The Analysis of Local Budgets and Their Importance in the Fight Against the Economic Crisis Effects (original) (raw)

The analysis of the financial performance of local authorities in the context of budgetary constraints

Management and Marketing, 2013

Drawing on a set of financial and budget specific indicators, the paper examines the financial activities of local authorities, aiming at diagnosing local public financial management. In the context of the increasing decentralization of public finance, local authorities must demonstrate the ability to manage local resources as efficiently as possible, adopting decisions (including financial ones) to respond promptly to citizen needs. For this reason, we set out to present an analysis model aimed at accustoming local decision-makers with the specific tools and methods and assisting them in gaining awareness of the benefits of such analyses. Empirical research shows that local authorities, due to the low income generation capacity, face a shortage of own resources, creating dependency on the state budget. Moreover, it has been demonstrated that that lack of resources limits both the investment capacity and the decision-making autonomy of local authorities in prioritizing spending. The...

How to Improve the Financial Conditions of Local Governments in a Period of Crisis: An Explanatory Case Study

International Journal of Business and Management, 2017

The context of austerity and crisis in the local governments has focused on looking for a solution to avoid the distress while also improving financial health. Therefore, a system to monitor the financial situation of local authorities is needed in order to understand what the governments’ proceeding to manage the crisis are. This paper aims to analyse the financial distress in the municipality of Rome to evaluate the processes that occur inside the “black box” of the organizational, institutional and strategic implementation of the reorganization practices and routines, also highlighting what are the indicators of the financial conditions that fall into either a positive or negative area so as to implement adequate planning. The analysis is conducted through an explanatory case study to understand and to explain the reasons for management practices in a condition of financial distress. The main finding shows that the case of Rome represents a good example of the financial resilienc...

Financial Stability of Local Government Units – Legal and Economic Approach

Copernican Journal of Finance & Accounting, 2019

The legislator introduced solutions conducive to the financial stability of local government units in the form of Articles 242 and 243 of the Public Finance Act of 2009. They force the reduction of deficit in the so-called current part of the local government budget and limit the amount of funds allocated for the repayment of financial liabilities. The aim of this article is to examine the impact of the obligation to comply with these regulations on the finances of local government units. The article will examine the content of both regulations and statistical data from the Reports on Budget Execution by Local Government Units, provided by the National Council of Regional Chambers of Audit. The summary will present a conclusion that Articles 242 and 243 of the Public Finance Act have a significant impact on the financial management of local governments, obliging them to maintain appropriate proportions between the amounts of income and current expenditure. However, the legal structure of both rules provides for certain exceptions to their absolute observance, which weakens their impact on the finances of local governments.

Methods for Improving the Effectiveness of the Financial Management of Local Government Units in Poland

Science and Studies of Accounting and Finance: Problems and Perspectives, 2016

The issue of public sector management, especially management of public finance, identifies as extremely important in both theoretical and practical areas. Within the context of social and economic change, its meaning becomes crucial to the smooth and efficient functioning of public institutions including local government units. The search for optimal solutions in the sphere of local governments’ financial management and the implementation of new tools causes an increase in the efficiency of financial management at local and central levels, an increase in the rational use of public resources’ management, a transparency of expenditures, and above all, an improvement in the efficiency of public tasks that the state and local governments carry out for their citizens. The aim of this paper is to present three tools that have been introduced in recent years with the aim to increase the efficiency of public financial management. They are the performance budget, the individual debt index, a...

The Interrelations Between The Central And Local Budgets In Romania - Problems And Possible Solutions

Annales Universitatis Apulensis Series Oeconomica, 2010

By integrating public budgets and their interrelationships, the public budgetary system must meet, through its actual configuration, some rationality requirements that should ensure the necessary support in order for it to contribute to the overall economic and social development. In these conditions, a universal structuring model of public budgetary systems in excluded on principle, but common foundation elements serving their functionality may and must be identified. On this premise, our article aims at highlighting, based on qualitative and quantitative research, the design and functioning method of the interrelationships between the state budget and local budgets, pointing out their implications for the functionality of the budgetary system and for the "soundness" of public finances, proposing corresponding improvement solutions.

FISCAL EFFICIENCY AND STABILITY OF OWN REVENUES IN URBAN LOCAL SELFGOVERNMENTS' BUDGETS BEFORE, DURING AND AFTER CRISIS – EXAMPLE FROM LOWER SILESIAN VOIVODESHIP

The main objective of this paper is presentation and analysis of own revenues system in 32 urban local self-governments (LSG) from Lower Silesian voivodeship in changing economics conditions during 2006-2014 years period. It takes into consideration average estimates and also particular types. The estimates come from financial reports from The Regional Chamber of Audit. LSG budgets need relatively stable revenues to sustain their responsibilities. Their revenues should be also rather resistant from crisis and not to overreact to economic fluctuations. As it can be observed shares of own revenues in total revenues between 2006 and 2014 were changing from average 59% in 2006 down to 56% in 2010, finally reaching about 60% in 2012-2014. The average growth of own revenues was slower than average growth of total revenues in 2008–2010. One of main sources of revenues are shares in central government PIT and CIT taxes. Share of those revenues in total revenues sharply dropped in 2010. This suggests that shares income taxes are not stable and efficient source of own revenues during crisis (2010). Differences between minimal and maximal share of local taxes and charges were rising - from 24 p.p.(2006) to 36 p.p.(2014). In case of real estate tax we can also observe steady growth of average of it (about 7 to 10 p.p.) each year.Revenues from their property are important source of revenue and that were very varied over the years. The main reason of it, is inclusion of revenues from selling municipal property – what is occasional.

Financial Strategies for the Romanian Local Public Administration

Transylvanian Review of Administrative Sciences, 2011

Public administration reform at all governmental levels constitutes an important component of the transformation process from a centralized system to democratic governance. This process involved important legislative and institutional changes in order to fulfill the principles of a market economy and the European Union standards based on transparency, predictability, accountability, adaptability and effectiveness. Therefore, in a continuing extension of the citizens' needs, Romanian public administration reform, especially at local level, is concentrated on quality of public services based on citizens' needs and increased performances in the context of a necessary decrease of budget expenditure, taking into consideration the actual financial constraint. In this context, it is useful to investigate the financial strategies of the local public administration based on the Romanian experiences that consisted in important public resources decline because of the financial crisis.

Assessment of the financial resources of municipalities

South African Journal of Economic and Management Sciences, 1998

The challenges with which municipalities are currently faced, include the fulfilment of the expectations of many new communities to whom they must render services, while they must simultaneously improve the quality of existing services and eliminate backlogs. The sources from which local authorities generate their revenue at present do not appear to be adequate for the increased need for funds. This paper provides an overview of the issues that have led to the current state of municipal finances and the factors that influence the revenue and expenditure of municipalities. In the light of the lack of sources of income for municipalities, particular attention is given to issues which could have an effect on the improvement of administration in municipalities.

Analysis of the Procedure for Balancing the Local Budgets in Romania

2011

This paper aims to provide a short analysis of the procedure for public financial resources allocation throughout the country to supplement the local budgets. Is there a proper, objective and balanced distribution of public funds among the Romanian counties? Does any county face disadvantage by the allocation of amount from certain state budget revenues? An unequal, irrational economic development within a country results in changing the equilibrium and influences the overall balance and the individuals of the state. Local budgets are highly dependent on the funds they receive from the central budget. Very few local communities contrive to generate sufficient revenues by their own. Balancing local budgets is a necessity, but the balancing procedure suffered many legislative changes. Inadvertency consists not necessarily in the procedure of distribution of public money, but in the efficiency and effectiveness with which they are used locally.

Financial independence of local government units in Poland

2014

In the proposed paper the financial autonomy of a local government is understood as an independence of local authorities in shaping their budgets: deciding about the revenues and expenses. Discrepancies between the level of decentralization in public services and decentralization in public finances is the constant issue of public debates as well as a frequent subject of academic discussions. The aim of the paper is to assess the actual potentials of local authorities in the formation of their budgets. The key hypothesis is that local authorities, having limited control over their finances, cannot be entirely accountable for the quality of delivered services. The authors analyze the current legal regulations and institutional solutions as well as the structure of local income and expenses. They also discuss the activities of local governments to shape their budgets and in that way upgrade the quality of public services delivered locally, especially focused on the education as one of ...