The Russian budget model operates at several levels - federal, regional and local. Despite this classification, all three state capital management systems are integrated into a single sphere. This can be seen in various aspects of the activities of the respective financial institutions: tax collection procedures, the provision of mutual financial assistance between budgets of various levels, and reporting. Consider the features of capital management at the level of municipal authority. What sources form local budgets? How can they interact with federal and regional public capital management systems?
The specifics of local budgets
The concept of "local budgets" in Russia is most often associated with the economic activities of municipalities - cities, districts. It is extremely rare that the term in question is understood to mean financial institutions at the level of the subject of the Russian Federation - this is incorrect both legally and in essence. Local budgets, as a rule, are formed at the expense of fees of the corresponding type of taxes, deductions from payments that are classified as regional and federal, through subsidies, subventions, loans and other financial mechanisms provided for by Russian legislation.
In many municipalities of the Russian Federation, local financial systems play a leading role in economic development. The level of demand in various areas of business, in particular those that focus on customers in the status of individuals, is largely determined by the income of state employees. If they grow, then the turnover of the respective enterprises, too.
Local budget revenues
Consider how local budget revenues are generated. We have already noted above that the main source of corresponding revenues in municipal enterprises is local taxes. A significant amount of financial transactions that fill the treasury of a city or district may be fees, fines, as well as deductions from regional and federal taxes stipulated by the legislation of the Russian Federation in accordance with accepted standards.
The revenues of local budgets can be generated from the proceeds transferred by the political center with the aim of exercising certain state powers, from the proceeds from the privatization of assets, leasing of property, profits of municipal enterprises, and transfer payments.
Federal structures, as well as the authorities of the constituent entities of the Russian Federation, can help municipalities to ensure a minimum level of budgetary resources. The criteria defining this value are established in regional legal acts (taking into account the norms of budgetary provision). If tax revenues of local budgets do not allow covering the minimum costs necessary to maintain the functioning of local institutions of political governance or economic development entities, then the federal authorities or bodies in the constituent entities of the Russian Federation send various subsidies and subventions to municipalities.
At the same time, the legislation of the Russian Federation provides mechanisms under which, in turn, the local budget can direct the necessary funding to higher levels of the state capital management system.
The unity of the budget system
Local budgets, as well as regional ones, form, together with the federal system of distribution of state capital, a single system.Despite the fact that municipalities generally have the right to manage financial resources independently, they regularly interact with political institutions of a similar level or located higher to participate in the subsidization of certain budget systems or to receive appropriate support.
Functions of Local Budgets
Local budgets perform a number of critical functions. Among them: the formation of capital, which are used to financially support the activities of municipal authorities; effective distribution of the respective funds in various sectors of the municipal economy; supporting the functioning of the economic system of a city or district.
Local budgets also play a significant role in solving social problems - this is to ensure employment and a high standard of living for citizens. The proper level of financing of various institutions largely determines the quality of interaction between the state and society. For example, this may relate to the work of municipal services: if there is insufficient budget support for such services, the efficiency of such institutions may decrease significantly, as well as the satisfaction of citizens from using the corresponding type of services.
Analysis of local budgets: expenses
We now study the main features that characterize the costs of local budgets. There are two main types: current and capital. Consider their specifics.
With regard to capital, or investment costs, they represent part of the costs that are associated with investments in existing or created legal entities engaged in activities within the framework of various investment programs. The structure of capital expenditures may include: budget loans; capitals aimed at increasing property owned by municipalities; development budgets; expenses for the overhaul of certain objects.
The current expenditures of local budgets are the costs that ensure the necessary functioning of political institutions at the level of municipalities, various institutions, and also become a mechanism for providing financial assistance in favor of state capital management systems at other levels in the form of subsidies, subsidies, subventions and other support methods. Current costs include those that are not classified as capital.
There are other criteria for dividing budget expenditures into various categories. So, the classification is widespread, implying the distribution of costs according to priority. In accordance with this method, expenses are divided into priority groups. This approach, according to some researchers, can significantly increase the effectiveness of the local budget system. At the same time, such methods are often criticized as not quite optimal from the point of view of performing social tasks, for which the identification of primary and secondary directions of spending budget funds is unusual. In connection with the priority and those costs that follow them, queues can be formed from various incomes of the local financial system.
There is a classification of budget expenditures, which is based on the distribution of relevant items depending on the object of financing. This scheme involves the allocation of the following basic categories of costs:
- associated with the performance of tasks of local importance;
- reflecting the need to implement at the municipality level certain state powers;
- related to debt repayment by local authorities;
- insurance appropriations.
Classification of expenses by source of financing
Another possible basis for the classification of relevant costs is their distribution depending on what are the sources of local budgets.So, there are expenses that can be financed exclusively from the financial resources at the disposal of municipal authorities. Among those:
- the content of the administration of the city or region;
- formation or acquisition of municipal assets, their management;
- job security municipal institutions - schools, hospitals, sports organizations;
- funding for law enforcement services;
- maintenance of housing and communal services;
- improvement of the settlement;
- waste disposal and recycling;
- environmental protection;
- implementation of subsidy programs.
Budget reserves
The system of local budgets in the Russian Federation suggests that reserve funds can be formed in the relevant management institutions. Their purpose is the accumulation of funds that can be used by municipal executive authorities in case of unforeseen circumstances, for example, in case of emergency. The order of expenditure of the corresponding reserves of the city government establish independently. At the same time, executive structures must quarterly send information on how the reserve fund is spent to representative institutions.
Deficit Allowed
The amount of current expenditures of the local budget should not be more than revenues. But suppose a deficit is within 3%. This does not include additional support resources, for example, funds received from the federal center. Capital from local budget deficit sources can also be used to finance investment costs. As a rule, their use in order to pay off debts of municipal authorities is not allowed.
Income classification
Let us now consider in more detail what kind of revenues the local budgets of the Russian Federation have. Distributed by their division into their own, regulatory and external.
As for the former, these include tax revenues of local budgets, fees, fines and other revenues generated within the local economic system. Regulatory incomes are deductions provided by law for federal taxes, as well as those that are established for constituent entities of the Russian Federation. The relevant standards are recorded in budget sources of law a particular region or at the level of a political center (in the case of federal taxes).
As for external sources of financing local public capital management systems, those same subsidies, subventions, and loans may be such.
The specifics of local taxes
Thus, financing of local budgets to a certain extent may depend on the volume of revenues in the form of local taxes. The specificity of the relevant payments is that the representative authorities of the municipality have the right to introduce additional local fees, fix rates on them, determine benefits, but only within the limits of those rights established by higher legislation, in particular federal.
Only 3 local taxes have been established in the Russian Federation. Among them are land taxes, property tax on individuals, and also trade tax. Therefore, the fullness of local budgets, as a rule, to a certain extent depends on regulatory revenues. They are formed due to deductions from federal and regional taxes according to the standards.
We study their specifics in more detail.
Regulatory payments
There are several types of municipalities in Russia. Consider, for example, several common varieties of them. Among these are urban settlements, municipal districts, urban districts, as well as rural settlements. The principles for calculating regulatory fees for them can vary significantly.
Regulatory Payments: Urban Settlements
So, the local budgets include the budgets of urban settlements.They are fully credited taxes: land, property of individuals. As for the regulatory fees proper, the budgets of urban settlements should include: 10% of personal income tax; 50% of unified agricultural tax; 100% of the fee charged for notarial acts by municipal authorities; 100% of the fee that is charged for the issuance by the municipality of a permit to drive a vehicle carrying dangerous goods.
Regulatory Payments: Municipal Areas
Local budgets include the budgets of municipal districts. In them, as in the case of urban settlements, the land tax is fully credited, as well as a fee on the property of individuals. As for regulatory payments, the following are to be credited to the budget of municipal districts: 5% of personal income tax levied in urban settlements; 13% - from personal income tax received in rural settlements; 15% - from personal income tax levied on inter-settlement territories; 100% of UTII; 50% of unified agricultural tax in urban settlements; 70% of the ENCH in the villages; 100% of the unified agricultural tax in the inter-settlement territories; 100% of the duty levied at the place of state registration.
There are other types of regulatory payments that are transferred to the treasury of municipal areas, but those considered by us can be considered key ones.
Regulatory Payments: Urban Counties
With regard to such a variety of municipalities as urban districts, the land tax, as well as the collection of property of individuals, are also fully credited to their budgets. Regulatory fees that provide revenues to the treasury of urban districts can be represented: 15% from personal income tax, 100% from UTII, 100% from unified income tax, 100% from taxes levied under the patent system.
Regulatory Payments: Rural Settlements
As in the case of the municipalities discussed above, 100% of the land tax and property tax on individuals are charged to rural settlements. But there are regulatory payments that involve filling the treasury of the respective municipalities. Among them: 2% from personal income tax, 30% from unified social tax, 100% from state duty for notarial acts 100% of the fee for issuing a transportation permit dangerous goods.
Non-tax revenues
Local budgets are also the recipients of a number of non-tax revenues. Among those:
- payment for negative impact on the environment (according to the standard of 40%);
- licensing fees for the sale of alcoholic beverages (in the amount of 100%);
- income from the sale and lease of land owned by the state (100%).
Specific values for standards are set in separate sources of law.
Powers of municipalities in terms of budget revenue generation
Municipalities operating in the political management system of the Russian Federation are endowed with a number of powers in terms of generating revenue for local budgets. Consider this feature in more detail.
First, the powers in question can be expressed in the possibility of issuing municipal legal acts through which local taxes will be introduced, rates for them will be fixed and necessary benefits will be formed. As we noted above, this is allowed only to the extent provided for by higher legislation, and above all at the federal level.
Secondly, municipal parliaments can formulate legal acts through which adjustments are made to existing sources of law governing local taxes and budget relations, which can lead to a change in the revenue structure of budgets of various levels operating in the Russian Federation. If the relevant laws enter into force in the next fiscal year, they must be adopted before the draft local budget for the corresponding period is submitted to the municipal parliament. The timing of such hearings is local representative bodies authorities are established in separate legal acts.
Thirdly, adjustments in municipal laws adopted by local parliaments regarding local taxes, which require entry into force within the next year, can only be made if necessary changes are made to the current local budget bill, which is approved by the representative authority of the municipality.
Thus, through regulatory payments, state and local budgets are integrated into a single system for ensuring tax revenues to the treasury. If, for example, a large number of agricultural enterprises operate on the territory of a municipal district, then a significant amount of fees, which are classified as federal, remains in the municipal budget.
However, entrepreneurial activities in a particular MO may not be enough to meet local funding needs. As a result, regional and local budgets begin to interact with regard to the provision of subventions and subsidies by the former in favor of the latter. And this is one of the problems of the Russian budget system, which is noted by many experts. Let's consider this aspect in more detail.
The main problems of the Russian system of local budgets
The role of local budgets in Russia is extremely large. As we noted above, it can be seen in the fact that the corresponding capitals can be leading in terms of demand formation in many segments of local economic systems. Also in Russia there are some problems of local budgets.
To such modern scholars include, first of all, the strong dependence of the corresponding capital distribution systems on the federal center, and in many ways on regional political institutions. We noted above that local budgets are dependent on regulatory fees. Actually, local taxes in most cases occupy a relatively small percentage of the total flow of financial revenues to the municipal treasury.
The second problem - an analysis of the local budgets of many Russian cities shows that they are also largely dependent on subsidies. The fact is that even with regulatory fees, the absolute amount of money that falls at the disposal of the municipal authorities may not be sufficient to solve local problems.
Another problem that characterizes the budget system of the Russian Federation in terms of municipal money capital management is the insufficiently strict, as many analysts believe, level of control over the expenditure of financial resources of external origin. The noted feature is adjacent to the insufficient transparency of cash flow management operations, which in some cases is allowed by the municipal authorities.
At the same time, the problems we have examined as we improve the legislation and improve the infrastructure of interaction between budgets of different levels are being gradually solved. Financial management of municipalities is gradually becoming more transparent and efficient.
Successful resolution of the problems noted (especially in terms of overcoming the dependence of local budgets on external support) may also consist in stimulating civic activities, which may contribute to more intensive tax collection. First of all, this, of course, concerns entrepreneurial initiatives. Moreover, this work should be carried out not only in terms of consultation and dissemination of various ideological concepts. Entrepreneurs should have real access to the necessary resources for doing business, especially low-cost loans and high-quality infrastructure.
