Problems of Budget Expenditure Allocation Among Villages within a United Territorial Community (UTC)

Abstract

The article examines the current state of local budget formation in the context of financial decentralization, taking into account recent amendments to budgetary and tax legislation.The purpose of the article is to study the problems of formation and use of local budget funds. Development of proposals for improving the existing mechanism of functioning and filling of local budgets. The state and local self-government share responsibilities for providing public services to citizens. The effectiveness and scope of local governments in delivering these services largely depend on their financial capacity. Using the example of the Spasskaya United Territorial Community, the main sources of budget revenue were analyzed. It was found that the community budget is primarily funded through tax revenues, non-tax revenues, and transfers. A large share of tax revenues is occupied by the personal income tax and the single tax. The Spasskaya community also earns money from renting out movable and immovable property. Transfers are also of considerable importance. Among the expenditures, expenses for education, healthcare and maintenance of the administrative apparatus occupy the largest share. Investigating the state and development of the Spasskaya community, a single problem is observed for all united territorial communities, how to fairly distribute expenditures between the villages of the community, based on the fact that income from them is uneven. This study proposes indicators for calculating the development of the community budget based on composite coefficients. These indicators aim to ensure a more equitable distribution of revenues across the expenditures of each village within the community. The calculation is based on data such as the overall development of the community budget, total village (or settlement) income, community population, income per capita, and the economic capacity coefficient of each village or settlement. The proposed coefficients operate on the principle of proportional return: the more income a village generates, the more funding it subsequently receives for its development. This approach encourages healthy competition among villages and can serve as a mechanism for promoting a fairer distribution of community funds for local expenditures.