Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 September 2025
Local government budgets remained significantly in surplus in the third quarter of 2025. Although the pace of growth slowed, local governments continue to maintain a very strong financial position. Local governments continue to benefit from favorable revenue developments, while gradually increasing their investment activity. Overall, the finances of local governments confirm the long-term trend of high financial stability and accumulation of funds. Although investments are gradually increasing, the investment potential of local budgets remains partly untapped.
The revenue side of local budgets continues to develop steadily, with tax revenues remaining the main source of growth. These were supported in particular by growth in corporate income tax and personal income tax revenues. Transfers continued to represent a significant component of revenues, particularly in connection with the financing of regional education. On the other hand, non-tax revenues weakened year-on-year, which was related to the absence of extraordinary one-off revenues realized in the previous year.
On the expenditure side, current expenditures continued to grow, particularly in the areas of transport services and local government salaries. At the same time, there was a significant increase in capital expenditure, which was mainly directed towards the development of school infrastructure, sports facilities, and transport infrastructure. This development confirms that some local governments are gradually moving towards more active use of their financial resources, especially at the end of the fiscal year.
The regions' finances remained in surplus and financially stable. Revenue growth was driven mainly by tax revenues, while expenditure reflected higher investment activity while maintaining a low level of debt. The volume of funds in the regions' bank accounts has been growing in the long term, confirming their ability to finance development projects from their own resources.
The finances of municipalities showed differentiated development. The overall result was significantly influenced by the finances of the capital city of Prague, while other municipalities achieved lower surpluses. Nevertheless, it can be said that the investment activity of municipalities increased significantly at the end of the third quarter, especially in the area of construction and modernization of educational and leisure infrastructure. The current expenditure of municipalities grew mainly in connection with salaries, while the total debt of municipalities remains under control in the long term.
Detailed information available on the website Monitor (data for territorial budgets can be obtained in the Analytical section under Local organisations).
Management of Local Governments
In the third quarter of 2025 regions, municipalities, and voluntary associations of municipalities had a budget surplus of CZK 70.6 billion, which represents a year-on-year decrease of 10.2% (i.e. CZK 8 billion), but it is still the third September highest surplus in history (see Chart No. 1). If we adjust the budget balance for direct expenditure on education and subsidies for private schools1, the surplus reached CZK 36.7 billion, a year-on-year decline of 38.1%, or CZK 22.6 billion.
Revenues of territorial budgets
Total consolidated revenues of regional budgets in September 2025 amounted to CZK 684.9 billion, representing a year-on-year increase of 5.6%, or CZK 36.3 billion. After adjusting the revenues of regions and municipalities (in the case of the capital city of Prague) for direct expenditures on education and subsidies for private schools1, revenues amounted to CZK 502.7 billion. The own revenuesi of local budgets, which reached CZK 416.7 billion, recorded a year-on-year increase. The self-sufficiency of local budgets, which represents the share of own revenues in total adjusted revenues , also declined year-on-year and amounted to 82.9%. The growth in own revenues was supported mainly by an increase in transfers, which reached CZK 268.1 billion. This was primarily due to growth in non-investment transfers, as investment transfers recorded only very weak growth. Tax revenues rose year-on-year to CZK 355.6 billion. The only year-on-year decline was in non-tax revenues, which fell by 11.9%, or CZK 7.3 billion, to CZK 54.3 billion. This decline is a result of payments made to Sberbank CZ creditors in the previous year.
Expenditure of territorial budgets
Total consolidated expenditure of regional budgets in September 2025 amounted to CZK 614.3 billion, representing a year-on-year increase of 7.8%, or CZK 44.3 billion. After adjusting regional and municipal expenditures (in the case of the City of Prague) for direct expenditures on education and subsidies for private schools1, expenditures amounted to CZK 466 billion. Current expenditure reached CZK 486.4 billion (year-on-year growth of 5.1%, i.e. CZK 23.7 billion), with the growth mainly attributable to the salaries of local government employees and expenditure on transport services. The dominant part of these current expenditures consisted of transfers that regions and municipalities transfer to contributory organizations and similar organizations. Capital expenditure increased significantly year-on-year in September (by 19.2%, i.e. CZK 20.6 billion) due to investments in school infrastructure, sports facilities, and public road transport, amounting to CZK 127.9 billion.
Management of regions
In September, the regions recorded a budget surplus of CZK 36.6 billion, reaching their highest surplus ever (see Chart No. 2). If we adjust the regions' budget balance for direct expenditure on education and subsidies for private schools1, the result is only CZK 6.2 billion, a year-on-year decrease of 51.9%, or CZK 6.7 billion.
Regional revenues
Total regional revenues at the end of September 2025 reached CZK 295.5 billion, a slight year-on-year decrease of 4.7%, or CZK 13.3 billion. After adjusting regional revenues for direct education expenditures and subsidies for private schools1, revenues amounted to CZK 135.7 billion. The regions' own revenues increased year-on-year to CZK 93.8 billion, accounting for 69.1% of total adjusted revenues2. On the contrary, capital revenues and non-tax revenues declined year-on-year due to payments made to Sberbank CZ creditors in the previous year.
Tax revenues (up 7% year-on-year, i.e. by CZK 5.5 billion) accounted for the largest share of own revenues, reaching CZK 84.7 billion. As can be seen from Chart No. 3, the most significant year-on-year increase was in corporate income tax revenue, which rose to CZK 23.7 billion, with the maturity of quarterly tax advances having a positive impact in September. Income from personal income tax also increased year-on-year to CZK 19.3 billion, reflecting higher wage and salary growth in the economy and, to a lesser extent, the impact of tax changes effective from 2024 (the abolition or restriction of selected tax allowances). Revenue from VAT grew to CZK 41.1 billion. Other tax revenues, which account for only a fraction of total tax revenues, also increased slightly year-on-year.
In September 2025, regions received transfers amounting to CZK 201.7 billion (a year-on-year increase of 6.6%, i.e. CZK 12.5 billion). Of this, non-investment transfers amounted to CZK 195.5 billion, representing year-on-year growth of 8.7%, or CZK 15.7 billion. The largest year-on-year growth was recorded in direct expenditure on education (by 10%, i.e., CZK 13.8 billion), which is provided from the budget of the Ministry of Education, Youth and Sports. Investment transfers received by regions fell year-on-year to CZK 6.1 billion. This was mainly due to a lower volume of funds provided for the financing of transport infrastructure (by CZK 1.2 billion) from the State Transport Infrastructure Fund.
Regional expenditure
Total regional expenditure in September 2025 amounted to CZK 258.9 billion, representing a year-on-year increase of 3.5%, or CZK 8.8 billion. After adjusting regional expenditure for direct expenditure on education and subsidies for private schools1, expenditure amounted to CZK 129.5 billion. The largest share of the year-on-year growth in total expenditure was accounted for by current expenditure, which increased (by 3.1%, i.e. CZK 6.9 billion) as a result of growth in expenditure on transport services – railways, reaching CZK 230.6 billion. Transfers made by regions to contributory and similar organizations amounted to CZK 169 billion and accounted for 73% of total current expenditures, mainly non-investment transfers provided to primary and nursery schools as part of direct expenditures on education. Capital expenditures increased year-on-year (by 7.1%, i.e., CZK 1.9 billion) to CZK 28.3 billion, mainly due to increased investments in museums and galleries.
Debt and balance on the regions' bank accounts
The debt of regions, including public organizations, amounted to CZK 25.6 billion at the end of the third quarter of 2025, representing a slight increase compared to the end of 2024. The slight increase in debt corresponds to higher investment activity by the regions. In terms of per capita debt, the Karlovy Vary Region had the highest debt, followed by the Liberec Region and the Ústí Region.
The amount of deposits by regions in current accounts (including contributory organizations) amounted to CZK 142.9 billion in the middle of this year, which represents an increase in savings of 35.5%, or CZK 37.5 billion, compared to 2024. After deducting funds received from the Ministry of Education, Youth and Sports for direct education expenses and subsidies for private schools1, which the regions had not provided to schools and educational institutions by the end of September, the balance on the regions' current accounts in September reached CZK 112.5 billion, meaning that deposits increased by 6.7% compared to 2024, i.e. by CZK 7.1 billion. The highest savings (excluding contributory organizations) per capita were reported in the Vysočina Region and the Karlovy Vary Region.
As can be seen from Chart No. 3, while regional debt has fallen by 3.2% since 2015, current account balances are growing dynamically, by 415.1%3.
Management of municipalities
In September, municipalities recorded a budget surplus of CZK 33.5 billion, which was the lowest September result in the last five years (see Chart No. 4). Of this, the budget of the City of Prague ended with a surplus of CZK 23.5 billion (year-on-year growth of 25.2%, i.e. CZK 4.7 billion) with total revenues of CZK 111.8 billion and expenditures of CZK 88.3 billion. Excluding the City of Prague, the budgetary result ended with a surplus of CZK 10 billion (a year-on-year decrease of 61.9%, i.e. CZK 16.3 billion). After adjusting the municipalities' (in the case of Prague) financial results for direct expenditure on education and subsidies for private schools1, the balance is CZK 30 billion, down 33.2% year-on-year, i.e. by CZK 14.9 billion.
Municipal revenues
Total municipal revenues in September reached CZK 397.6 billion, up 6.3% year-on-year, i.e. by CZK 23.6 billion. After adjusting municipal revenues (for the capital city of Prague) for direct education expenditures and subsidies for private schools1, revenues amounted to CZK 375.2 billion. Municipalities' own revenuesi, which accounted for 86% of total adjusted revenues2, recorded year-on-year growth and reached CZK 321.7 billion.
Tax revenues contributed most to the growth in own revenues (up 5.9% year on year, or CZK 15.2 billion), reaching CZK 270.9 billion. The most significant year-on-year increase was in corporate income tax revenue, which rose to CZK 71.5 billion, with the maturity of quarterly tax advances having a positive impact in September. Income from personal income tax also increased year-on-year to CZK 54.1 billion, reflecting increased wage and salary growth in the economy and, to a lesser extent, the impact of tax changes effective from 2024 (abolition or restriction of selected tax allowances). Revenue from VAT grew to CZK 110.1 billion. Other tax revenues recorded a slight increase to CZK 35.1 billion (of which CZK 16.9 billion was from real estate taxes).
In September, municipalities received transfers totaling CZK 75.9 billion (a year-on-year increase of 15.7%, or CZK 10.3 billion). Of this amount, non-investment transfers amounted to CZK 56.8 billion, representing a year-on-year increase of 12.1%, or CZK 6.1 billion. The year-on-year growth was mainly due to transfers provided from the Ministry of Education, Youth and Sports budget for the Jan Amos Komenský operational program (by CZK 3.3 billion). Investment transfers received by municipalities increased year-on-year (by 27.8%, i.e. by CZK 4.1 billion) to CZK 19.1 billion. This was mainly due to the growth in transfers provided under the Integrated Regional Operational Program 2021-2027 – EU funds (by CZK 3.5 billion) from the Ministry of Regional Development.
Municipal expenditure
Total municipal expenditure in September 2025 amounted to CZK 364.1 billion, representing a year-on-year increase of 10.7%, or CZK 35.1 billion. After adjusting municipal expenditure (in the case of the capital city of Prague) for direct expenditure on education and subsidies for private schools1, expenditure amounted to CZK 345.1billion. The year-on-year growth was mainly due to an increase in capital expenditure of 22.3%, i.e. CZK 18.2 billion, to CZK 100.1 billion, due to increased investment in the construction of primary schools and sports facilities. The increase in capital expenditure confirms the increased investment activity of municipalities at the end of the year. Current expenditure rose (by 6.8%, i.e. by CZK 16.9 billion) to CZK 264 billion, mainly due to an increase in the salaries of local government employees.
Debt and balance on the municipalities' bank accounts
The debt of municipalities, including public organizations, amounted to CZK 65.7 billion in the third quarter, an increase of 2.5%, or CZK 1.6 billion, compared to the end of 2024. The capital city of Prague had a debt of CZK 7.2 billion (a year-on-year decrease of 3%, i.e. CZK 0.2 billion). The largest debt (excluding public organizations) per capita was reported by municipalities in the Olomouc and Pardubice regions.
The balance of municipalities on current accounts (including contributory organizations) amounted to CZK 441.7 billion, which represents an increase in savings of 4.7%, or CZK 19.8 billion, compared to 2024. After deducting funds received from the Ministry of Education, Youth and Sports for direct education expenses and subsidies for private schools1>, which the City of Prague had not provided to schools and educational institutions by the end of September, the balance on the current accounts of municipalities in September reached CZK 438.2 billion, meaning that deposits increased by 3.9% compared to 2024, i.e. by CZK 16.3 billion. The balance of the City of Prague (including contributory organizations) amounted to CZK 180.5 billion (year-on-year growth of 14.6%, i.e. CZK 22.9 billion).
As can be seen from Chart No. 5, while municipal debt has decreased by 24.4% since 2015, current account balances are growing dynamically, by 240.2%.
Management of voluntary associations of municipalities
In September 2025, voluntary associations of municipalities managed total revenues of CZK 5.7 billion and total expenditures of CZK 5.4 billion. The budget balance declined year-on-year and ended with a surplus of CZK 0.3 billion.
1 Direct education expenditures represent funds from the state budget (specifically from the chapter of the Ministry of Education, Youth and Sports), which the regions and the Capital City of Prague allocate directly to the respective schools and educational institutions. The regions and the Capital City of Prague have no discretion over how these funds are used. The same applies to subsidies for private schools. For this reason, the total revenues and expenditures of regions and the Capital City of Prague are adjusted to avoid distortions in their budgetary performance.
2Total revenue adjusted for revenue from transfers earmarked for direct education expenditure and subsidies for private schools.
3After adjusting for direct education expenditures and subsidies for private schools, the balance sheet total increased by 305.6% compared to 2015.
i Own revenues = tax + non-tax + capital revenues