Technical Area (Sectoral) Profile: LOCAL BUDGETS AND FINANCIAL FOUNDATIONS OF LOCAL SELF-GOVERNANCE

The main sources of local budgets' income include income tax on natural persons, land fee, revenues from various dues and fees for licenses and state tax, revenues from the sales and leasing of communally-owned property, revenues from profit tax on enterprises and communally-owned financial institutions, charges for placement of temporarily surplus funds of local budgets, transfers from other budgets, primarily from the State Budget, and proper revenues of budgetary institutions and to special-purpose funds. Local taxes and fees constitute an insignificant share in the revenues of local budgets. Revenues are subdivided into proper revenues and those assigned to local governments. The main areas of local expenditures are public administration, public education, healthcare, social security and protection, culture and arts, physical education and sport, utilities, road networks and transportation, landscaping, and local programs of socio-economic and humanitarian development of local communities. Expenditures are subdivided into performance of their own and delegated by the state to local government authority. The calculation of the scope of revenues and expenditures of local budgets is based on a formula approved by the Cabinet of Ministers in accordance with the indicators approved by the Budget Code. Calculation of fixed revenues and expenditures for the delegated authority is performed by the Ministry of Finance of Ukraine and then entrusted to local governments for execution. The amount of own revenues is calculated by local governments independently by the formula. The procedure of the adoption and implementation of local budgets varies depending on the level of the local government. Compliance with the budget legislation at the local government level is entrusted to the Ministry of Finance of Ukraine, the State Treasury Service of Ukraine, the State Financial Inspection of Ukraine, local state administrations, local councils, and local financial authorities. The current legal framework for local government activities in the technical area of local budgets and financial foundations of local self-governance is based on a range of laws and resolutions. These include the Constitution of Ukraine, the European Charter of Local Self-Governance, the Budget Code of Ukraine, the Tax Code of Ukraine, and various resolutions of the Cabinet of Ministers of Ukraine. The laws and resolutions provide a framework for local governments to manage their budgets, establish taxes and fees, and implement social programs. They also provide guidelines for the calculation of revenues and expenditures, the distribution of inter-budget transfers, and the procedures for local borrowings. The legal framework is designed to ensure the effective management of local budgets and the provision of essential services to local communities. The laws and resolutions are subject to amendment and revision as necessary to ensure their relevance and effectiveness in supporting local self-governance.