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Application of a Unified Methodology for Intergovernmental Equalization at Regional Level

Natalia E. Barbashova ()
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Natalia E. Barbashova: Financial Research Institute, Moscow 127006, Russia

Finansovyj žhurnal — Financial Journal, 2019, issue 1, 44-55

Abstract: High degree of inequity in fiscal capacity of local budgets requires flexible and efficient system of intergovernmental equalization. According to actual budget legislation, equalization transfers at subnational level have a number of forms. Different types of local bodies accept transfers from different budget funds that are accumulated at regional or local levels. As a result, the scheme of equalization of a local budget is rather complicated. Another problem of the current system of intergovernmental equalization at subnational level is that municipalities of the same type (e. g. rural settlements) become incomparable by income sources and expenditure responsibilities. This is due to the changes in legislation in the field of power assignment at regional and local levels of the budget system. The article proposes a possible solution for this problem based on legislation analysis and interregional comparison. The author offers a transition to a unified scheme of equalization for all types of municipalities. Moreover, the author formulates several necessary amendments to legislation and presents a model methodology of distribution of equalizing transfers from the unified fund.

Keywords: intergovernmental relations; local budget; equalization transfers; separation of powers (search for similar items in EconPapers)
JEL-codes: H72 H77 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.31107/2075-1990-2019-1-44-55

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Handle: RePEc:fru:finjrn:190104:p:44-55