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Budgetary revenues equalization methods in Russia
Orekhovsky P.

Budgetary revenues equalization methods in Russia (abstract)


The article is dedicated to analysis and stricture of interbudgetary levelling process carrying out by the Ministry of Finance in the Russian Federation. The main arguments described in this publication can be brought to the following theses:

  • From the time of the Soviet Union there was a great differentiation in the volume of budgetary services in regions and municipalities in Russia. It was concerned with the fact that main financial resources were allotted through different branch ministries. The Ministry of Finance territorial agencies carried out a moderate part of budgetary mandates. At the beginning of 1990s in the course of the most part of Russian enterprises privatization their social liabilities were passed to municipalities along with social service, housing and engineering infrastructure. At the same time revision of budgetary enterprises (i.e. analysis of budgetary institutions activities, bringing them up to unified standards counting on population) was not done by financial authorities. Furthermore the expert community even did not discuss this measure. Thus the mentioned differentiation of budgetary services didn’t only remain but became stronger. That was also caused by differentiation of municipal revenues.

  • The aim of interbudget equalization was realized in the term of “minimal social standard” (norm) that was assumed to be a basis for calculation of minimum budget resources requirement. Then the existing of that time legislation stipulated the calculation of subsidy necessity for the most of Russian regions and municipalities those are financial support receivers now. Nevertheless the term of minimal social standards disappeared in the new redactions of the Budgetary code and local government legislation. Instead of this the term of the average budgetary revenues is used both in regions and in the Russian Federation on the whole. At the same time the number of budgetary mandates passed to municipalities nominally decreases: the questions of education and health protection financing partly become state duties.

  • In consequence of the decrease of the budgetary mandates a number of different methods are being developed where average budgetary revenues per capita (but not average expenditures as before) are being equalized. As a result those municipalities where own revenues (without subsidies) were below the average now get less. However it’s not concerned with real requirements of budgetary system maintenance expenditures. In cases when all the region is subsidized like the Altai territory consistent realization of these principals means that the most part of social institutions will be liquidated.

  • At the same time financial resources centralization in the federal budget is going on. Thus Ministry of Finance of the Russian Federation being the budgetary reform initiator actually shifts the main burden of the reform to the regions and municipalities. Moreover the absence of unified budget services standards causes the aggravation of social inequality and the growth of conflicts in the regions as it has already been shown during the social privileges monetization.
All of these theses are developed in this article in detail. Also the formulas from the interbudgetary equalization method recommended by Ministry of Finance are given.

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