Selected issues of the development of small municipalities in the Czech Republic, financing of municipalities

Decentralization of decision-making on the availability of essential public goods for regional and local level raises questions regardless of ability to ensure or guarantee the supply by the small municipalities. It affects the delicate problem of fiscal decentralization and own limits of decentralization process. In this paper, we deal with problems concerning primarily the development of small municipalities as independent public corporations, their ability to play the self-government role and to ensure the availability of essential public goods and services. The main criteria for defining small rural communities are the population and the status of municipality in the settlement structure, which is a predetermined by range of services provided at territory of municipality (market services, public services) to its citizens and residents of surrounding villages. We deal with problems of financing small communities, their participation in the distribution of revenue from shared taxes, the availability of other resources. We monitor the factors that enter into models of reallocation of public resources. We base their findings mot only on information from literature, but also from terrain research, which not only confirmed some previously published facts, but allowed to reveal the factors that significantly affect the financial situation of small municipalities. This led to the determination of parameters, the key mechanism for setting the allocation of public resources. On the basis of the investigation, we analyze the parameters, the key mechanism for setting the allocation of public resources. In conclusion, the authors summarize the main issues and articulate the principles that should be respected in the formulation and adjustment of the budget determination.