Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 August 2022
In August 2022 local governments continue to prosper and exceed pre-pandemic operating results. They are in good financial condition despite the war in Ukraine and the inflation, which gave rise to warnings about the strains these budgets would face as the actual situation cut short important sources of revenue while creating new spending and needs. In spite of these negative situations the balance of local budgets improved in comparison with August 2021, as a result of reduction of restrictive implementations against the epidemic and mostly strengthened tax revenue.
Municipalities, regions and voluntary associations of municipalities in August 2022 operate with a surplus budget balance of CZK 40 billion. The economic result increased only marginally against last year (by 1.9%, i.e. CZK 0.8 billion), but in comparison with year 2020 (the period of the first wave of the COVID-19 pandemic), the balance even improved by 102.6%, i.e. CZK 20.3 billion. On the contrary, when comparing the results with the period before the pandemic, i.e. August 2019, the economic result fell by CZK 1.9 billion, i.e. 4.5% (see chart no. 1).
The own revenues of local budgets reached CZK 298.8 billion in August 2022 and increased by 18.4% in comparison with last year, i.e. by CZK 46.4 billion. This growth was caused by an increase in tax revenues, which reached CZK 254.4 billion and increased by 17.7%, i.e. by CZK 38.3 billion.
The total consolidated expenditures of local budgets in August 2022 amounted to CZK 483.9 billion and increased by 9.3% in comparison with last year, i.e. by CZK 41.3 billion. The current expenditures in August this year amounted to CZK 365.1 billion (CZK + 27.9 billion) and the capital expenditures reached CZK 78.8 billion (CZK + 12.7 billion). In August 2022 local governments realized consolidated expenditures for aid to Ukraine in the amount of CZK 2.4 billion (mainly the capital city of Prague).
Regions
As at 31 August 2022 the regions operate with a surplus budget of CZK 5.6 billion. Although the budget balance fell compared to last year, still exceeded the economic results from the period before the pandemic. How described in chart no. 2 the total revenues of the regions in August this year amounted to CZK 204.9 billion and increased by 4.6%, i.e. by CZK 9 billion. Their own income also reached CZK 65.9 billion. Own revenues improved due to the growth of tax revenues, which increased by 16.8%, i.e. by CZK 8.5 billion, to CZK 59.2 billion.
The total expenditures of the regions as at 31 August 2022 amounted to CZK 199.3 billion and increased by 5% compared to last year, i.e. by CZK 9.4 billion. This growth was caused by an increase in current expenses, which increased by 5.2% compared to last year, i.e.by CZK 9 billion, to CZK 181 billion. The transfers that the regions transferred to contributory and similar organizations reached CZK 134.3 billion and represent 74.2% of total current expenses. Most of these funds were intended for direct education costs.
At the end of August, capital expenditure also increased by 2.4%, i.e. by CZK 0.4 billion, to CZK 18.2 billion, despite restrictions of investment transfers or a significant increase in the price of construction materials. The increased investment activity corresponds to the fact that regions mainly invest before the end of the budget year. The regions even invested more than before the outbreak of the pandemic, by 9.6%. The regions realized expenses for aid to Ukraine in the amount of CZK 1.6 billion.
Municipalities
As at 31 August 2022, the municipalities reported a positive budget balance of CZK 34.3 billion, which represents the best economic result since 2013. The balance exceeded last year's balance by 4.7%, i.e. by CZK 1.5 billion and even by 12.8% compared to 2019, i.e. by CZK 3.9 billion (see chart no. 3). In August of this year, the capital city operate with a surplus of CZK 14.6 billion, with total revenues of CZK 79 billion and expenses in the amount of CZK 64.4 billion. Without the capital city, the total consolidated revenues of the municipalities at the end of August amounted to CZK 205.7 billion, expenses to CZK 186 billion, and the budget ended in a surplus of CZK 19.7 billion.
The total revenues of municipalities at the end of August this year reached CZK 284.8 billion and increased by 13%, i.e. by CZK 32.8 billion compared to August 2021. Their own income amounted to CZK 232.1 billion (growth of 18.3%, i.e. by CZK 35.9 billion) and represent the majority of total adjusted income. In comparison to the regions, the municipalities are relatively more self-sufficient and thus do not show significant dependence on received transfers. The own revenues improved due to the growth of tax revenues, which increased by 18%, i.e. by CZK 29.8 billion to CZK 195.2 billion and thus reached their highest level.
The total expenditures of municipalities in August 2022 amounted to CZK 250.5 billion and increased by 14.3%, i.e.by CZK 31.3 billion compared to last year. The growth was mainly caused by an increase in current expenses, which increased by 11.3% compared to last year, i.e. by CZK 19.3 billion, to CZK 190.5 billion. The capital expenditures by municipalities also increased against last year (specifically by 24.8%, i.e. by CZK 12 billion) and reached CZK 60.4 billion. Municipalities even invested more than before the outbreak of the pandemic, by 26.6%. The municipalities realized expenses for aid to Ukraine in the amount of CZK 955.5 million.