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Application of a Unified Methodology for Intergovernmental Equalization at Regional Level

Author

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  • Natalia E. Barbashova

    (Financial Research Institute, Moscow 127006, Russia
    Russian Presidential Academy of National Economy and Public Administration, Moscow 119571, Russia)

Abstract

High degree of inequity in fiscal capacity of local budgets requires flexible and efficient system of intergovernmental equalization. According to actual budget legislation, equalization transfers at subnational level have a number of forms. Different types of local bodies accept transfers from different budget funds that are accumulated at regional or local levels. As a result, the scheme of equalization of a local budget is rather complicated. Another problem of the current system of intergovernmental equalization at subnational level is that municipalities of the same type (e. g. rural settlements) become incomparable by income sources and expenditure responsibilities. This is due to the changes in legislation in the field of power assignment at regional and local levels of the budget system. The article proposes a possible solution for this problem based on legislation analysis and interregional comparison. The author offers a transition to a unified scheme of equalization for all types of municipalities. Moreover, the author formulates several necessary amendments to legislation and presents a model methodology of distribution of equalizing transfers from the unified fund.

Suggested Citation

  • Natalia E. Barbashova, 2019. "Application of a Unified Methodology for Intergovernmental Equalization at Regional Level," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 44-55, February.
    • Handle: RePEc:fru:finjrn:190104:p:44-55
    DOI: 10.31107/2075-1990-2019-1-44-55
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    References listed on IDEAS

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    1. Slavgorodskaya Margarita & Letunova T. & Khrustalev A., 2008. "Analysis of Financial Aspects of Local Self governance Reform Implementation," Research Paper Series, Gaidar Institute for Economic Policy, issue 120P.
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    Cited by:

    1. Igor Yu. Arlashkin, 2020. "Comparative Assessment of Regional Fiscal Capacity Calculation Approaches," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 58-67, February.

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      More about this item

      Keywords

      intergovernmental relations; local budget; equalization transfers; separation of powers;
      All these keywords.

      JEL classification:

      • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
      • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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