The state regulation conducted in accordance with the current economic policy plays a leading role in the formation and development of the economic structure of modern society. The financial system carries out control activities in the market economy through financial mechanisms by means of financial levers and incentives to achieve financial objectives. Regional public finance, as a major part of the RF financial system, is of great importance for the reproductive process during the transfer to effective market organization of the economy. The state budget is the main link of the financial system. It is an incomparable by its amount monetary fund, winch has huge investment potential and can quantitatively and qualitatively affect the efficiency of social production. The use of this potential to a great extent will determine a development direction and regional economy sustainability. The stability of the budget system is seen in the concept of long term socio-economic development of Russia until 2020 as a vital condition for the solution of strategic economic and social objectives of financial provision of innovative development of the economy. Despite recent reforms, the negative trends persist in the sphere of public finance. The proportion in the distribution of tax revenues between the Federation and its subjects changed from 44–56 in 1997 to 54–46 in 2014 that led to the serious deficit and the debt of regional budgets. The most critical situation is observed in the field of municipal finance. The budgets of even large Russian cities depend on regional subsidies by 25–35%. The regional and district levels were formed during the 2003 local government reform in isolation from the financial-economic base of their functioning. So, as a result, the revenue base of the Vologda Oblast municipal districts decreased by 3.3 times and their transfer dependence from higher levels increased by almost 5 times. About 95% of the settlements in the region function by 90–98% due to subsidized investments from budgets of other levels. In addition, the monostructural nature of the regional economy leads to the dependence of its budget potential on the financial situation of the key metallurgical enterprise – PAO Severstal. The share of its tax payments in the total tax revenues of the Vologda Oblast consolidated budget amounted to about 40%, before the 2009 pre-crisis year; in 2014 it fell to 10.8%. All this indicates the need for careful consideration of science-based management decisions and prioritization in the implementation of budgetary policy. Therefore, the research in this basic aspect of public administration occupies a key place in the work of the Institute of Socio-Economic Development of Territories of RAS
Keywords
budget, public finance in the region, budget policy, inter-budgetary relations, budgetary security, problems of public administration efficiency, market reforms trends, budgetary system crisis, role of private
capital