Serhii Poperechnyi, head of the Terebovlyanska amalgamated hromada, teaches the city council branch departments to earn money for their own needs. He is currently dreaming of each branch to be able to pay all its expenses in future on its own.
By Dmytro Syniak
The Terebovlyanska AH is one of the largest AHs in western Ukraine, with more than 30,500 residents. Serhii Poperechnyi, head of the hromada, worked for 5 years in the rayon administration and was rayon deputy head for a half of this term. The management experience and innate entrepreneurship helped him to introduce an interesting experiment in his hromada. Serhii Poperechnyi sets a task for each of the city council departments to earn funds for its own minor needs on its own. There are already some successes achieved. Thus, last year the culture department earned UAH 785 thousand, and the sports sector got UAH 50 thousand. In fact, we talked with Mr. Poperechnyi on the ways to earn money for hromada needs.
Compared to 2017, the budget of the Terebovlianska hromada in 2018 grew by 17% and made up UAH 190 million, out of which hromada’s own revenues amounted to UAH 84 million. What is the reason for growth?
- I take into consideration only the second indicator, that is our own revenues. Last year we earned UAH 84 million, and this year, due to the growth of salaries and legal land valuation, we must raise at least UAH 98 million. And our total budget should reach UAH 230 million. Last year's growth was achieved primarily due to new jobs creation. In September 2018, we launched a new dairy factory, which employs 65 people. The largest Terebovlya’s enterprises have considerably increased their staff: a factory producing Christmas tree decorations and a shoe factory are now operating exclusively for export. We also extended the staff of the utility enterprise, that now has brigades cleaning the territory on the outskirts of our hromada. And yet significant additional revenues to the budget were received as a result of hromada’s property inventory, on the basis of which we made an electronic consolidated database. I think it is the only one existing in Ukraine.
Serhii Poperechnyi, head of the Terebovlyanska AH
Terebovlya developed the “Hromada Creators” game, like a monopoly one (more information)
Your structure has a financial receipts control unit. What are its functions?
- We took a different path: we created a finance department maintaining control over tax revenues. This department employs former tax inspectors. They also visit the entrepreneurs, negotiate with them on workplaces’ legalisation. I also join these talks.
A factory producing Christmas tree decorations and a shoe factory operate exclusively for export
By forcing entrepreneurs to participate in projects that should be financed exclusively from the budget, you are hampering the development of the economy of your hromada.
- The fact that a certain model works well in the Czech Republic or France does not mean that it will work well in Ukraine.
Terebovlya needs a hotel. Is the city council ready to allocate 10% of the project cost to investor?
- No, it is not. Firstly, because the hotel is already being built by a private entrepreneur and should be ready by the beginning of the next year. Next to the construction site there is a stadium, where the Ukrainian volleyball championships of the Children’s League are already taking place. Besides, we plan to arrange a youth centre and a cafe on the ground floor of the hotel, and the profits will be used to finance this centre. It makes no sense to give it all up to private hands, because the youth can be left with nothing, and we will lose another premises that we need.
The stadium, where Ukrainian volleyball championships are already taking place within the Children’s League
Yet entrepreneurship is not a function of local self-government. Let a private entrepreneur build the hotel and you will receive taxes paid by him. The local self-government will not be able to provide the same return on business as a private investor.
- I am not against business development in our hromada, and when I see the opportunities to save money, I use them. Everything is simple! I want to make the Terebovlyanska AH buy only gas and electricity on the side, and use its own resources in terms of everything else. When “money remains in the family”, the cost of goods and services will be significantly reduced.
So, is the Terebovlyanska AH the one that saves?
- Rather, it's the one that earns, although these two activities are interrelated.
Will the departments of the city council make money?!
- Sure! Moreover, each of them lifts its own bar annually. If, for example, the department of culture last year earned UAH 785 thousand, this year it aims to earn UAH 1.5 million - almost twice as much. Sport must bring UAH 250 thousand to the city treasury.
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