Decentralization of Budget Expenditure Execution and Its Effect on Municipal Spending (original) (raw)

Local Fiscal Administration After Decentralization: Revenue and Expenditure Analysis of the Municipalities

2021

This is the concluding chapter of the study and presents a summary of findings, conclusions and recommendations. The Research Problem The purpose of the study was to analyze the income and expenditures of the municipalities in the Province of Iloilo in relation to their income enhancement measures and characteristics, such as income class, distance from Iloilo City, land area, population and political configuration. Summary of the Findings Half of the municipalities belong to second and third income class, while the other half also belong to fourth and fifth income class. Most of the municipalities had concentrated political configuration. Majority of the municipalities had land area of 100 square kilometers or less and the mean land area is 105.34 square kilometers. The average distance from Iloilo City is 54.21 kilometers and majority of the municipalities are 50 kilometers or less away from the city. Slightly more than half had population of more than 30,000, while slightly less ...

Ensuring Budgetary Resources at the Level of Local Communities in the Current Social-Economic Context: Evidence for Romanian Municipalities

Economies

This paper aims to examine whether the status of fiscal decentralization generates efficiency in local spending behavior and leads to local fiscal performance and local economic growth, revealing not only the status of Romania from the point of vertical fiscal imbalance but also the fiscal implication of spending decentralization and local government effectiveness. The methodological background includes qualitative sequential methodology, involving empiric analysis that provides coherence and viability for our study, but also quantitative methods, including Ordinary Least Squares regression (OLS). The empirical results show that fiscal decentralization determines more responsible and efficient local spending, enhancing local performance and contributing to economic growth. Furthermore, the analysis provides evidence on the importance of local fiscal consolidation and gives an overview in terms of spending responsibilities between the central government and local government. The pape...

The Impact of Decentralization on the Efficiency of Municipal Services. Case study

2015

The decentralization process represents an important component of the administrative reform, which allows an ample manifestation of the local initiative, but which, in the context of the great phenomena such as globalization, European integration, regionalization, proves to be insufficient, due to the increased competitiveness in different important economic sectors, such as education, health, transport, utility supply public services, the emerging needs, interests and necessities becoming increasingly difficult to be directly solved by the local administrations. At present, there is no national or local model of efficient administration, the optimum decentralization or deconcentration limits being difficult to establish in the public sector; still, the experiences of different states in the matter vary from models falling into the optimum parameters (states in western Europe),to classical semi-failure examples (Argentina, Brazil).On public services decentralization policy there is,...

Forming of Local Budgets: Between Fiscal Decentralization and Social Solidarity

2017

Financial decentralization is an essential part of the administrative and financial decentralization process, because it represents the most important source that fuels the public budgets. The transfer of administrative competences from the center towards the periphery, meaning from the central public administration to the local ones, must be accompanied by the increase of the local budget revenues, which is in direct dependence of financial decentralization, by increasing the amount of taxes entering the local budgets (without increasing the tax burden). Increasing the local budget revenues is also possible by allocation of additional amounts from the national budget, but this doesn’t represent a real decentralization, rather a disguised centralization, where the state decides how much, from where and under what form they are allocated to the local authorities, and this last one is in a continuous uncertainty and dependency to the center. This study proposes a modern conception on ...

Revenues of Municipalities as a Tool of Local Self-Government Development (Comparative Study

A municipality's budget is a tool that significantly affects the long-term economic potential of the area. In addition, it is an important tool for the management of the municipality, in relation to the effective provision of public services for inhabitants. To ensure them, it uses the revenues that the local self-government receives from various sources. The aim of the paper is to characterize and to compare the mechanism of creating revenues of the local self-government in the Slovak and Czech Republic and, at the same time, to analyze the relationships between individual groups of local revenues in the time period 2009-2018. We analyzed the basic groups of municipal revenues: total revenues, current revenues, and capital revenues. For the analysis, we used selected mathematical-statistical methods (trend lines, correlation coefficient). Although both countries were part of one country, both have a dual model of public administration and have undergone fiscal decentralization; the structure and sources of local self-government revenues are different. However, a common attribute is the dependence of local self-government on state revenues. Tax revenues are the most important part of current budget revenues. Despite fiscal decentralization, local budget revenues are dependent on the state. In the Slovak Republic, share taxes from the state represent 74% of the total tax revenues of municipalities, and in the Czech Republic, 85% of the total tax revenues of municipalities.

The Degree of Autonomy of the Romanian Local Public Expenditures

EuroEconomica, 2016

The process of local public spending optimization is extensively studied by those who have the power of decision towards saving. Even if the goal is to adjust the imbalance revenues/expenditures, the trend to spend more than accumulated is still a matter of concern. Our objective is that of analyzing the local governments’ functional expenditures by measuring the degree of decentralization/autonomy. The value of the paper is given by the model we applied for Romania which is based on spending management. By analyzing different types of expenses, we have highlighted that local expenditures represent instruments of strengthening or weakening local autonomy. The indicators measure the effectiveness of local expenditures by using the model published by The World Bank in 2006. We gathered information through interviewing different Town-Hall representatives from Brasov County and then we gave scores and established ranks. As the degree of autonomy reached a score of about 3 on a scale of ...

Fiscal Decentralization – City of Belgrade Case Study

Management: Journal for Theory and Practice Management, 2016

The research in this paper is devoted to analysis of budget items for the city of Belgrade, to revenues and earnings, expenses and issuance for 2013, 2014 and 2015 in order to determine changes in the structure and in time, and, based on these, the appropriate conclusions were drawn, which can serve as recommendations for creating budgets in the future. One of the key problems in public procurement at the City of Belgrade level were significant differences in prices for the same items procured by different contracting authorities. In many cases the same bidder offered the very same items at prices which differed up to 50% to different contracting authorities at the city level. That was a signal for the city administration to centralize the procurement of certain items in 2015 achieving significant reduction in prices of bundled procurement compared to the ones undertaken by different contracting authorities previously. In this context, the subject of the second part of this paper wi...

Political effects on the discontinuation of participatory budgeting in municipalities

Revista de Administração Pública

The article analyzes the factors associated with the discontinuation of participatory budgeting (PB) in Brazilian municipalities with more than 50,000 inhabitants between 2000 and 2016. We used econometric models to estimate PB’s discontinuation based on political explanatory variables and people’s local participation. The results indicate that discontinuation is associated: (i) positively with the election of a different local government, regardless of the winning party’s ideology; (ii) positively with the election of a local government with a left-wing ideology’; (iii) negatively with the election of a non-left-wing local government; (iv) positively with the election of a left-wing local government replacing another left-wing government. Changes in local government where other non-left-wing parties replace non-left-wing parties had no significant effect on discontinuation. The results contribute to our knowledge by showing the local and contextual factors that explain the disconti...

The Perspective of the Agency Theory in Budget Preparation of Local Government and Its Implementation on Budget Performance and Financial Decentralization to Realize Performance of Local Government of Regencies and Cities in Banten Province

Russian Journal of Agricultural and Socio-Economic Sciences, 2017

The purpose of this study is to examine and analyze the perspective of the Agency Theory in the formulation and implementation of local government budgets. This research was conducted at regencies / cities in Banten employing survey method and regression analysis in hypothesis testing. The population was all regencies / cities in Banten. Selection of the sample was the entire population (census). Data consisted of secondary data and was classified as panel data; covering the cross section and time series data. Sources of data were from DPKD 1 , Bappeda 2 at regencies and cities, and the Central Bureau of Statistics in Banten from 2009 to 2014. The analysis was done using Path Analysis and Partial Least Square (PLS). The findings indicate that: (1) the change of PAD 3 does not affect the Opportunistic Behavior of the Legislators; (2) the amendment to the Budget of DPRD 4 positively affects the Opportunistic Behavior of the Legislators; (3) budget decentralization affects Regional Financial Performance; (4) budget decentralization does not affect the Local Government Performance; and (5) Regional Financial Performance affects Local Government Performance. Analysis on the Agency Theory Perspective shows that: (1) budget allocated for DPRD and infrastructure has increased, while budget on health and education has decreased; this indicates the Opportunistic Behavior of Legislators; and (2) when it comes to budget policies, the executive and legislative tend to practice moral hazard for their own self-interest; the fact reveals much bigger compared to development expenditures in APBD 5. The decisions are related to the contracts given to outside parties, which can produce rente 6 in the form of commissions. KEY WORDS The perspective of the Agency Theory in public budgeting, opportunistic behavior of the legislators, decentralized budget, regional financial performance, local government performance Opportunistic behavior may occur at all levels of public budgeting, from the planning to the payment of public funds. Political corruption may occur in the local budgeting process where political decisions are very dominant, done by diverting public resources allocation (Garamfalvi, 1997). Corruption in the implementation of the budget is administrative corruption as administrative decision is more dominant. In the end, political corruption will lead to administrative corruption. Opportunistic behavior brings much impact on budget allocation decisions for capital projects (Tanzi and Davoodi, 2002).

Centralized versus decentralized provision of local public goods: a political economy approach

Journal of Public Economics, 2003

This paper takes a fresh look at the trade-off between centralized and decentralized provision of local public goods. It argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions. When spending decisions are made by a legislature of locally elected representatives, this conflict of interest will play out in the legislature. Depending on precisely how the legislature behaves, the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts. The extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending. Thus, the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending, but for different reasons than suggested in the existing literature.