Abstract
Obligatory consideration of peculiarities of the territorial development and regional differences in municipal budgets development is a prerequisite for ensuring the success of reforms aimed at decentralizing state power in the financial sphere and for developing the mechanism of inter-budget relations. The purpose of the study is to substantiate theoretically and develop a methodical approach to the differences between regions in terms of structural and regional differentiation of municipal budgets under state power decentralization. The article proposes a methodical approach to identifying the needs and substantiating measures for financial decentralization. The approach is based on considering the structural and regional differentiation and using statistical and cluster analyses to identify special aspects of the municipal budgets creation at different levels. The following regularities of changes in structural and regional differentiation of municipal budgets in the context of reforming the inter-budgetary relations and financial decentralization are determined: the changes in the state regulation of the local economy and finances usually boost an increase in the manifestations of differentiation; strengthening the negative influence of endogenous and exogenous risks on the increased disproportions in the socio-economic environment of regions while preserving the features of extensive management in the economic system; increasing imbalances and disparities in the structural differentiation of municipal budgets is usually due to the excessive centralization of public finances, while the intensive reforms aimed at decentralizing municipal budgets can increase the growth risks.
Highlights
Creating an effective decentralized mechanism of inter-budget relations, a thorough arrangement of the revenue base and the meaningful establishment of expenditures for municipal budgets are primarily conditioned by the construction of the administrative and territorial system (ATS)
Obligatory consideration of peculiarities of the territorial development and regional differences in municipal budgets development is a prerequisite for ensuring the success of reforms aimed at decentralizing state power in the financial sphere and for developing the mechanism of inter-budget relations
The following regularities of changes in structural and regional differentiation of municipal budgets in the context of reforming the inter-budgetary relations and financial decentralization are determined: the changes in the state regulation of the local economy and finances usually boost an increase in the manifestations of differentiation; strengthening the negative influence of endogenous and exogenous risks on the increased disproportions in the socio-economic environment of regions while preserving the features of extensive management in the economic system; increasing imbalances and disparities in the structural differentiation of municipal budgets is usually due to the excessive centralization of public finances, while the intensive reforms aimed at decentralizing municipal budgets can increase the growth risks
Summary
Creating an effective decentralized mechanism of inter-budget relations, a thorough arrangement of the revenue base and the meaningful establishment of expenditures for municipal budgets are primarily conditioned by the construction of the administrative and territorial system (ATS). This system defines characteristics and parameters of the national tax system, forms and practices of interaction between central and municipal authorities in the public sector, the order of tax revenues redistribution and provision of budget transfers, subsidies, etc. The desire to explain the nature of these consistent patterns, as well as to identify effective mechanisms for expanding the fiscal space of municipal authorities (increasing municipal budget revenues and expenditures) as a target for financial decentralization, should be considered as the main reason for a significant increase in the researchers’ attention to the generalization and systematization of a huge array of empirical observations of decentralization reforms
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