Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 29 February 2024
At the beginning of 2024, the economy of territorial budgets is in the best condition for the past decade. While last year the consequences of the Russian invasion of Ukraine, the energy crisis and inflation were reflected in the management of territorial budgets, this year the economy is expected recover and inflation to remain around the inflation target. For now, the prediction is confirmed by the values of year-on-year inflation, which fell again in February 2024 and reached 2%. Compared to the previous month, the year-on-year growth of consumer prices slowed by 0.3 percentage points. This was mainly due to the strict monetary policy and weak domestic economic activity. During the year, the effects of the consolidation package should also contribute to the reduction of inflationary pressures.
The income side of the territorial budgets strengthened significantly year-on-year due to the growth of own incomes, especially non-tax incomes. Year-on-year tax revenues also increased, which were mainly influenced by the growth of personal income tax as a result of wage growth, but also by measures within the consolidation package and, in the case of municipalities, by the growth in the collection of local fees. The weakening occurred only in non-investment transfers received by territorial budgets. Significant growth was recorded in investment transfers, which rose year-on-year to record levels. Despite this, investment activity in the regions fell. In February, the regions also managed a lower volume of current expenses than in the previous year.
Management of Local Governments
In February 2024 municipalities, regions and voluntary associations of municipalities operated with a budget surplus of CZK 26.5 billion (year-on-year an increase by 22.2%, i.e. CZK 4.8 billion) and reported the highest surplus budget balance since February 2014 (see Chart No. 1). If we reduce the budget balance by the direct costs of education and subsidies for private schools1, the economic surplus reached CZK 26.3 billion and increased by 24.2% year-on-year, i.e. by CZK 5.1 billion.
The total revenues of local budgets reached CZK 133.8 billion in February 2024 and increased by 5.7%, i.e. by CZK 7.2 billion. Adjusted total revenues1 amounted to CZK 100 billion. Their own revenues amounted to CZK 76 billion and increased by 7.7% in comparison with last year, i.e. by CZK 5.4 billion. This growth was caused by a rise in tax revenues, which reached CZK 62.1 billion and increased by 4.2%, i.e. by CZK 2.5 billion. Transfers received by territorial budgets in February 2024 increased year-on-year by 3.1%, i.e. by CZK 1.8 billion, to CZK 57.8 billion. This increase was only due to investment received transfers, which rose by 354.1% year-on-year, i.e. by CZK 3.4 billion, to CZK 4.4 billion. On the contrary, non-investment received transfers decreased by 3% year-on-year, i.e. by CZK 1.7 billion and reached CZK 53.4 billion.
The total consolidated expenditures of local budgets in February 2024 amounted to CZK 107.3 billion and increased by 2.3% in comparison with last year, i.e. by CZK 2.4 billion. Adjusted total expenditures1 amounted to CZK 73.7 billion. The current expenditures in February amounted to CZK 96 billion (year-on-year growth of 1.4%, i.e. CZK 1.4 billion), while the dominant part of it was represented of transfers that regions and municipalities transfer to contributory organizations and similar organizations. The capital expenditures reached CZK 11.3 billion (year-on-year growth of 9.7%, i.e. CZK 1 billion).
Management of regions
In February 2024, the regions managed a positive budget balance of CZK 13.7 billion and continue to generate the highest economic surpluses.2 The budget increased compared to last year by 53.8%, i.e. by CZK 4.8 billion (see Chart No. 2). If we reduce the budget balance by the direct costs of education and subsidies for private schools1, the economic surplus reached CZK 13.5 billion and increased by 59.7%, i.e. by CZK 5.1 billion.
The total revenues of the regions in February 2024 amounted to CZK 65.3 billion and increased by 6.4%, i.e. by CZK 3.9 billion. Adjusted total revenues1 reached CZK 35.8 billion. Their own income reached CZK 17.9 billion (year-on-year increase by 11.2%, i.e. by CZK 1.8 billion) and represent 50% of total income adjusted for direct education costs. The regions' own revenues are repeatedly strengthening mainly due to the growth of non-tax revenues, which in February of this year increased by 61.3% year-on-year, i.e. by CZK 1.1 billion, to CZK 3 billion. In February 2023, the tax revenues increased by 4.8%, i.e. CZK 0.7 billion, to CZK 14.9 billion. Regions received transfers in the amount of CZK 47.4 billion, i.e. by 4.6%, i.e. by CZK 2.6 billion more against last year. This was mainly due to the growth of investment transfers, which increased by 443.1 % year-on-year, i.e. CZK 2.1 billion, to CZK 2.6 billion. Non-Investment transfers received by the region decreased year-on-year, reaching CZK 47.4 billion in February and year-on-year fall of 0.1%, i.e. by CZK 0.05 billion.
The total expenditures of the regions in February 2024 amounted to CZK 51.5 billion and decreased by 1.7% compared to last year, i.e. by CZK 0.9 billion. Adjusted total expenditures1 reached CZK 22.3 billion. This decay was mainly caused by a decrease in capital expenses, which fell by 24.4% compared to last year, i.e.by CZK 0.8 billion, to CZK 2.5 billion. In January 2024 current expenditures also decreased by 0.2%, i.e. by CZK 0.08 billion, to CZK 49 billion. The transfers that the regions transferred to contributory and similar organizations reached CZK 35.9 billion and represented 55% of current expenses. Most of these funds were intended for direct education costs.
The balances on bank accounts and the debt of regions are only available for December 20233 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 December 2023.
Management of Municipalities
In February of this year, municipalities managed budget balance surplus of CZK 12.3 billion. Year-on-year, the economic result decreased by 1.8%, i.e. by CZK 0.2 billion (see Chart No. 3). Without the capital city, the total consolidated revenues of the municipalities in February amounted to CZK 48.8 billion, expenses to CZK 41.8 billion, and the result of budget management ended in a surplus of CZK 7 billion. Budget of the city of Prague ended up with a surplus of CZK 5.3 billion, with total revenues of CZK 20.4 billion and expenses of CZK 15.1 billion.
The total revenues of municipalities in February 2024 reached CZK 69.2 billion and increased by 4.4%, i.e. by CZK 2.9 billion compared to 2023. Adjusted total revenues1 reached CZK 64.8 billion. Their own income amounted to CZK 57.9 billion (year-on-year growth of 7%, i.e. by CZK 3.6 billion) and represented 89.4% of total adjusted income. Own revenues are repeatedly strengthening, especially due to the growth of tax revenues, which in February of this year increased by 4.1% year-on-year, i.e. by CZK 1.8 billion, to CZK 47.2 billion. At the end of February this year, municipalities received transfers in the total amount of CZK 11.3 billion and year-on-year they received them by 6%, i.e. by CZK 0.7 billion less. Non-investment transfers, which amounted to CZK 9.8 billion at the end of February, decreased year-on-year by 13.3%, i.e. by CZK 1.5 billion. Investment transfers received by municipalities significantly increased year-on-year by 114.7%, i.e. by CZK 0.8 billion, to CZK 1.5 billion.
The total expenditures of municipalities in February 2024 amounted to CZK 56.9 billion and increased by 5.8 %, i.e.by CZK 3.1 billion compared to last year. Adjusted total expenditures1 reached CZK 52.5 billion. The year-on-year growth of total expenses was caused by an increase in capital expenses, which increased by 22.8% compared to last year, i.e.by CZK 1.6 billion, to CZK 8.7 billion. In January 2024 current expenditures also increased by 3.2%, i.e. by CZK 1.5 billion, to CZK 48.1 billion. The transfers that the regions transferred to contributory and similar organizations reached CZK 13.3 billion and represented the majority of current expenses.
The balances on bank accounts and the debt of regions are only available for December 20233 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 December 2023.
Voluntary associations of municipalities
In February 2024, voluntary associations of municipalities reported total revenues of CZK 1.1 billion (year-on-year an increase of 80.3%, i.e. CZK 0.5 billion) and total expenses of CZK 0.6 billion (year-on-year an increase of 23.7%, i.e. by CZK 0.1 billion). The budget balance ended in a surplus of CZK 0.5 billion (year-on-year growth by CZK 0.4 billion).
1 The direct costs of education and subsidies for private schools represent funds from the state budget, which are distributed and directly allocated to the schools and school facilities by regions and Prague. It is therefore a non-investment flow transfer and the region and Prague cannot dispose of these funds in any way. For this reason, the total revenues and expenses of the regions and Prague are reduced so not to distort their results of management.
2 The highest economic surplus was reported only in February 2013, in the amount of CZK 15.1 billion.
3 The balance on bank accounts and debt are available from the financial statements, which are submitted to the Central State Accounting Information System on a quarterly basis.