Finacial Decentralization and Local Self-governance in the Period of Reforms

Abstract

This paper reviews Russian municipal budget revenues and expenditures reforms in 1992–2002. Recent tax reforms have resulted in the decrease of local fiscal autonomy. Municipal budget revenues have dropped sharply in relative as well as absolute terms. Despite significant formal expenditure powers Russian municipalities are completely financially dependent on higher-level governments. Within regions regional governments have continued to increasingly finance municipal social expenditures. The examination of possible scenarios of development after the enactment of the draft law"On the General Principles of the Organization of Local Self-governance in the Russian Federation" shows that the fiscal centralization trend will continue.