The principle of financial independence is particularly linked to one of the budgetary principles, i.e. the principle of material unity. The article aims to describe the principles of financial independence and the principle of material unity in the financing of municipalities. To obtain this objectives, we focus on explaining the essence and goals of the principles of financial independence and the principles of material unity, as well as on exceptions to the principles of unity. The article bases on the dogmatic and legal method. The presented considerations lead to the conclusion that the introduction of many sources of exceptions to the principles of material unity results from additional regulatory arbitrariness, limiting decentralization and management independence.
Sections 5.1–5.4 feature detailed considerations of capital market law, payment service law, anti-money laundering law, tax law and budget law. These are necessary, because public law is less flexible than private law, and creates the most significant legal risks for the financing of long-term and capital-intensive investments using distributed ledger technology. This analysis is completed in Sections 5.5 and 5.6 by in-depth reflections on important legal issues for the modern world, especially in a global context, i.e., the legal aspects of the implementation of the sustainable development goals and analysis of the legal aspects of personal data protection (including the EU digital identity).
In modern conditions, taking into account decentralization, martial law and economic instability in Ukraine, local communities are forced to look for alternative sources of financing to ensure sustainable development. One of the most effective tools for attracting resources for the implementation of socioeconomic, infrastructure and humanitarian projects is international grant financing. Grants are provided by international organizations, foundations, governments and private donors to implement programs that contribute to the development of social, scientific, technological, environmental and other areas of strategic importance. Unlike loans, grants are free financial assistance and are provided on a competitive basis and with clearly defined conditions, including the use of funds and reporting on results. The article studies the impact of international grant financing on the economic development of a local community, namely the Bakhmach urban territorial community. The theoretical foundations of international grant financing are considered; the dynamics of budget revenues and expenditures of the community are analyzed; an assessment of the contribution of grant funds to the development of individual areas (education, healthcare, social protection, etc.) was carried out. A practical analysis of the activities of the Bakhmach urban territorial community showed that international grant funding has a positive impact on economic development, modernization of infrastructure, improvement of the quality of education and medicine, expansion of social protection and activation of cultural and sports life. Thanks to the grants involved, the community managed to implement a number of important initiatives, including the construction of a shelter for a lyceum, modernization of educational offices, creation of a crisis room for victims of domestic violence, updating medical equipment, repair of cultural centers and other projects that directly affected the well-being of the population. The prospects for further research in this area are the development of practical recommendations for improving the interaction between local authorities and international donors.
Introduction. The purpose of this study is a systematic analysis of the stakeholder relations on the issue of the formation and management of decentralized capital repair funds. The high social significance of capital repairs of residential real estate, coupled with a high degree of wear and tear, determines the need for coordinated and effective stakeholder interaction, the involvement of public authorities in co-financing expenses and the development of effective mechanisms for the rational allocation of funds from decentralized capital repair funds formed in special accounts in banking organizations and protecting them from inflationary processes. Materials and methods. The authors explore institutional factors in the implementation of major renovations of apartment buildings, identify the key stakeholders of these processes, their interests and risks, and reveal the presence of an agency problem. Based on statistical data and regulations, the authors conduct economic modeling of the formation of a decentralized capital repair fund using the example of an existing homeowners' association, and calculate target indicators for the efficiency of capital repair fund management. Results. The conducted research revealed inconsistency of the current management approaches and the impossibility of forming major overhaul funds in sufficient size to replace elevator equipment after the shelf life expiry without external financing. The authors conduct a study of the agency problem that arises when managing funds placed in special accounts for major overhaul, and identify the presence of informal institutional factors that prevent the formation of a "mature real estate owner". Discussion. Based on the results of the study, the authors proposed regulatory measures that could positively affect the effectiveness of relations on the issue of formation and management of decentralized capital repair funds. In addition to regulatory measures, the authors consider it necessary to involve municipal deputies in awareness-raising activities aimed at creating a “mature property owner.” The scientific novelty of this study consists in the development of management and regulation methods for the formation of decentralized capital repair funds on the basis of the synthesis of stakeholder and institutional approaches.
Oana Camelia Iacob Pargaru, Carmen Elena Spiridon, Ovidiu Andrei Cristian Buzoianu, Nicolae Gabriel Uta
Abstract When a Romanian entrepreneur is looking for European funds to finance his business, it is essential for him to understand the terms of the loan and the details about the financier, just like in any other loan agreement. The aim of this article is to present the challenges of projects implemented with funding from European Union funds. The research methodology involved a literature review followed by an analysis that examines different categories of public structures, including deconcentrated or decentralized units of central public administration, local public administration units, autonomous kings, state commercial companies or local authorities, units of state education and research, hospitals, and intercommunity development associations. The findings of the research highlighted the specific types of organizations that received financial support from EU-funded programs. Thus, the funds allocated to Romania by the European Union, considered from the point of view of the investment strategy and their non-refundable nature, constituted a substantial asset for the development of the Romanian economy and society in the short, medium and long term. In addition, these funds represented an element of budgetary sustainability. The results of the projects that were financed from European funds are numerous. Each of these is an illustration of a successful effort that has the potential to give rise to additional initiatives of equal significance in the context of the new opportunities that the European Union will fund.
DeFi in the insurance market. The acceleration and intensification of digitization processes, i.e. the growing use of digital technologies and the reliance of a large part of the economy on the Internet, has begun to change the emphasis on the role and importance of traditional architecture in the financial market, including the financial intermediation market. DeFi, or “decentralized finance”, is a part of the main trend of these changes and they have also found their place on the insurance market. On the one hand, their presence may significantly change the shape of the insurance market due to the fact that the idea of DeFi indirectly means building services and products separate from the traditional financial system. DeFi insurance and alternative risk coverage have the potential to successfully fill the insurance coverage gap for crypto-assets and limit the risk exposure that accompanies entities active in a decentralized economy.
Martina Halásková, Renata Halásková, Beáta Gavurová, Matúš Kubák
Services are a dynamically developing economic sector in all countries. The paper focuses on public services, evaluated from the perspective of fiscal decentralization. It aims to evaluate the level of fiscal decentralization of expenditures in selected categories of public services in European countries. For this purpose, government expenditures by the local government sector are analyzed in the set of the selected 28 European countries in the period 2010-2018. Cluster analysis has been carried out in order to determine four clusters of countries based on their level of decentralization of expenditures on services. The results show differences in the extent of decentralization between the European countries in the provision of specific public services and reflect the form of financing of local public needs. A low level of fiscal decentralization of expenditures on services (public order and safety; housing and community amenities; recreation, culture, and religion) was observed in the majority of the countries. However, the majority of the countries failed to prove a high level of fiscal decentralization of expenditures on services (social protection, health, education) and a medium level of decentralization of expenditures in terms of general public services and services of economic affairs. These findings demonstrate that the degree of decentralization of public services is determined, to a certain degree, determined by country history and its geographical location, as well as by the different roles of sector-specific public policies. The findings can be helpful for creators of local public policies, strategic plans, and financial concepts.
Проблематика роботи відповідає завданням адміністративної реформи, найважливішим результатом якої повинні бути докорінні зміни в управлінні територіальними громадами, пов’язані з отриманням нових можливостей розвитку й задоволенням потреб місцевих спільнот. Оскільки місцевий бюджет серед інститутів місцевих фінансів відіграє основну роль у забезпеченні виконання функцій і завдань місцевими органами, то упродовж останніх років було приділено багато уваги посиленню його впливу на економіку і соціальну сферу як інструменту фіскальної діяльності, забезпечення громадських послуг і економічного зростання. Ґрунтовнішого наукового осмислення та практичного вирішення потребують питання власних доходів місцевих бюджетів з позицій організаційно-структурних аспектів з метою забезпечення повноважень органів місцевого самоврядування вагомими джерелами фінансування. Питання фінансового забезпечення виконання органами місцевого самоврядування видаткових повноважень є особливо актуальним.
Gabriele Kulenkampff, Martin Ockenfels, Thomas Plückebaum, Konrad Zoz · 5 authors
According to the EU policy, a future-proof broadband supply for all European households is to be achieved by 2025. There is already a wide range of fibre deployment in Europe. However, the expansion of fibre-based access networks in Europe to date has taken place mainly in large cities. In other areas, the expansion is sluggish or non-existent. As a result, a digital divide between urban and rural areas in Europe is arising. The spatial disparity in fibre roll-out is often justified by market stake holders with significant regional cost differences. In the absence of private-sector investment, government subsidy programmes are often used to improve broadband coverage. Thus, politicians have to deal with the question about the level of investment required and the spatial distribution of subsidy needs. In this paper, we will therefore investigate the question of how significant the heterogeneity in the costs of Very High Capacity (VHC) networks in Germany actually is and whether and how the costs for Very High Capacity (VHC) networks differ between urban and rural regions. In the first part of the paper, we will analyse the regional cost differences of access network areas on the basis of bottom-up calculated investment figures. In the second part of the paper, we establish statistical estimation models that explain these regional cost differences. For this purpose, we use publicly available data. As a reference value for regionally differentiated costs of Very High Capacity (VHC) access networks, we use the results of a detailed bottom-up modelling of an FTTH network carried out for the whole of Germany. The model uses georeferenced household and business location data and optimizes the access network routes along the street network in a bottom-up manner. This model allows us to determine regionally differentiated FTTH investment at the level of access areas. By matching this data with the EU-wide standardized EUROSTAT urban/rural typology classification (predominantly urban, intermediate and predominantly rural), we determine whether and to which extent significant regional cost differences can be found in Germany applying these classifications. One focus is on determining the spread of investment requirements, especially among rural areas. Based on our experience, these areas exhibit the lowest economic viability of a network roll-out and, thus, the highest need for funding. By using statistical indicators, we analyse the suitability of the EUROSTAT classification as a differentiation criterion for regional cost differences. Here, we are particularly interested in whether the areas defined as rural form a sufficiently homogeneous group, and whether they show comparable levels of required investment. Our findings confirm that the differentiation criterion used, namely EUROSTAT urban/rural typology classification, is not satisfactory in measuring regional cost differences. It cannot sufficiently account for a large share of observable differences in fibre-based access network costs. Since it is desirable to answer questions regarding the required funding for selected regions based on publicly available data, we apply regression models to identify alternative influencing factors on the basis of publicly available data, in order to better explain observable regional cost differences. Here, we find that a handful of geographical factors are capable of explaining 95% of the geographical differences in fibre investment requirements, the most relevant being the number of connection lines, the number of households per kilometre of road in built-up areas, the main road length per built-up area and the share of built-up area in relation to overall area. In the last part of the analysis, we examine whether the derived results are also meaningful in a political and regulatory context. Discussions about the necessity of promoting high-speed networks usually take place at the level of local authorities. Therefore, in a final step, we address the question whether the statistical relationships derived from the regression model at the level of access areas also apply at a higher aggregated, i.e. NUTS3, level. In summary, we show that for Germany, classifications based on subscriber density exhibit a significant spread in the investment costs of Very High Capacity (VHC) access networks, which is most pronounced in rural clusters. Statistical analyses using regression models can improve the result if geographical elements of the settlement structure are considered in the analysis.
Introduction. Decentralization is characterized by the transfer of a large amount of powers and budgetary resources to local governments. At the same time, the financial and organizational capacity of local self-government bodies and the enterprises created by them is increasing. Budget decentralization creates new opportunities for borrowing through the placement of local government bonds by city councils. A utility loan is one of the instruments of local governments. Municipal credit, as one of the main financial institutions in the local finance system, is important in the financial support of local needs
The economic and civic development of local communities is based, first of all, on the local public finance system, which must meet certain conditions so that the management of the territorial administrative units and the functioning of the local authorities meet the standards of a quasi-society. This paper is topical as the issue of local public finances is at the center of the current political debate as all the member states of the Council of Europe are confronted with the issue of harmonizing two diverging trends, namely: controlling and reducing spending and giving as much as possible large autonomies of local communities. The main objective of the paper is to identify solutions to ensure a more balanced allocation of financial resources between different levels of administrative organization, taking into account the budgetary regulation that is imposed at all levels of public administration. The data processing provided by the Ministry of Public Finance and the Court of Accounts highlighted the degree of dependence of local budgets of communes, cities, municipalities and counties on the consolidated general budget in the context of a decentralized process that is desirable to be as efficient as possible.
The ongoing processes of decentralization, which are present in many countries, cause a growing proportion of public funds to be collected and spent at the local government tier, which necessitates the use of fiscal rules not only at the state level. This issue may raise some controversy due to the specific character, autonomy and empowerment of local government and local communities. Therefore, the analysed subject is based on three questions: 1. Limited fiscal autonomy of local self-government and it's consequences 2. A real need for and the scope of the use of fiscal rules in local government finance, 3. The informal factors that directly determine the indebtedness in local governments in the light of literature and selected empirical research. We use a descriptive method supported by an analysis of financial data and a case study as it presents selected aspects of Polish experience in the subject matter. The results of the analysis seem to point to the necessity of the use of fiscal rules in local government finance, which paradoxically strengthens the processes of decentralization, democratization, technological advancement and globalization. Some primary results of our research indicate investment expenditure, own revenues, number of companies (level of GDP) and election cycle as important, significant factors (in statistical meaning) effecting the local deficit and debt. The conclusions list the advantages of the use of fiscal rules at the local government tier and large diversity of informal conditions across the whole country.
The article deals with questions about the rules of effective, efficient and rational management through the results of marketing communications of administrative units of local self-government. The authors point to the Polish experience in this area with regard to systemic transformation since 1990, based on the decentralization of power and the effective dismissal of social potential, by focusing marketing communications of local governments on activating citizens to take action and ensure citizens' responsibility for the environment. These changes set new tasks for local governments, the proper implementation of which should be based on the implementation of management through the results that can be identified in local government bodies as a process of setting measurable goals for the administration responsible for specific public tasks. implementation of the mechanism of continuous monitoring of these goals, as well as the adaptation mechanism in the context of changes in the internal and external conditions of the organization and informing the public about the results achieved. The results management is based on modern tools used in public finance management, that is, budget execution and management. In order to improve the activities of local self-government bodies, the authors offer lifelong learning in the form of short forms of support (training, courses, seminars) in the process of non-formal learning, taking into account the educational prerequisites for sustainable development. The authors recommend short forms of acquiring new competencies required by the changing environment, challenges related to technological changes and increasing efficiency of market institutions (enterprises), indicating that non-formal education in the field of results management, combining economic, social and ecological aspects is an indispensable element improving the staff of local government administration, aimed at the proper implementation of statutory tasks and competent service of the local community while at the same time rational and effective use of public funds, and thus an essential element of sustainable city management. New management tools implementation combined with the education process can be treated as organisational innovation.
Open access
Polish socio-economic development
Local Governance and Planning
Sustainable Development and Environmental Management
The paper attempts to analyse the state of the solutions of management organization structures in the public sector, with a particular emphasis on the efficiency of information and decision-making processes determined by correct or incorrectly functioning solutions. The assessment of the functioning of the public administration must be related to the efficiency of the information and decision-making processes and the elimination of inconsistent structural solutions. It is important that the overriding criterion is positively verified solutions and not the political interests of individual parties, which are usually divergent from the substantive assessment criteria. The improvement in decision-making support solutions in the management of local government units was achieved through the formulation of three research hypotheses of the university research team with the municipalities quoted in the work.
The paper is dedicated to the analysis the financing situation and level of decentralization in the municipalities in Poland and Turkey. The analysis covers years 2012–2016. Due to decentralisation reforms in both countries the basic level of subnational governments are municipalities. The decentralization process includes three categories: political, administrative, and fiscal. Because of above the municipalities in Poland and Turkey are various with the number of units, average municipal area, average municipality size, sources of the revenues and directions of money spending.
Local financing in advanced countries enables local governments to assess real local priorities as well as limitations. The present paper deals with financial capabilities of local governments for the development of public services, local government expenditure and fiscal expenditure decentralization in the EU28. By use of cluster analysis, local public expenditures are assessed by selected COFOG functions, as % of total local government expenditures in years 2010-2013. The results proved the largest differences in the set of countries in local government expenditures on social protection and the smallest differences in local expenditures on recreation and cultures, housing and community amenities.
Under the combined pressure of increased urbanization, fiscal adjustments and decentralization, central governments were pushed towards accepting the idea of local government accessing the private finance sources for their public infrastructure and service development investments. While the importance of borrowing increases for local developments, the main challenge many small municipalities have to face is the difficulty to access private financing sources. One obstacle is related to the creditworthiness of the municipal debtor or bond issuer. Sub-national governments can overcome the problem of creditworthiness through the use of credit enhancement mechanisms or techniques. The present paper is the first to discuss the situation of credit enhancements for Romanian municipal bond financing, its consequences and the path that might be followed for their further development. The absence of appropriate credit enhancements can be considered among the factors that contributed to the underdevelopment of the Romanian municipal bond market segment mainly between 2011 and 2014. In order to improve the municipal bond market profile, Romanian local governments should not ignore credit enhancements for any future bond issue and a combination of internal credit enhancements and bond pooling, as external credit enhancements seem to provide a feasible solution.
In last thirty years Poland has gone a long way toward democracy and decentralization. Role of public participation in planning is increasing rapidly and recently many new instruments of empowering the community is being introduced, participatory budgeting is one of the most important. On the other hand, urban regeneration is one of the most important challenges of polish cities are facing. Technical and transport infrastructure investments are, in most cases, financed by public sphere. We can also observe increasing role of NGO's in neighbourhood regeneration process but their scope of actions is mostly limited to soft projects. The paper tries to answer the question whether participatory budget can fill this gap and be a source of financing local community needs. This paper shows the creation and evolution of participatory budgets in Poland as well as the process of their implementation including examples of projects financed from participatory budget in Polish cities. It consists of analyses of participatory budgets’ expenditures structure and influence of the projects on the neighbourhood and the city. It also assesses long term influence and identify barriers, challenges and opportunities of using this instrument in urban regeneration process.
Currently the preparation of the new 2014-2020 multiannual financial framework period is taking place in all areas - e.g. the sectorial legislation, such as the establishment of the new system of Cohesion Policy, is in progress. The rules are being formed in the spirit of a new approach; result orientation will become the main goal which requires a change of attitude in the operation of the institution system. Poland and Hungary are two cohesion countries, both of them using a significant amount of structural funds to finance public investments. Despite the common regulation at EU level the two countries are seemingly choosing different solutions in order to guarantee smoother implementation that will allow policy objectives and results to be achieved more effectively – Hungary is centralizing and Poland is rather decentralizing the system. What is behind this phenomenon? Which is the best way to strengthen the efficiency of the cohesion policy? Our paper will present the institutions systems and mechanism, administrative procedures working in the cohesion policy and compare the Polish and Hungarian systems. It will analyze the directions of changes under the new cohesion policy regulation with regard to the functioning institutions system and national specificities. At the end of our analysis we try to identify good practices and make general recommendations.
Open access
Regional Development and Policy
Hungarian Social, Economic and Educational Studies
The main purpose of this article was to present the most important organizational, supervisory and financial competences of local government units (LGUs) in Poland relating to public health care institutions (medical entities, a non-entrepreneurs). One of the goals of article was also evaluated the involvement of the various levels of local government in Poland in the financing of the tasks related to the health care and evaluated the effects of decentralization in health care. The article has been prepared on the basis of literature study, including the current legislation, as well as papers of various organizations, institutions and scientific journals.
In this paper the authors present important aspects of local autonomy seen through the lenses of decentralization and regionalization. It shows that local finance can contribute to community development only to the extent that the law provides financial autonomy so that the administration can attract European funds for local projects.
Following the completion of the process of decentralization of the public administration in Poland in 2003, a number of tasks implemented so far by the state authorities were transferred to the local level. One of the most significant changes in the methods of financing and management of the local authorities was the transfer of culture and national heritage-related tasks to a group of the own tasks implemented by local governments. As a result of the decentralization process, the local government units in Poland were given a significant autonomy in determining the purposes of their budgetary expenditure on culture. At the same time they were obliged to cover these expenses from their own revenue. This paper focuses on the analysis of expenditure on culture covered by the provincial budgets, taking into consideration the structure of cultural institutions by their types in the years 2003, 2006, 2010 and 2012. To illustrate the diversity of the expenditure on culture by the type of the institutions in particular provinces, one applied the location quotient (LQ), which reflects a spatial distribution of expenditure on culture in relation to reference expenses incurred by the cultural institutions in Poland.
The sustainable development became a goal for knowledge society, but one of the main question in literature remains as how close is the relationship between economic dvelopment, knowledge society and local governments' level. Given the great diversity of situations and frameworks both across countries and within them in the European Union, I consider that each country must have own policies designed to implement process of decentralization with the commitment of "healthy" economy in a society dominated by the technology and innovation. In this context, the problem occurs in decentralization should be managed on two levels: on the one hand in terms of central-local budgets relations, and on the other hand, in the local public finance structural plan. The paper will try to emphasize the connection between decentralization, local economic sustainable development and knowledge society, taking into account an overview of this three aspects and empirical evidences. In this regard, I will use the background offered by literature and the official statiscal data for analysis to identify the variables which explain decentralization and local economic development in the knowledge society. I estimate the analysis to confirm the hypothesis that there are good aspects, but also deficiencies that require solutions and budgetary policy options as part undisputed positioning local government finance as an engine of development of the whole nation. I consider that the paper can be a useful viewpoint in understanding local public finances in decentralization, which allows researchers to include other sources of information for researching an in a much more complex approach.