It is possible to decentralise funds and powers, but perhaps not ability to manage efficiently

It is possible to decentralise funds and powers, but perhaps not ability to manage efficiently

​​​​​The beginning is almost always difficult. Though moving ahead, you gradually begin to gain speed. Nevertheless, even if you follow all the rules, it does not guarantee absolute safety. It is necessary that the other traffic participants follow the rules. Besides, the rules are the same for all and, if desired, they are not difficult to abide. For sure, you need to know them at least.

In 2015, the whole country eventually got a move on. It was then that the Government introduced the first stage of financial decentralisation. In 2014, own revenues of the local budgets amounted to UAH 68.6 billion, and according to preliminary results of 2017, this figure amounted to UAH 192 billion. Local budgets began to gradually grow, but at the same time the outlook of cities, villages and rural settlements renewed. Somewhere the energy efficient projects were launched, somewhere construction and renovation of roads were carried out. Some considered water pipelines, solid household waste landfills and their recycling, repair and building of new schools, kindergartens, healthcare facilities, sports grounds as primary need. And this is not a fiction – everyone can make sure of this, getting to where the local head is in his proper place, or in other words, knows the rules and follows them.

There is no need to go anywhere, but simply read online as, for example, decentralisation had a negative impact in the town of Nizhyn in the Chernihiv Oblast, according to Anatoliy Linnyk, Nizhyn mayor.

“... People come and say: “You have a lot of funds to develop the town, where are they? Why do not we see such a progress here as in Vinnitsya, Chernihiv or Lviv?” We do not have such revenues, just additional load instead!” Nizhyn town mayor shared his opinion with a journalist of one of the online publications.

What are the reasons not to believe the mayor?

In order to once again make sure that the words of the mayor are true, we addressed the experts of the Financial Monitoring Group of the Central Reform Office. We would like to share obtained information with the readers of decentralisation.gov.ua.

In 2017, the inflow of own revenues to the general fund of the Nizhyn town budget (excluding transfers from the state budget) amounted to UAH 203.7 million, which is 39% more than from 2016 revenues.

“By the way, the average revenue growth rate in Ukraine as a whole is lower than in Nizhyn, and makes up 31%,” commented Yanina Kazyuk, financial decentralisation coordinator of the Central Reform Office.

In 2017, the budget of the town of Nizhyn received UAH 31.9 million of land payment, which is 35.6% more than in 2016. At the same time, it should be noted that the town is provided with compensations in the total amount of UAH 20 million for the payment of the land tax of the State Emergency Service and Ministry of Defense regarding the taxation of land plots with military units, airfields and other facilities located on them. The amount of these privileges is over 60% of the revenues to the budget from the land payment.

According to the State Treasury, during 2017, the town of Nizhyn did not attract funds from the State Fund for Regional Development.

In addition to own funds, in 2017, Nizhyn received a basic subsidy of UAH 8.5 million, educational subvention of UAH 68.1 million, and healthcare subvention of UAH 60 million from the state budget for the execution of powers delegated by the state and funding of the social and cultural sectors.

“In the process of decentralisation, local authorities have broad powers to enable them, on their own and in the light of local specifics, to determine the main priorities, feasibility and effectiveness of using budget resources in the interests of hromada rather than waiting for guidance from the centre. The complaints of the Nizhyn mayor concerning the lack of budget funds are not confirmed by the real state of affairs. According to the Ministry of Finance, from the beginning of 2017, the town authorities placed UAH 53.8 million of funds from the general fund and UAH 7.1 million from the special fund of the town budget on the bank deposit accounts. As of 1 January 2017, the balance of the general fund of the town budget amounted to UAH 19.3 million,” informed the expert.

Indeed, prior to the beginning of the reform (by 2015), the town budget had had no free resources to place funds on bank deposits, and had to take loans in the treasury bodies to pay salaries to budget sector employees (teachers and medical specialists) and to finance energy resources. For example, in 2014 loans were borrowed in the amount of UAH 95 million. And already in 2015, there was no necessity in such loans and a resource emerged to finance the needs of the hromada.

The full version is available in Ukrainian – please click HERE

 

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