local Governments, the statistical Regions disappeared in January 2013 and the Counties took over their competences, i.e. development and spatial planning. The central Government is responsible for the functions which were carried out by the Counties. On 1 January 2018 the Decree 39/2017. (27 December) of the Minister of Prime Minister's Office, amending Decree 31/2011. (24 October) of the Minister of Public Administration and Justice on the territorial registration identification code system entered into force. The modification was justified by international and national legislative changes, in accordance with which several territorial classifications had been modified. In view of user needs, new nomenclatures have also been incorporated into the territorial code system. Based on the changes, Budapest and Pest county are also planning and statistical regions, while Central Hungary became exclusively a statistical large region.

The system of local governments in Hungary has not been changed substantially since the adoption of the related Act in 2011, although numerous acts have affected their functions. Among others, these were the 6th and the 7th Amendments of the Fundamental Law, the acts on the central state budget of Hungary and on their implementation.  The Government Decree 94/2018. (22 May) on Tasks and Powers of Members of the Government, according to the Act V of 2018 listing the Ministries of Hungary and modifications of certain acts has had its effects on the division of tasks and powers of members of the Government.

The 6th Amendment of the Fundamental Law modifying Art. 51/A on declaration and rules of emergency in case of terrorist threat (June 14, 2016) gives special powers to the Government in case of serious terrorism risks in the country. Among others, it means introduction of the governance based on decrees instead of on acts. This period endures 60 days. It means restrictions of transport, media freedoms etc. as well. Taking into account that the notion of terrorism is not clear, and the same Government determines the state of terrorism risks, the Act has proven controversial.

The 7th Amendment of the Fundamental Law –  Art. XIV (1)-(3) – e.a. on immigration rules (28 June 2018) has had effects on local governments actions related to massive flow of immigrants to the country and in Southern zones with state border fence.

The 8th Amendment of the Fundamental Law was intended to amend the provisions of the Fundamental Law relating to courts with the same content as before the 7th Amendment of the Fundamental Law. Accordingly, the sections on independent administrative courts have been deleted, but the previous constitutional provision referring to the possibility of establishing separate courts has not been reinstated.

The Government Decree 94/2018. (22 May) has modified tasks and powers of the members of the Government. Among others, administration and control of tourism have been delegated to the Prime Minister's Office, the Ministry of Human Resources has been granted authority in new areas, including human resources, and the Government Office has been designated to deal with operational programmes. The Ministry of Interior has the responsibility to deal with local government issues, the Competitive Central Hungary Operational Programme (Budapest) belongs to the Ministry of Finance.

The government reduced the local government spending from 11.8% of GDP in 2010 to 10% in 2013. Accordingly, total central state expenditure fell from 12.6% in 2010 to 7.5% in 2013. One of the local government's main sources of revenue since 1990, the personal income tax, was removed from the local government's financial system[9]. Tax autonomy indicators were the following: revenue autonomy : 2015 : 38 %, 2016 : 48%, 2017 : 47 %, own revenue decentralisation : 2015 : 6%, 2016 : 7 %, 2017 : 6 %, transfer dependency: 2015 : 63 %, 2016 : 54%, 2017: 53 %.

Central level

State competences

• The Parliament holds exclusive legislative powers;
• The Prime Minister determines the Government's general policy;
• The central Government enjoys exclusive powers in matters related to national sovereignty (justice, foreign affairs, finance and national defence);
• The Government has competences in all matters not expressly delegated to another body;
• The Government has a civil service at its disposal, which is also deconcentrated at the County (County government offices) and local levels (metropolitan government offices).

Regional level 

Counties'(megyei) competences

• Territorial development;
• Rural development;
• Land-use planning;
• Coordination activities.

Local level

Municipal (települési) competences

• Urban development, land use planning;
• Urban operations (developing and maintaining public cemeteries, providing street lighting, providing industrial chimney sweeping services, developing and maintaining local public roads and their accessories, developing and maintaining public parks and other public areas, providing space for parking vehicles);
• Naming public areas and public institutions in local government ownership;
• Primary healthcare, services promoting healthy ways of living;
• Environmental health (refuse collection, sanitation of urban environment, control of pests and rodents);
• Kindergarten services;
• Cultural services (public library services, support to cinemas, performing art organisations, protection of local cultural heritage; support to local community education);
• Social, child welfare and child protection services;
• Housing and property management;
• Rehabilitation of the homeless and prevention of homelessness;
• Protection of the local environment and nature, water management, preventing flood damages, supply of drinking water, canalisation, treatment and disposal of waste water (sewage service);
• National defence, civil defence, disaster protection, local public employment;
• Duties related to local taxes, organising local economy and tourism;
• Providing sales opportunities for small-scale producers and licensed traditional producers (to sell products specified by legislation), including weekend markets;
• Sport- and youth-related affairs;
• Nationality affairs;
• Participation in ensuring public safety of their municipality;
• Providing local public transport;
• Waste management;
• District heat supply.

[1] The Fundamental Law of Hungary (as in force on 13 December 2019), Art. B).

[2] Act LXV of 1990 on Local Governments.

[3] 2011. évi CLXXXIX. törvény Magyarország helyi önkormányzatairól [Act CLXXXIX of 2011 on Local Governments in Hungary].

[4] Gazetteer of Hungary, 1 January 2019.

[5] Interinstitutional Style Guide, Annex A10 - Regions

[6] Fundamental Law of Hungary, Art. 31.

[7] 2011. évi CLXXXIX. törvény Magyarország helyi önkormányzatairól [Act CLXXXIX of 2011 on Local Governments].

[8] See Nationalization of Waste Management Industry, Act CLXXXV of 2012 on Waste.

[9] OECD Fiscal Decentralisation Database.