Structure of the local budget: concept, types

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

One of the forms of direct exercise of power is local self-government. Local authorities allow the use, possession and disposal of municipal property. Local governments must:

• maintain and manage residential and non-residential property (including kindergartens, schools, hospitals and other infrastructure facilities);
• maintain utilities and provide services (supply of gas, electricity, water, and so on);
• maintain the road infrastructure, carry out construction and repair, and solve other issues.

The most important objects of municipal government are: land, real estate, industrial facilities.

To solve all these issues, self-government bodies must have funds, which make up the structure of the local budget. In this case, the sources of income can be:

• taxes and fees, deductions and pen alties that go to the local budget;
• rental income from property owned;
• donations;
• deductions from the income of municipal enterprises.

What is the local budget?

The local budget (the structure of revenues and expenditures) has the same form as the state budget. Scientists in the field of economics give the following definition: the local budget is a whole complex of economic relationships that ensures the distribution of national income within a particular region, and forms the financial base at the local level. The budget helps to strengthen the financial independence and autonomy of local authorities, activates economic activity and infrastructure development in a particular area.

The essence of local budgeting

The basic concepts and structure of the local budget are set out in the Constitution (Article 132). First of all, this article gives the right to local authorities to form, approve and further implement this budget. At the same time, such a budget is part of the consolidated budget, which is formed in a particular region.

The main task of the authorities in budgeting at the local level is to make the whole procedure as transparent as possible and balance all receipts and expenditures. However, everything must take place within the framework of federal law.

In the structure of the local budget, there are several items of income that are distributed to implement the powers of this government and solve problems that arise at the local level. Based on the amount of income received, the issue of granting subventions to a specific region, settlement, city or village is decided.

Obligations of authorities to open data

The composition and structure of the local budget are subject to mandatory official publication. Simply put, the local media should publish draft budgets, interim results, and information about how revenues are spent. Without fail, such information publications must contain information on the number of employees of local authorities, the size of the content of this apparatus.

If there is no regional print media in a particular area, then the information should be published on the official website of the local government, and information can also be placed on information stands. The main thing is that the local population should have the opportunity to get acquainted with the local budget, with information about its replenishment and expenditure items.

Independence of the local budget

The independence of the local budget structure is ensured by several factors:

• presence of own source of income in the region;
• the right of local authorities to independently determine where to spend funds;
• the ability to use the extra income as you see fit;
• the right to receive compensation for additional, unbudgeted expenses that arose in the process of implementing the local infrastructure development program, other activities of local authorities;
• full responsibility of representatives of local authorities for the execution and replenishment of the budget.

What does the local budget consist of?

At the heart of any local plan to replenish and spend cash, there are two components:

• revenue;
• consumables.

Income income from taxes

In turn, this part of the local budget revenue structure consists of several parts.

Profit. These are actually tax revenues that go to the local budget and are clearly stipulated by the current legislation of the Russian Federation. The income of village councils consists of land tax and tax, which is paid for the ownership of real estate by individuals. These revenues are solely the income of the village council.

This also includes a single agricultural tax and from the profits of individuals, which is provided for by special regimes. But the local authorities keep only a part of these revenues in their budget. In particular, the agricultural tax remains at 30%, and tax payments from the profits of individuals - at 10%. In municipal areas, the budget is formed in the same way.

The structure of local budget revenues of urban districts has several differences. The revenue side is also formed at the expense of state duties in the amount of 100%. Thus, 100% of the general agricultural tax, temporary income tax remains in the city district.

Profits generated other than taxes

The following revenues to the budget can also be described as profit, but not related totax area. It could be income from your own property.

The third component is all kinds of deductions (non-refundable and refundable), with the exception of subventions received from federal or regional funds. These can be punitive payments, donations and other receipts.

Expenditure

The structure of local budget expenditures also consists of several parts. First of all, these are the costs of the production sector. This refers to the costs of maintaining and modernizing the housing and communal services system. It also includes spending on environmental protection and the development of the country's economy. All these costs, as a rule, account for a fifth of the total budget.

Expenses for the development of the state economy are the funds allocated for subventions and road repair.

This part of the cost also includes:

• financing of the administrative apparatus;
• local elections;
• implementation in practice of their own bills;
• local order fulfillment;
• financial support for local economy;
• maintaining organizations of other levels of government;
• implementation of targeted programs that were initiated at the local level and are important for a particular region;
• payment of interest on loans;
• development of local infrastructure.

The main thing is that these expenses are covered by non-tax and tax revenues, that is, personal sources of financing. If there is a deficiency, it can be usedtransfer.

Let's consider the costs of implementing the tasks assigned to local authorities. Typically, this item of expenses takes about 70% of all expenses. Of these, about 40% should be in education. The rest should go to improving the quality of work of municipalities, developing culture and the social sphere.

The second part of the expenditure part

This part of the local budget structure aims at:

• ensuring a guaranteed obligation to receive free education;
• ensuring the smooth operation of commissions on problems of children under 18;
• distribution of income, their adjustment between settlements;
• social support for people who need help the most (disabled, low-income families, veterans and orphans);
• subsidizing low-income families and citizens for utility bills;
• construction of new roads;
• solving environmental problems in the region;
• maintaining the library fund and so on.

It should be understood that the structure of state and local budgets can be very different. But in general, we can say that about 30% should go to the development of the social and cultural sphere, then comes the housing and communal services, and so on.

Equalizing the level of fiscal security

It happens that not every rural settlement, municipal district or other entity has an insufficient composition and income structurelocal budget, that is, they actually do not have the opportunity to exercise their powers in full. In such cases, funding is provided through grants. Such transfers are irrevocable and gratuitous.

The procedure for granting subsidies is regulated by Russian legislation, in particular, the budget code. In addition to the lack of budgetary funds, when determining the need for subsidies, the number of residents in a particular settlement is taken into account.

You should also know that when resolving this issue, the higher authorities have the right to be guided solely by the methodology for determining the estimated budget provision. If this level is higher, then a subsidy is due. When determining the need, it is forbidden to take into account actual expenses and income for the reporting period or forecasted indicators for the next period.

It is also possible to partially allocate subsidies per inhabitant in a particular region.

Subsidies

Another type of intergovernmental transfers. But unlike subsidies, spending subsidies is a fully controlled process, which is regulated at the level of legislation. Such assistance is issued in order to co-finance budgetary obligations, including financing of local budgets, most often for the implementation of a specific program. At the same time, funds can be allocated both from the lower (negative transfer) and the higher budget.

Problems

Local authorities are as close as possible to the population, and the budget of a particular region is the primary level of public authority organization. Municipalities are those bodies that are the backbone of democracy, supporting the stability of the whole state. However, it is no secret that it is at the level of local budgets that failures and problems most often occur that negatively affect the state of the entire society.

Today, a number of main problems can be identified:

• opportunity to interpret the regulatory framework inconsistently;
• discrepancy between the powers of local authorities and financial resources;
• imbalance in most municipal budgets;
• most of the regions have a small income part due to the minimum amount of property, land and even a small number of people;
• irresponsibility of representatives of regional authorities.

But the biggest problem is the imbalance in the composition and structure of local budget expenditures and the material base of most regions. The solution of these issues requires a systematic approach and urgent measures.