Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 April 2023
The economic results reported by territorial self-governing units in April still confirm the good financial condition of territorial budgets this year. Although territorial budgets recorded a lower positive budget balance compared to previous years, their investments reached historically high values. The growing investment activity of the territorial self-governing units is very important, because investments enable the modernization of regional and municipal infrastructure, and thereby contribute to the improvement of the general living standard of the population.
The domestic economy is still affected by high inflation and the invasion of Ukraine by Russian troops. In this connection, the growth of territorial budget expenditures for assistance to Ukraine and its population continues in April, which are, however, compensated to a large extent from the state budget. Although inflation in April increased by 12.7% year-on-year, it fell noticeably compared to March and even ended up slightly below the forecast of the Czech National Bank. There is therefore an expected and gradual slowdown in price growth, which should gradually lead to a year-on-year reduction in price growth to single-digit values and to approach to the limit of the inflation target in the second or third quarter of the following year. Persistent inflation continues to contribute to an increase in expenses (e.g. an increase in the price of construction works, an increase in energy prices), but at the same time it also increases the tax income of the territorial budgets. Although inflationary pressures may, in the same way as last year, have a negative effect on this year's planned investments, so capital expenditures of territorial budgets are at this time growing and surpassing investments from previous years.
Local Governments
In April 2023 municipalities, regions and voluntary associations of municipalities operated with a budget surplus of CZK 12 billion. The economic result decreased against last year by 38%, i.e. CZK 7.4 billion. Despite that, this is still a better result than in 2020, in the period of the first wave of the pandemic COVID-19 (see chart no. 1). Adjusted total budget balance1 amounted to CZK 11.6 billion. Territorial budgets are still performing very well in April 2023, in spite of economic stagnation and inflation.
The total revenues of local budgets reached CZK 248.4 billion in April 2023 and increased by 18.3%, i.e. by CZK 38.5 billion. Adjusted total revenues1 amounted to CZK 181.4 billion. Their own revenues amounted to CZK 143.9 billion and increased by 16.2% in comparison with last year, i.e. by CZK 20 billion. This growth was caused by a rise in tax revenues, which reached CZK 120.6 billion and increased by 16.2%, i.e. by CZK 16.8 billion.
The total consolidated expenditures of local budgets in April 2023 amounted to CZK 236.4 billion and increased by 24% in comparison with last year, i.e. by CZK 45.8 billion. Adjusted total expenditures1amounted to CZK 169.8 billion. The current expenditures in April amounted to CZK 207.2 billion (CZK +41.7 billion) and the capital expenditures reached CZK 29.2 billion (CZK +4.1 billion). In 2023 local governments realized consolidated expenditures for aid to Ukraine in the amount of CZK 3.1 billion (mainly the capital city of Prague).
Regions
In April 2023 the regions operated with the lowest budget surplus since 2013, amounting to CZK 0.5 billion. The reason is the significant growth of current and capital expenditures of the regions, which exceeded the growth of the revenues.The surplus decreased compared to last year by 93.5%, i.e. by CZK 7.8 billion. Adjusted total budget balance1 amounted to CZK 0.2 billion. How described in chart no. 2, the total revenues of the regions in April amounted to CZK 113.9 billion and increased by 23.5%, i.e. by CZK 21.7 billion. Adjusted total revenues1 reached CZK 55.5 billion. Their own income reached CZK 32.4 billion (growth of 17.8%, i.e. by CZK 4.9 billion). Improvement of region´s own income was caused by the growth of tax revenues, which increased by 16.2%, i.e. by CZK 4 billion, to CZK 28.6 billion.
The total expenditures of the regions in April 2023 amounted to CZK 113.4 billion and increased by 35.1% compared to last year, i.e. by CZK 29.4 billion. Adjusted total expenditures1 reached CZK 55.3 billion. This growth was caused by an increase in current expenses, which increased by 34% compared to last year, i.e.by CZK 26.6 billion, to CZK 104.9 billion. The transfers that the regions transferred to contributory and similar organizations reached CZK 75.5 billion and represent 72% of total current expenses. Most of these funds were intended for direct education costs. In April 2023 capital expenditures also increased by 50.1%, i.e. by CZK 2.8 billion, to CZK 8.5 billion, despite of actual inflation. In 2023 the regions realized expenditures for aid to Ukraine and its population in the amount of CZK 2.6 billion.
Municipalities
In April 2023 the municipalities managed the surplus budget amounted to CZK 10.9 billion. The municipal budget increased by 2.3% year-on-year, i.e. by CZK 0.2 billion (see chart no. 3). In April the capital city operated with a surplus of CZK 4.8 billion, with total revenues of CZK 39 billion and expenses in the amount of CZK 34.2 billion. Without the capital city, the total consolidated revenues of the municipalities amounted to CZK 98.9 billion, expenses to CZK 92.8 billion, and the budget ended in a surplus of CZK 6.1 billion.
The total revenues of municipalities in April 2023 reached CZK 137.9 billion and increased by 16.1%, i.e. by CZK 19.1 billion compared to 2022. Adjusted total revenues1 reached CZK 129.3 billion. Their own income amounted to CZK 111.1 billion (growth of 15.8%, i.e. by CZK 15.2 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 16.2%, i.e. by CZK 12.8 billion to CZK 92 billion.
The total expenditures of municipalities in April 2023 amounted to CZK 127 billion and increased by 17.4%, i.e.by CZK 18.8 billion compared to last year. Adjusted total expenditures1 reached CZK 118.4 billion. The growth was mainly caused by an increase in current expenses, which increased by 19.6% compared to last year, i.e. by CZK 17.4 billion, to CZK 106.2 billion. The capital expenditures of municipalities also increased against last year (specifically by 7.4%, i.e. by CZK 1.4 billion) and reached CZK 20.8 billion. In 2023, the municipalities realized expenditures for aid to Ukraine and its population in the amount of CZK 540 million. Expenditures are the largest in the case of capital city of Prague (CZK 467.4 million).
Voluntary associations of municipalities
In April 2023, voluntary associations of municipalities reported total revenues of CZK 1.7 billion (year-on-year increase of 14.6%, i.e. CZK 0.2 billion) and total expenses of CZK 1.2 billion (year-on-year decrease of 0.9%, i.e. by CZK 0.01 billion). The budget balance ended in a surplus of CZK 0.5 billion (year-on-year growth of 92.4%, i.e. by CZK 0.2 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.