Municipal Budgets in Poland and the Czech Republic in the Third Year of Reform

Abstract

Municipal budgets in Poland and the Czech Republic are compared in the context of the institutional settings adopted for local government in each country. Wildavsky's model of budgetary behaviour for ‘poor and uncertain’ budget makers is applied to explain the financial decisions of local authorities in the circumstances of postcommunist transition. The scope of independence of local budgeting is examined in both countries with regard to legal restrictions on municipal revenues and expenditures and also in regard to the relationship between local government and the intermediary level of state administration. Two hypotheses are tested concerning the capital expenditures of the municipal governments under study. The first seeks to explain the impact of state grants on the level of municipal investments, depending on the way they are distributed—directly from the centre or through the district offices. The second hypothesis concerns the consequences of electoral rules on budgetary decisions of the respective councils. At the end, a map of municipal incomes is produced for each country, both reflecting the west—cast gradient of modernization.