The Verkhovna Rada’s Budget Committee recommended the draft State Budget 2027 for consideration at first reading. The proposals for the second reading include changes to the distribution of revenue between the state and local budgets, increased funding for regional development, support for local infrastructure, and housing programmes for internally displaced persons.

Roksolana Pidlasa, Chair of the Committee, reported this. She said that MPs had reviewed 5,236 amendments and taken into account 90 budgetary conclusions. The draft budget is expected to be considered at first reading on approximately 28 October.

 

Local budget revenues

The Committee instructed the Government to consider a proposal to allocate 4% of personal income tax, excluding military personal income tax, to community budgets. According to Roksolana Pidlasa’s estimates, this would reduce state budget revenue by UAH 18.2 billion, so the proposal needs to be balanced.

The Committee instructed the Government to consider the possibility of retaining the reverse subsidy in local budgets. Roksolana Pidlasa stated that, should such a decision be taken, the state budget would lose UAH 19.2 billion, which could otherwise be channelled into defence expenditure.

Both proposals are yet to be finalised by the Government during the preparation of the draft law for its second reading.

 

Regional development and the calculation of subsidies

The Committee recommends increasing the resources of the State Fund of Regional Development by at least UAH 2 billion.

To calculate the horizontal equalisation indicators for 2027, it is proposed to use data from the State Statistics Service on the current population of communities, with the number of internally displaced persons (IDPs) taken into account based on data from the Ministry of Social Policy.

Another proposal concerns district councils: the Committee recommends increasing the subvention to local budgets by UAH 118 million to enable them to perform their functions.

 

Housing for IDPs and the completion of projects already underway

The Government should consider increasing expenditure on compensation for destroyed housing, as well as finding funds to complete projects in the education and healthcare sectors that were started in previous years using funds from the Fund for the Elimination of the Consequences of Armed Aggression.

The Committee also proposes considering the possibility of increasing funding for subsidised housing loans and the creation of social housing for IDPs.

The Committee separately clarified the purposes for which the remaining funds from the regional budgets of Donetsk and Luhansk regions and the budgets of communities in the temporarily occupied territories may be allocated. The Government proposes transferring these funds to a special account held by the Ministry for Communities to be used for housing for IDPs. The Committee proposes allowing these funds to be directed not only to the purchase of ready-built housing, but also to the renovation of existing buildings, the creation of social rental housing, and subsidised lending.

Roksolana Pidlasa explained that, when purchasing housing, priority should be given to combatants and people with war-related disabilities. It is also proposed that MinRehion be required to publish quarterly information on the funds used, the properties prepared and the number of IDPs who have been provided with housing.

 

Education, security, and energy independence

The Committee instructed the Government to consider increasing subsidies for workshops at vocational and pre-higher education institutions, and for bomb shelters in schools and kindergartens, as well as to allocate funds for the energy independence of schools and vocational and higher education institutions.

In the defence sector, the Government is to explore the creation of a new subsidy for local budgets to support the operation of centres that prepare citizens for national resistance.

These proposals relate to infrastructure and tasks that are important for communities. Specific funding volumes are to be determined during further development of the draft budget.

The proposals set out above are recommendations from the Budget Committee for the second reading, and do not constitute finally approved expenditure. The Government must consider them before the next stage of consideration of the State Budget 2027.