If the draft State Budget and amendments to the Budget Code are adopted as presented, the local budgets will not have sufficient funds for all necessary expenditures, according to local self-government representatives.

Major requests of city mayors:

• transfer all established amalgamated hromadas into direct interbudgetary relations with the State Budget,
• not to collect local excise tax on fuel from local governments,
• enshrine a clear percentage distribution of all funds transferred from the central level.

Hromadas receive about UAH 8 billion from the excise tax on fuel. The mayors say that without these revenues, many hromadas will not have the money to repair house surrounding areas, sand the streets, clear snow. “According to our analysis, for certain hromadas and settlements, excise tax funds make up 80% of revenues in the budget structure, in most – up to 30% of revenues. This is the fourth major source of income, after the PIT, land payments and a single tax,” says Oleksandr Slobozhan, Executive Director of the Association of Ukrainian Cities.

According to him, under the formula proposed by Ukravtodor and the Ministry of Infrastructure, only half of this sum, 4 billion hryvnias, can return to local budgets.

“We are again in a situation where the state budget lacks funds, the Ministry of Finance looks for where to find them and finds them in local budgets… We are in no way confronting the problems of local self-government and national problems: financing of the Pension Fund, the army, provision of timely servicing of external borrowings. But the Ministry of Finance does not understand what the challenges are,” said Vladyslav Atroshenko, Mayor of Chernihiv.

If the budget is adopted in the way proposed by the Ministry of Finance, Chernihiv's development budget in 2020 will be about 150-200 million, compared to 650 million in 2019. Even these funds, the mayor says, were enough to renovate less than 1% of municipal infrastructure.

“The compromise position proposed by hromadas is to support draft law No 2231, which envisages to leave the excise tax on fuel available to hromadas for 2020 to produce a formula calculation of road industry funding from the Road Fund, or amendment 209 to the Budget Code. Our proposals do not require additional burden on the state budget. They provide for a fair allocation of available financial resources, taking into account the interests of local self-government and adhering to the principles of budgetary decentralisation,” says Oleksandr Slobozhan.

The Association also proposes to establish a formal distribution of subsidies in the educational and medical sectors, which will take into account the number of AHs formed in the oblast and location of the infrastructure that requires maintenance with these funds.

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