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Journal section "Public finances"

Why Is the Self-Sufficiency of Urban Districts Budgets Not Growing

Povarova A.I.

1 (43), 2016

Povarova A.I. Why Is the Self-Sufficiency of Urban Districts Budgets Not Growing. Economic and Social Changes: Facts, Trends, Forecast, 2016, no. 1 (43), pp. 108-121. DOI: 10.15838/esc/2016.1.43.7

DOI: 10.15838/esc/2016.1.43.7

Abstract   |   Authors   |   References
Urban districts occupy a special place in the system of municipalities due to their potential and role in the implementation of governmental economic policy. Possessing the most developed infrastructure, facilities and a good financial basis, large and medium-sized cities accumulate the major part of budget revenues. However, the predominant part of their revenues that amounts, according to various estimates, to 70–85% [1, 6, 15] goes to superior budgets. As a consequence of the reforms of intergovernmental fiscal relations and local government that were held in 2000–2009, cities were left without stable, legislated fiscal revenue sources that were sufficient to fulfill their obligations to the population. Currently, city government can fully dispose of single tax on imputed income, individual property tax and land tax. Significant imbalances in the distribution of budget revenues make cities dependent on the financial assistance of higher levels of public authority and lead to an accumulation of problems. The Federal Treasury data on the execution of urban districts budgets show the stagnation of own revenues in 2011–2014. According to the calculations made by ISEDT RAS, in 2014, the availability of own budget revenues per capita was below the average value in 60% of the capital cities of Russia’s constituent entities (regardless of Moscow and Saint Petersburg). This affected even major centers like Voronezh, Volgograd, Ufa, Chelyabinsk and Omsk. In the Vologda Oblast, the fiscal capacity of residents in urban districts that include the cities of Vologda and Cherepovets was 17% below the national average due to the reduction in the amount of receipts of own budget sources since 2012. In the conditions of acute shortage of financial resources to meet the growing obligations to support citizens, local authorities are forced to make borrowings; this fact limits the possibility of conducting a responsible fiscal policy and implementation of strategic investment projects. The paper presents the results of the analysis of execution of the budgets of the Vologda Oblast municipal districts. The main objective of the analysis was to identify the factors that reduce the self-sufficiency of urban districts in relation to intergovernmental fiscal policy at the regional level. The main conclusion of the research consists in the fact that the actual state of city budgets reflects the lack of economic ties between budgetary security of cities and the efficiency of their economies

Keywords

urban district, intergovernmental fiscal relations, urban districts budgets, own revenues of the budget, efficiency of intergovernmental fiscal policy

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