Principal changes in the structure of municipal revenues in the period of 2000–2017 with an emphasis on fiscal decentralization in Slovakia

Abstract

The implementation of fiscal decentralization in Slovakia in 2005 should have improved the financing of lower levels of government in terms of fortifying their financial autonomy, bringing the local authorities closer to citizens, etc. Indeed, the immediate period after the implementation brought excellent results, maybe thanks to the persistence of the economic expansion. However, the optimistic prospects of municipal and regional authorities were destroyed by the arrival of the financial crisis. Certain alleviation came in the period of the economic recovery. In this paper the structure of municipal revenues in the period of 2000–2017 is analysed with an emphasis on a system change presented by fiscal decentralization. An increasing trend in the municipal total revenues per capita can be observed in the monitored period. Simultaneously, as expected, results show certain principal changes in their structure which are linked to the public finance reform. Additionally, they were later affected by the financial crisis. What is important is the increase of the municipal tax revenues after 2005 with disturbance of the trend during the financial crisis. The eligible increase of received grants in the period of 2000–2004 was followed by a slight decrease after 2005, but worsening of the economic conditions in the period of 2009–2013 again required its dramatic increase. Municipal non-tax revenues seem to be resistant to economic development in Slovakia.