Financial self-sufficiency of territorial communities in decentralization conditions: analysis and new difficulties

  • Taisiiа Krushelnytska Dnipropetrovsk Regional Institute for Public Administration National Academy for Public Administration under the President of Ukraine
Keywords: public administration, local government, local budget, financial self-sufficiency, intergovernmental transfers, intergovernmental transfers institutional difficulties

Abstract

This article analyzes the current state of financial self-sufficiency of the territorial communities of Ukraine, investigates the mechanisms of forming local budgets in the context of decentralization and identifies new economic and institutional difficulties for community development.The relevance of this article is condition by the need to address the problems of creating adequate material, financial and organizational conditions to ensure the exercise of local and regional authorities' own and delegated powers. It is determined that decentralization is a complex system of public management of organizational and functional influence of public authorities on the functioning and development of territories.The analysis of the state of practical implementation of financial support of territorial communities. It is revealed that against the background of increasing absolute size of local budget revenues, their share in GDP, which is redistributed through local budgets in the period 2002–2006 was 20 %, in 2007, before the global financial crisis, reached 32.71 %, and Since 2015, since the beginning of decentralization, it has fluctuated at the level of 15%. This level is slightly lower than in the developed countries of Europe, which indicates a strong growth potential for Ukraine.The level of financial dependence/independence of local budgets from intergovernmental transfers from the State Budget. It found that the share of local budgets, formed with the participation of intergovernmental transfers remains quite high, although in 2018–2019 there was a tendency to decrease and increase the financial capacity of local budgets. Thus, right after the start of decentralization in 2015, their share was 59.08 % (own 40.92 %), and in 2019 they are expected to decrease to 50.2 % (correspondingly, their own increase to 47.34 %). Although, overall, there has been a tendency to strengthen the financial capacity of territorial communities, the practice of looking toward reducing the share of taxes credited to local budgets is an example of inconsistent state budgetary policy.In order to shape the financial self-sufficiency of territorial communities in the course of decentralization, an important institutional complication has emerged and needs to be address. We mean rethinking the role of local governments in shaping the local budget, eradicating paternalism, and fostering the philosophy of ownership and responsibility of each citizen in the development of society and the territorial community.

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Published
2020-02-29
How to Cite
Krushelnytska, T. (2020). Financial self-sufficiency of territorial communities in decentralization conditions: analysis and new difficulties. Public Administration Aspects, 8(1), 6-17. https://doi.org/10.15421/152001
Section
Article