Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 28 February 2023
In 2023, the management of territorial self-governing units will continue to be accompanied by the negative events of the last year. This year as well, the consequences of the Russian invasion of Ukraine will be reflected on the income and expenditure side of the territorial budgets, in the form of expenditure on aid to Ukraine and its population, or the energy crisis and inflation. According to the forecasts of the Czech National Bank stagflation can be expected even in 2023, i.e. higher inflation and at the same time lower growth of the real economy. The expected rapid recovery of the economy after the pandemic did not occur, and this is unlikely to change even in the first part of 2023. Nevertheless, it seems that the territorial self-governing units will be able to face economic stagnation without the help of the state budget this year as well. Even at the beginning of the year, the budgets of the territorial self-governing units manage with a budget surplus. The budget balance of municipalities resulted in a surplus for the first time since 2014i.
Local Governments
In February 2023 municipalities, regions and voluntary associations of municipalities operated with a budget surplus of CZK 21.7 billion. The economic result decreased against last year (by 10.7%, i.e. CZK 2.6 billion). The budget balance also decreased in comparison with year 2021 (by 0.6%, i.e. CZK 0.1 billion), but also with 2019. Even so, territorial budgets managed better than in 2020, i.e. the period before the outbreak of the first wave of the COVID-19 pandemic (see chart no. 1). Adjusted total budget balance1 amounted to CZK 21.2 billion. Territorial budgets are still performing very well at the beginning of 2023, despite economic stagnation and inflation.
The total revenues of local budgets reached CZK 126.6 billion in February 2023 and increased by 23.6%, i.e. by CZK 24.2 billion. Adjusted total revenues1 amounted to CZK 93.1 billion. Their own revenues amounted to CZK 70.6 billion and increased by 13.6% in comparison with last year, i.e. by CZK 8.5 billion. This growth was caused by a rise in tax revenues, which reached CZK 59.6 billion and increased by 14.7%, i.e. by CZK 7.6 billion.
The total consolidated expenditures of local budgets in February 2023 amounted to CZK 104.9 billion and increased by 34.4% in comparison with last year, i.e. by CZK 26.8 billion. Adjusted total expenditures1 amounted to CZK 71.9 billion. The current expenditures in February amounted to CZK 94.6 billion (CZK +25.7 billion) and the capital expenditures reached CZK 10.3 billion (CZK +1.1 billion). In February 2023 local governments realized consolidated expenditures for aid to Ukraine in the amount of CZK 1.4 billion (mainly the capital city of Prague).
Regions
In February 2023 the regions operated with a surplus of CZK 8.9 billion. The surplus decreased compared to last year by 33.5%, i.e. by CZK 4.5 billion. The regions also showed better results in February 2021 or 2019. Adjusted total budget balance1 amounted to CZK 8.5 billion. How described in chart no. 2, the total revenues of the regions in February amounted to CZK 61.4 billion and increased by 31.9%, i.e. by CZK 14.8 billion. Adjusted total revenues1 reached CZK 32.2 billion. Their own income reached CZK 16.1 billion (CZK +1.8 billion). Improvement in own income of regions was caused by the growth of tax revenues, which increased by 14%, i.e. by CZK 1.7 billion, to CZK 14.2 billion.
The total expenditures of the regions in February 2023 amounted to CZK 52.4 billion and increased by 58.4% compared to last year, i.e. by CZK 19.3 billion. Adjusted total expenditures1 reached CZK 23.7 billion. This growth was caused by an increase in current expenses, which increased by 58.8% compared to last year, i.e.by CZK 18.2 billion, to CZK 49.1 billion. The transfers that the regions transferred to contributory and similar organizations reached CZK 36.4 billion and represent 74.3% of total current expenses. Most of these funds were intended for direct education costs.
In February 2023 capital expenditures also increased by 53.6%, i.e. by CZK 1.2 billion, to CZK 3.4 billion, despite decrease of investment transfers or actual inflation. In February the regions realized expenditures for aid to Ukraine and its population in the amount of CZK 1.2 billion
Municipalities
In February 2023 municipalities reported a budget surplus of CZK 12.5 billion. The surplus increased in comparison with last year's budget balance by 16.2%, i.e. by CZK 1.8 billion (see chart no. 3). In February the capital city operated with a surplus of CZK 6.6 billion, with total revenues of CZK 20.3 billion and expenses in the amount of CZK 13.7 billion. Without the capital city, the total consolidated revenues of the municipalities amounted to CZK 45.9 billion, expenses to CZK 40 billion, and the budget ended in a surplus of CZK 5.9 billion.
The total revenues of municipalities in February 2023 reached CZK 66.3 billion and increased by 18.2%, i.e. by CZK 10.2 billion compared to 2022. Adjusted total revenues1 reached CZK 61.9 billion. Their own income amounted to CZK 54.3 billion (growth of 14%, i.e. by CZK 6.7 billion) and represented the majority of total adjusted income. Increase in own income of municipalities was caused mainly by the growth of tax revenues, which increased by 14.9%, i.e. by CZK 5.9 billion to CZK 45.4 billion.
The total expenditures of municipalities in February 2023 amounted to CZK 53.7 billion and increased by 18.6 %, i.e.by CZK 8.4 billion compared to last year. Adjusted total expenditures1 reached CZK 49.5 billion. The growth was mainly caused by an increase in current expenses, which increased by 21.5% compared to last year, i.e. by CZK 8.3 billion, to CZK 46.6 billion. The capital expenditures by municipalities also increased against last year (specifically by 2.6%, i.e. by CZK 0.2 billion) and reached CZK 7.1 billion. In February 2023, the municipalities realized expenditures for aid to Ukraine and its population in the amount of CZK 188.7 million. Expenditures are the largest in the case of capital city of Prague (CZK 155.2 million).
Voluntary associations of municipalities
In February 2023, voluntary associations of municipalities reported total revenues of CZK 0.6 billion (year-on-year decrease of 4.9%, i.e. CZK 0.03 billion) and total expenses of CZK 0.4 billion (year-on-year a decrease of 11.6%, i.e. by CZK 0.06 billion). The budget balance ended in a surplus of CZK 0.2 billion (year-on-year growth of 22.9%, i.e. by CZK 0.03 billion).
1 The total revenues and expenditures without direct education costs and subsidies for private schools, which regions and capital city of Prague directly allocated to the relevant schools and school facilities.
i The compared period is always February.