Subnational Governance Reform and Local Government Finance in Ukraine: 2014-2018 (original) (raw)
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In the spring of 2014, and in response to Russian (and Western) demands to “federalize” Ukraine, the government of newly elected President Poroshenko put “decentralization” at the top of its reform agenda. This paper examines what the government has actually done against the background of earlier “decentralization” efforts. We argue that the government has shown a strong commitment to decentralization by not recentralizing public finances in the face of armed conflict. But it has proved too weak to pass key laws, most importantly legislation that would require the consolidation of Ukraine’s 10,000 tiny villages into larger townships (amalgamated gromada). As result, it has been forced to rely on a voluntary process of jurisdictional consolidation, and on amendments to the tax and budget codes. Voluntary amalgamation combined with financial reform are clearly “municipalizing” oblast power, and beginning to “gromadize” rayon power. Nonetheless, reformers have avoided talking about their efforts in these terms. Instead, they have advertised the reforms by highlighting the new money that has been given to all subnational governments. But these claims are false once inflation is taken into account. They also mask the structural shifts in power across subnational governments that have been produced by the reforms. Finally, this ‘financialization’ of the discourse around decentralization is creating expectations that will be hard to fulfil going forward, and may even become politically self-blocking because when the movement towards a single-payer health care system requires cutting subnational budgets.
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This chapter examines the core aspects of the post-2014 decentralization reform: local amalgamation and fiscal decentralization. Taken together, these two policies radically changed the division of responsibilities and finances at substate scales and aided Ukraine's territorial consolidation. The 2019 shift of the balance of power in Kyiv did not alter the reform's trajectory. Indeed, the newly elected President Zelenskyy fostered, as we show, implementation of the reform by approving the previously drafted laws on decentralization whose progress had stalled prior to 2019-2020. Evidence of this commitment was the policy of merging rayons (upper subregional units) that was quickly implemented once nationwide local amalgamation was completed.
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Central European Public Administration Review, 2022
Purpose: The article aims to measure the impact of the voluntary amalgamation approach applied in Ukraine in the course of the decentralization reforms undertaken over a period of five years, and assess how much these reforms have been successful in improving the local government fiscal situation. Ukraine began a long-delayed decentralization process in 2015 through amalgamation based on a voluntary approach, with an emphasis on improving the fiscal resources of the amalgamated units. The decentralization reform was based on three pillars: (1) voluntary amalgamation of the territorial units, (2) enhanced financial resources through own source revenues and infrastructure grants, and (3) utilization of inter-municipal cooperation to support improved service delivery. Methodology: A time series of fiscal data from amalgamated territorial communities in selected regions of Ukraine have been analysed to measure the impact of the amalgamation policy on the amalgamated territorial units. Findings: The fiscal improvements anticipated by the amalgamated territorial units have not been demonstrated by the statistical data analysis and no significant improvement in local government finances appears to have been realized through the application of a voluntary merging a proach. There have been significant regional and urban/rural variations based on the population segments and access to financial resources. Academic contribution to the field: While there has been considerable research on the impact of merging or amalgamating local governments, there has been very little, if any, on the voluntary approach to amalgamation. The study seeks to address this problem and present evidence of the advantage of utilizing a voluntary over a mandatory approach to amalgamation. Significance: The study provides a unique opportunity to measure the impact of amalgamation process in Ukraine over a five-year period based on the voluntary approach to amalgamation and determine how much this approach and the accompanying policies have been successful in improving the local government fiscal situation.
NISPAcee Journal of Public Administration and Policy, 2021
This paper examines the progress of implementing a comprehensive decentralization program in Ukraine. Ukraine was practically the last country of the former Soviet bloc to undertake a comprehensive decentralization program. The decentralization program was based on three pillars: (1) a reliance on voluntary amalgamation of the local government units, (2) the use of inter-municipal cooperation, and (3) enhanced financial incentives. The authors examine how these policies were implemented as well as the impact on local governments service delivery and fiscal capacity. The analyses are based on available data and the application of statistical tests measuring fiscal resources to the population size and other variables of the local government. The study has revealed some significant flaws in Ukrainian decentralization policy implementation. The voluntary approach eventually had to be abandoned for a mandatory approach. The weak progress in inter-municipal cooperation did not establish i...
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ICLD Country Brief: Local Governance in Ukraine
ICLD Country Brief on Local Governance and Government Administration, 2019
In the report the authors elaborates on possibilities and barriers for local democracy and municipal partnerships. The report gives insights into the local contexts, the capabilities of local governments, and fiscal and political decentralisation. The information and views expressed in these briefs are based on the current understanding of the situation before 31 May 2019.
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The article examines the features of inter-budgetary relations in the context of decentralization of power as an important tool for the formation of local budgets and their effective implementation with limited financial resources. The authors considered the factors influencing the decentralization process such as the taxation system, transfer policy, giving greater powers to local governments in developing programs of socio-economic development and analyzed the sources of financial resources of the region, problems of their formation and use, revenues and expenditures last years. Decentralization reform has made it possible to increase the revenue side of local budgets and strengthen the financial and resource base of the regions, improve the use of intergovernmental transfers and diversify their sources. The study revealed the main problems of formation and use of financial resources of the region. These include inconsistencies in the movement of financial resources, tax pressure,...