MOSUL, Iraq — Security forces have gotten much of the attention in the struggle to turn more responsibility over to the Iraqis. But U.S. provincial advisers say they are seeing reassuring progress on something most Americans take for granted at home: the budget process.

Mike Hankey, economics section chief for the Ninevah Provincial Reconstruction Team, said officials here have rapidly embraced a heretofore unfamiliar budget process and are using it to take care of their peoples’ needs.

Saddam Hussein’s regime invested little fiscal authority in the country’s provinces, Hankey said. The provinces depended on the central government for money because they did not collect state and local taxes, Hankey said.

While they still do not levy their own taxes, the provinces now must submit budget requests to the Iraqi government. This has forced provincial officials to learn a new bottom-up process that’s very different from the way they did things the past three decades, he said.

The learning process was initially bumpy. There was corruption during the 2006 budget process, for which some people were arrested, Hankey said. But the province quickly corrected course, cancelled corrupt contracts and re-implemented the budget for 2007 with better controls.

"They very quickly learned from their mistakes and instituted an accountability (process)," Hankey said.

The actual 2007 budget went much better and the 2008 budget even better than that, he said. Ninevah was the first province to submit its budget this year. The province has now learned the process so well that it works off a year-round budget cycle as governments do back in the United States.

Provincial officials are not dealing with small amounts of money. Ninevah’s budget was about $1 billion in 2008, comprised of $400 million in its regular budget and $600 million in supplementals. The province could get an additional $100 million in emergency spending as well.

Ninevah is the largest Sunni Arab-majority province, but also is one of the more diverse provinces. Sunni Arabs make up from 55 to 65 percent of the population; the Sunni Kurds, 15 to 25 percent. There also is a handful of other ethnic groups.

"I don’t think you can characterize the province as absent of political rivalry," Hankey said.

Yet Hankey said local leaders reported feeling "very plugged in" whenever questioned about how the 2008 process went.

Mayors, for example, are starting to understand how to push their own cities’ needs through the budget process.

Hankey concedes that the PRTs still have some work to do — notably smoothing out communication between Ninevah and the Iraqi government so that provincial officials can get their money fast.

But overall he’s pleased that Ninevah has gone from having no say in the budget process to driving the process in just a few short years.

"We have seen extraordinary progress in what the Iraqis have taken on," he said.

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