Analysis of Revenues and Expenses of Local Budgets

Publication date
Friday, 26.12.2003

Authors
I. Starodubrovskaya S. Javoronkov K. Milenteva M. Slavgorodskaya A. Yudin E. Korovin A. Sancton H. Kitchen I. Gauthier F. Vaillancourt M. McMillan Dr. Douglas Brown

Series
CEPRA

Annotation
In this paper the current mechanism of local finance regulation is analyzed, and certain ways of its reforming are proposed. The main distinction of this research from other ones in the framework of this problem area is the use of significant data file on budget execution in specific municipalities. Thereby the results of this research and its practical applications reflect not only theoretical views but also solid calculations based on real budget data. On the basis of this data certain scenarios were created to forecast financial consequences of imple-mentation of certain measures including changes in local authorities competence as well as an as-signment of various revenue sources and mechanisms of inter-budget equalization for municipalities. In this paper a certain procedure is proposed to estimate the possible outcome of existing projects on local government reform. In one of the chapters international experience of municipal functioning and local finance regulation is analyzed.

Contents

Introduction 5
Part I. Municipal Finances: a Qualitative Analysis 6
Chapter 1. Municipal Entities in Russia - Basic Characteristics 6
Chapter 2. Evolution of Municipal Finance 16
Chapter 3. Municipal Revenues in the Context of the Tax Reform 25
Annex 3.1. Analysis of the Personal Property Tax 33
Chapter 4. Municipal Expenses: Current Status and Future Prospects 37
Annex 4.1 45
Part II. Municipal Finances: Quantitative Analysis 48
Chapter 5. The Assignment of Revenue Sources to Municipal Entities: the Program of Calculations 48
Annex 5.1 The Methods of Selection of Rf Subjects for Inclusion in the Database 56
Annex 5.2 A Short Description of the Database 60
Chapter 6. Calculations Basing on the Data about Municipal Finances of Large Cities 64
Chapter 7. Calculations Basing on the Data about Municipal Finances Across Regions 80
Annex 7.1 The Results of Assignment of Revenue Sources to Local Budgets in the Framework of Different Expenditure Scenarios 92
Part III. Municipal Finances: Reform Directions 104
Chapter 8. Analyzing Results of Calculations: Economic Policy Considerations 104
Chapter 9. Basic Approaches to Changes in Legislation Aimed to Ensure Financial Guarantees of Local Self-Governance 115
Annex 9.1 Recommendations on granting local authorities the right to impose special fees 127
Annex 9.2 Consequences of the introduction of limitations on municipal borrowings: a formalized analysis 128
Conclusion 129
Bibliography 131
Part IV. Municipal Finance - International Experience 133
Chapter 10. The Legal аnd Political Setting оf Municipalities 133
Chapter 11. Municipalities: Status and Responsibilities, Budgeting and Accounting 146
Chapter 12. Municipal Governance in Canada, United States, France and Pakistan: Some Lessons for Russia 173
Annex 189
Bibliography 191
Chapter 13. Financial Relationships between Regional and Municipal Authorities: Insights from the Examination of Five  OECD Countries 192
References 223
Chapter 14. The Role of Federal (Central) Governments in Local Affairs 225
Annex. 241
References 242

Notes
Analysis of Revenues and Expenses of Local Budgets. - Moscow, 2003
Team leader - Starodubrovskaya I.
Authors:
Chapters 1,2, 4, 8, 9 (with annexes), introduction and conclusion - Starodubrovskaya I.
Chapter 3 (with annex) - Starodubrovskaya I., Javoronkov S., Milenteva K.
Chapter 5 (with annexes) - Starodubrovskaya I., Slavgorodskaya M., Yudin A., Korovin E.
Chapters 6,7 (with annexes) - Starodubrovskaya I., Slavgorodskaya M., Yudin A.
Chapter 10 - A. Sancton, Department of Political Science, the University of Western Ontario, Lon-don, Ontario
Chapter 11 - H. Kitchen, Department of Economics, Trent University, Peterborough, Ontario, Canada
Chapter 12 - I. Gauthier and F. Vaillancourt, the Institute for Intergovernmental Affairs, Queen's University, Canada
Chapter 13 - M. McMillan, Department of Economics, the University of Alberta, Edmonton, Canada
Chapter 14 - Dr. Douglas M. Brown, Institute of Intergovernmental Relations, Queen's University, Canada
Trunin I. - scientific consultant
Authors would like to express their gratitude to Mikov V. for his assistance in finding information and database creation, Golant O and Korotkova O. - for their assistance in the report preparation.
Editor: N. Glavatskaya
Page setting: V. Yudichev
ISBN 5-93255-113-5
The research and the publication were undertaken in the framework of CEPRA (Consortium for Economic Policy, Research and Advice) project funded by the Canadian Agency for International Development (CIDA)


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