EXECUTION AND FINANCING OF LOCAL BUDGETS IN UKRAINE: FEAUTURES AND RESULTS

Introduction. The formation of the revenue side of local budgets under martial law in Ukraine is one of the key tasks for effective local government in territorial communities. They must establish effective cooperation with state authorities, particularly the State Tax Service of Ukraine, international institutions, specialized (public) organizations dealing with budget and tax administration issues, and business entities – taxpayers – to build sufficient fiscal potential in local budgets and ensure the sustainable development of territorial communities. It is necessary to substantiate ways of forming local budget resources by effectively using fiscal instruments, considering the current economic conditions under which territorial communities in Ukraine function. Research Objective. The purpose of this article is to monitor the theoretical and practical foundations of forming the fiscal potential of local budgets in Ukraine and to develop ways to optimize it to ensure the sustainable development of territorial communities in the current context. Methodology. General scientific and special research methods were used in writing the article, including systematic analysis, functional analysis, structural methods, statistical methods, comparison, synthesis, observation, induction, deduction, and other methods of scientific inquiry. Results. The theoretical and methodological principles of forming local budgets in Ukraine have been substantiated. An organizational framework for accumulating fiscal resources of territorial communities under decentralization in Ukraine has been developed. The analysis of state and local budget revenue by income categories showed a general upward trend in tax payments despite the challenges posed by martial law. It was found that the most fiscally effective algorithm is the collection and distribution of personal income tax across different levels of the budget system, confirmed by empirical calculations of the performance of the State Tax Service of Ukraine in meeting planned indicators. The study also revealed that, in practice, the functioning of territorial communities is mainly supported by revenues from local taxes and fees, particularly the single tax and land rent, while revenues from real estate taxes (other than land) have a lesser fiscal effect. There are certain fiscal losses in local budgets in frontline regions, requiring an adequate response from state and local authorities to stabilize the fiscal potential of these local budgets. Based on these trends, methods for increasing the fiscal potential of local budgets in Ukraine have been proposed, focusing on cooperation between local authorities and other fiscal entities, creating a favorable investment-innovative climate in the regions, using modern information systems and tax administration technologies, and following the key principles of budget resource formation applied in foreign countries.

The guarantee for stable development of the local community's well-being creates conditions to ensure the financial self-sufficiency for local budgets. Today it is urgent to improve the theoretical and practical approaches to forming the local budget revenue to ensure the necessary financial self-sufficiency level for local budgets. Thus, the purpose of this research is to investigate the level of financial self-sufficiency for local budgets in Ukraine in 1998−2019 by analyzing the revenue side of these budgets. The research used methods of economic, systemic, and structural dynamic analysis. The paper compares different approaches to defining the concept of “financial self-sufficiency for local budgets”. It is determined that the community's success depends on the level of its financial self-sufficiency, which is possible only when the community has financial resources fully to implement local budgets in terms of expenditures. Structural and dynamic analysis of the local budget revenue in Ukraine for 1998-2019 is carried out to assess the level of financial self-sufficiency for local budgets in Ukraine as a whole. The study results indicate the state measures correctness in the reforming of the local taxation system in 2010 and budget decentralization in 2015. However, these measures must be fully implemented and systemic. Conclusions: the composition and structure of the revenues of the local budgets are continually changing, due to the constant changes in the tax system of Ukraine and the state’s efforts to solve the problem of generating local budget revenues, not due to the development of local taxation, but via official transfers. In such conditions, the self-sufficiency of local budgets does not receive the appropriate level. Local budgets are formed on the principle of minimum execution. However, the local taxation system development and the significant increase in tax revenues from local taxes since 2015 allow us to make optimistic forecasts for the growth of the financial self-sufficiency level for local budgets in the future. Keywords: self-sufficiency, community, budget, taxes.

The need for setting financial and economic stability of local budgets and an adequate degree of financial decentralization determines new requirements to the local budget administration. The article’s objective is to deepen the theoretical and methodological framework for assessment of the financial stability of local budgets.
 The existing theoretical and methodological framework for the analysis of processes involved in mobilization of financial resources to local budgets is shown, and the econometric assessment of the current financial stability of local budgets in Ukraine is given. A comprehensive analysis of the financial stability of
 local budgets in Ukraine is made, with demonstrating that the efficiency of the financial system in Ukraine is conditional on the financial capacities and financial stabilities of its territories.
 It is shown that the share of local budget revenues in the consolidated budget of Ukraine is too low. It is evidence of high centralization of financial resources in the state budget, making local self-governance bodies far less autonomous and independent. A comprehensive analysis of the financial stability of local budgets made by computing an integral index measuring the cumulative impact of integral estimates taken for the analysis: balance, financial autonomy, budget efficiency. The assessment of the financial stability of local budgets shows that the integral index of financial stability was growing in 2012-2016 due to the increasing local revenues of local budgets, although the reliance on financial transfers from the state budget was still very strong. A positive factor is emphasized, which is the legal acts on budget autonomy and financial independence of local budgets, issued during 2016.
 Further studies of issues related with strengthening the financial stability of local budgets will be focused on developing instruments for effective management of processes involved in mobilization and use of financial resources of local self-governance bodies.

The purpose of the article is to identify the correspondence between the revenue and expenditure parts of local budgets, which are responsible for the significant part of state expenditure financing due to financial decentralization reform. The article provides a comparative analysis of decentralization levels of local budgets in Ukraine and European countries by revenues and expenditures, as well as analyzes the structure of revenues and expenditures of the consolidated budget which include state and local budgets. The article notes that over the past ten years, the gap between revenue and expenditure has narrowed due to decentralization reform, but fiscal balance has not been achieved.The results of the analysis demonstrate the existence of a significant vertical imbalance in the budget system of Ukraine, which consists in the insufficiency of own and fixed financial resources of local authorities to ensure their powers. In terms of income decentralization, Ukraine ranks middle among Eastern European countries, while the level of expenditure decentralization corresponds to the level of Scandinavian countries, where the state plays an active role in income redistribution and has high institutional efficiency and high social standards. The article substantiates that the vertical imbalance exist due to the inefficient structure of local budgets’ revenues, in particular the high share of transfer payments from the state budget to local budgets, as well as the low share of own revenues, namely local taxes, in tax revenues. In order to strengthen the revenue side of local budgets and reduce vertical imbalances it is proposed to increase the tax base of local taxes through development of business and welfare in the regions, to increase the share of deductions from corporate tax and personal income tax to local budgets, to improve the control over local budget revenues and to optimize local expenditures, including social protection and social security expenditures. As the practice of foreign countries with decentralized budget systems shows, the elimination of vertical imbalances leads to a significant increase in the fiscal capacity of the regions. JEL classіfіcatіon: E62, H61, H71, H77 Manuscript received 30.04.2020

Introduction. The formation of the revenue side of local budgets under martial law in Ukraine is one of the key tasks for the effective functioning of local self-government bodies within territorial communities. The fundamental characteristics of local self-governance include capacity, transparency, and resilience. Capable territorial communities, independently or through their respective authorities, should be able to provide an adequate level of public services in healthcare, social protection, education, culture, and public utilities, based on available human resources, financial support, and infrastructure development in the respective administrative-territorial units. However, such functionality requires adequate financial backing, which can be achieved through the effective development of local budgets' tax potential. Purpose. The article aims to monitor the theoretical and practical principles for forming and increasing the tax potential of Ukraine’s local budgets in the current context of wartime risk mitigation. Methodology. The theoretical and methodological framework of the research is based on classical and neoclassical economic theories, fiscal decentralization theory, finance theory, and institutional economics. The study applies the dialectical method of cognition, theoretical generalization and comparison, statistical analysis, graphical presentation, induction, deduction, and other methods. Results. The paper outlines the scientific and practical foundations of tax potential formation for local budgets in Ukraine, particularly under current conditions and in the context of community development stimulation. A definitional interpretation of «tax potential» is provided, including its inherent features and the key determinants of its formation and expansion under martial law. The article presents a review of methodological approaches to identifying and evaluating local tax potential, taking into account international practices. An analysis of tax revenue indicators to local budgets during the reporting period is conducted, highlighting the critical role of personal income tax due to its redistributive mechanisms between budget levels. A forecast trend for property tax revenues to local budgets through 2027 is constructed, revealing a positive trajectory despite fiscal security risks. The study proposes both tactical and strategic measures to improve the tax potential of local budgets in Ukraine. These measures account for realistic fiscal policy, international best practices in local tax administration, and the integration of artificial intelligence technologies into the taxation system to enhance the financial capacity of territorial communities and ensure their sustainable development.

The aim of the paper is to study the theoretical and normative principles of ensuring the transparency of local budgets in the context of the formation of an effective system of decentralization of financial resources. Analyzing and generalizing the scientific works of many scholars, the views of researchers are systematized on the definition of the concept of “local budget”. In accordance with the provisions of the legal acts, the organizational structure of local finances has been developed, taking into account the strengthening of decentralization and democratization processes in the modern conditions. In accordance with the provisions of the Budget Code of Ukraine, the essence of the principle of openity and transparency of the budget system is disclosed. The scheme of functioning of the informational-analytical system “Transparent budget” is proposed. The comparative analysis of the level of openness of the state budget of Ukraine with the budgets of other countries of the world is carried out according to the data of the International Budget Partnership. A diagnosis of the level of transparency, participation and integrity of local budgets in Ukraine is conducted. Prospects for further research in this area are improving the methodological approach to assessing the level of decentralization of financial resources of local budgets, as well as developing recommendations for increasing the level of openness and transparency of local budgets in Ukraine.

In the conditions of the constant increase of global challenges and socio-economic instability, the problem of the effectiveness of state financial control is one of the central ones for modern Ukraine. The purpose of the research was to identify key problems of government financial control and to assess the implementation of local budgets. The main methods for the study of the subject matter were theoretical approaches (analysis of Ukrainian and international theoretical positions), analysis and synthesis, statistical analysis, systematic analysis, terminological analysis, method of graphical representation of statistical data, and analysis of legislative and programme documents. As a result, it was confirmed that necessity to develop the state financial control system and to create a basis for improving the effectiveness of local budget execution had increased. The statistical data for the last three years (in some cases for 10 years) were analysed, which made it possible to describe the current situation in the field of public financial control and execution of local budgets in Ukraine. Shortcomings, problems, obstacles, limitations, and perspectives for public financial control development and the execution of local budgets are identified. The results obtained have theoretical and practical significance. The application of theoretical approaches in the study complements the theoretical provisions financial control of government. The results are of practical importance, especially in the implementation of national policy in the field of state financial control in the context of the crisis caused by the pandemic and its socio-economic consequences

The article examines the problems of managing the funds of the State budget and local budgets in Ukraine, since the effective management of budget funds becomes a key factor for ensuring the financial stability of the state and regions. The purpose of the study is a comprehensive analysis of the current state of management of funds of the State Budget and local budgets of Ukraine, identification of key problems and development of recommendations for improving the system of management of budget funds. The system of managing the funds of the State budget and local budgets in Ukraine was considered and conclusions were drawn about the presence of serious challenges, especially in the conditions of the ongoing martial law. Analysis of the structure of revenues and expenditures of the State Budget revealed significant changes due to the need to finance defense needs. In particular, there is a significant increase in the share of defense and security spending, which puts pressure on other budget items, such as the social sphere, education and health care. Local budgets, despite difficult economic conditions, show a tendency to increase revenues and expenditures, which indicates the effectiveness of the decentralization reform and the ability of local authorities to adapt to new challenges. Also, the study revealed a number of problematic aspects in the management of budget funds. In particular, the growth of the budget deficit and public debt creates risks for the country's long-term financial stability. There is a need to find an optimal balance between meeting current needs, especially in the field of defense, and maintaining funding for important socio-economic programs. The expediency of implementing a comprehensive approach to the management of budget funds is substantiated. This includes improving the system of strategic budget planning, strengthening mechanisms for controlling the use of funds, optimizing the structure of expenditures, and developing a long-term strategy for public debt management

The article deals with the technological aspects of the mechanism of formation of local budgets in Ukraine, which is an important tool for state policy, the development of administrative and territorial units, and ensuring an adequate level of living standards. On the basis of the analysis carried out by the authors, it was revealed that the mechanism of formation of local budgets does not correspond to the current trends, therefore the components of legislative and regulatory support are systematized and the potential of their use for the changes of the existing mechanism is revealed. The technological aspects of the formation of local budgets are considered, namely, the composition of local budgets is determined, and at the expense of which the local budget is formed by the legislative base. The features of the mechanism of formation of local budgets and the main organizational and technological procedures for its development are determined. The authors highlighted the main shortcomings of the existing mechanism for the formation of local budgets, namely, the absence of a procedure for forming the income and expenditure part of local budgets. It is determined that local budgets of Ukraine are more dependent on intergovernmental transfers than local budgets of EU countries, the volume of transfers and their share in the organization of local budget revenues is constantly increasing. In this work, the authors proposed measures to eliminate the problems of the formation of local budgets.

Purpose. The aim of the article is to study current trends in the formation and implementation of compliance in the Ukrainian practice of tax risk management in order to increase the fiscal potential of state and local budgets. Methodology of research. The following general scientific and special methods of scientific research were used in the article to solve the set goal: system analysis – for a comprehensive study of the essence of tax compliance and its institutional and legal aspects, which made it possible to determine the main ways of minimizing tax risks; functional analysis – when investigating the fiscal and motivating role of tax compliance; structural – when assessing the structure of tax risks and their impact on the execution of state and local budgets in Ukraine; the method of comparison – in the study of foreign experience of tax risk management based on compliance; generalization and observation – during the analysis of causes and factors affecting the effectiveness of taxation and ensuring the sustainable development of the state; induction, deduction and other methods of scientific knowledge. Findings. The essential determinants of the use of compliance in tax risk management processes are highlighted. The fiscal and motivational role of tax compliance in the accumulation of state and local budget revenues is substantiated. The indicators of the activity of fiscal institutions in the process of implementing tax compliance into the Ukrainian practice of minimizing fraudulent and corrupt phenomena in taxation are analysed. The practical role of the functioning of the unit responsible for the implementation of tax compliance in tax authorities, taking into account foreign experience and within the framework of the implementation of the National Revenue Strategy, has been proven, which will improve the procedures for working out tax risks and forming partnership relations with taxpayers. This aspect will contribute to the conscientious fulfilment of tax obligations, which will positively affect the accumulation of financial resources of the state and local budgets in Ukraine in the conditions of combating wartime risks. Originality. The theoretical and methodological approaches to the implementation of dominant compliance in the system of combating tax risks and fiscal losses based on the results of the administration of tax payments to budgets of all levels have gained further development. Practical value. The obtained results can be useful for legislators, specialists in the field of taxation, scientific and pedagogical workers and other interested persons, contributing to the development of effective strategies for overcoming tax risks in order to strengthen the fiscal potential of the state and territorial communities. Key words: fiscal policy, budgetary resources, compliance, tax risk management, tax administration, fiscal partnership.

The decentralization of finance in the context of reform of local self-government in Ukraine needs the improvement of the tax system i.e. the optimal allocation of taxes between the local and state budgets. The purpose of this research is to enhance the existing experience of budget decentralization with the identification of the practical results of the decentralization reform and its impact on the local territorial communities in Ukraine. The article examines and summarizes the current experience of budget decentralization in Ukraine and the results of the reform, as well as their community impact. The main focus of the study is on the principles of tax policy implementation in terms of taxes and fees credited to local budgets. The purpose of the study is to optimize the tax mechanisms for filling local budgets in Ukraine. The article examines the state of filling local budgets and its impact on socio-economic development of the community. It is determined that the basis of revenues are tax revenues, the share of which is growing every year. The reform resulted in increased interest of local governments in increasing revenues to local budgets, finding reserves to fill them, improving the efficiency of administration of taxes and fees. Thus, the main budget-forming tax is the personal income tax, which in the amount of 60 percent is credited to the budgets of rural, township, urban territorial communities. In its turn, the positive dynamics is the reduction of intergovernmental transfers. Increasing the dependence of local budgets on personal income tax and own local taxes is a positive consequence of the implemented budget reform. According to the results of the study, the directions of optimizing the use of tax instruments in filling local budgets are substantiated. One of the crucial conditions for creating a highly developed market economy is the formation of local self-government as an effectively functioning part of the public sector.

The budgetary capacity with the tax component as its key aspect is the basis for forming local budgets of a territorial community. The paper outlines the methods for diagnostics of the budgetary capacity of territorial communities by revenues aimed at providing a comprehensive quantitative and qualitative assessment of the status, strengths, and weaknesses of the economy of an administrative-territorial unit and determining the place and role of the local budget in ensuring the socio-economic development of the territory. The main objectives of the suggested methods are to analyze local budget revenues, identify sources and patterns of their formation, study the structure of own revenues of community budgets, justify the dependence of the characteristics of local budgets forming in territorial communities on the level of their socio-economic development and management features. As a result of the conducted research, the problems of filling local budgets were identified, and directions of budgetary capacity increase were substantiated.

The article analyzes the essence and features of transparency and publicity of local budgets in Ukraine and abroad using advanced foreign experience. The need to ensure transparency and publicity of local budgets is substantiated. International ratings of openness and transparency of local budgets are considered. Successful projects and practices in ensuring budget transparency and publicity are analyzed. The features of ensuring budget transparency and publicity in war conditions are determined. Recommendations are proposed to increase the transparency and publicity of local budgets in Ukraine in the face of new challenges. To achieve the goals of this article, general scientific and special methods were used, such as the structural-functional method (to study individual tools, successful projects, and practices in ensuring transparency and publicity of local budgets), comparison method (comparison of data openness across countries, successful projects, and practices in ensuring budget transparency and publicity). All this made it possible to develop measures to ensure transparency and publicity of local budgets in Ukraine in the face of new challenges.

The purpose of this research is to develop scientific and pragmatic approaches to optimize the interaction of fiscal institutions in the process of administering property taxes to local budgets in Ukraine, considering contemporary realities and international experience.Results and Conclusions. The article addresses current issues concerning the interaction between government and local authorities in enhancing property tax administration procedures. It substantiates the theoretical determinants of property taxes and highlights their fiscal role within the tax revenue architecture of local budgets in Ukraine and the European Union. An organizational-methodological framework is improved to ensure the administration mechanism of property taxes in Ukraine across key dominants. Using an empirical approach and comparative analysis, the study reveals a positive trend in the share of property tax elements within the structure of local budget revenues in Ukraine. This trend is attributed to fiscal decentralization and cooperative efforts of fiscal institutions in achieving planned property tax revenue targets. First identified the synergistic fiscal effect of further active collaboration among tax authorities, local governments, and taxpayers in the context of forming and updating property registers in Ukraine for taxation purposes based on a value-based approach.Theoretical and methodical approaches to forecasting property tax revenues to local budgets of Ukraine have been further developed, taking into account fiscal policy trends under martial law and using the «forecasting» module of the SPSS statistics package. This approach made it possible to identify the limited fiscal impact of the real estate tax (excluding land), which does not align with global practices and indicates the incomplete fiscal and regulatory function of this tax in Ukraine.Based on the research results, measures are proposed to optimize property tax administration procedures in Ukraine, grounded in principles of cooperation, transparency, compliance, digitalization, and the use of fiscal registers (cadasters).

Effective system of local self-government is a key to the successful development of a democratic state. It should be aimed at ensuring the effective performance of functions by the authorities, creating environment for obtaining quality services by citizens, and introducing and expanding the system of local taxes.Local taxes make the financial basis for the activities of local self-government bodies. However, nowadays, the lack of their volume and revenue instability are considered as a matter of national concern. Funding of state delegated powers, which is mainly due to transfer payments, is characterized by the delayed receipt of revenues and the lack of revenue in terms of targets, thereby creating problems with financing from local budgets.The article investigates the essentials of local taxation in the system of local budgets in Ukraine. It also summarizes methodological approaches to determining the nature of local taxes, clarifies their fiscal role in the local tax system and local budgets, and analyzes the existing practice of formation and implementation of local taxes in local budget revenues. Besides, prospective lines of improvement of the local taxation system are investigated and recommendations for its development are elaborated. Also, the subject to reform of the system of tax and budgetary relations was substantiated; changes in some administration mechanisms, the list expansion due to environmental fees and strengthened control over the unshadowing of small and medium businesses were offered.