Based on the results of the first half of 2019, the experts analysed individual financial indicators of 806 amalgamated hromadas established in 2015-2018.

The experts analysed the data by four indicators:

1. income per capita;
2. budget subsidisation level;
3. share of expenditures for the maintenance of the management apparatus in the AH financial resources;
4. salary share in general fund expenditures.

For the analysis, 806 AHs were grouped according to the population size criterion. In addition, for a more accurate comparison, the cities of oblast significance that have undergone amalgamation or accession procedure under the Law of Ukraine “On Voluntary Amalgamation of Territorial Hromadas” were grouped separately:

• Group 1 – AHs with a population of more than 15 thousand residents;
• Group 2 – AHs with a population from 10 to 15 thousand residents;
• Group 3 – AHs with a population from 5 to 10 thousand residents;
• Group 4 – AHs with a population of less than 5 thousand residents;
• Group 5 – AHs-cities of oblast significance.

Groups	Grouping criteria	Number of AHs	Total population in the AH group, thousand people	% of the total population of AHs studied
Group 1	population of more than 15 thousand residents	96	2 031,0	24.4%
Group 2	population from 10 to 15 thousand residents	124	1 519,2	18.3%
Group 3	population from 5 to 10 thousand residents	267	1 881,7	22.6%
Group 4	population of less than 5 thousand residents	292	1 000,5	12.0%
Group 5	AHs-cities of oblast significance	27	1 882,8	22.7%
Total		806	8 315,3	100.0%

Based on these criteria, the experts presented results of the implementation of individual indicators of local budgets in 806 AHs over the first half of 2019:

Group 1

Group 2

Group 3

Group 4

Group 5

 

Indicator 1. The per capita income is calculated as the ratio of the total revenue of the general fund, excluding transfers, to the number of residents of the respective AH. That is, only general fund revenue mobilised to the budget in the relevant territory is included in the calculation.

According to the results of the first half of 2019, UAH 17.7 billion came to the budgets of 806 AHs. Hromadas received UAH 2129.2 per capita.

In 217 hromadas out of 806 AHs (26.9% of the total number) the per capita income exceeds the average in all AHs.

On average, one AH in Group 1 received UAH 39.3 million of own revenues, UAH 23.8 million in Group 2, UAH 13.6 million in Group 3, only UAH 6.9 million in Group 4, UAH 197.9 million in Group 5.

 

Indicator 2. The budget subsidisation level (share of base / reverse subsidy in general fund revenues) was calculated as the ratio of base or reverse subsidy amount to the volume of general fund revenues (excluding state budget subventions).

Hromadas-cities of oblast significance from Group 5 are least dependent on subsidy resources from the state budget. In Group 1, the highest level of subsidy is 50.5% (only in one hromada the indicator exceeds 50%).

 

Indicator 3. The share of expenditures for the maintenance of the management apparatus in the AH financial resources is defined as a percentage of expenditures for the maintenance of the management apparatus of local self-government bodies in the amount of general fund revenues (excluding all types of transfers from the state budget).

Group 1 includes 47 AHs that have management expenditures exceeding 20% ​​of own revenues, of which 50.7% in one AH.

Among Group 2 AHs, management expenditures in 83 hromadas exceed 20%.

In Group 3, namely in 217 hromadas, management expenditures exceed 20% of own revenues.

In Group 4, the number of AHs with management expenditures in excess of 20% of own revenues is 267.

In Group 5 there are 10 AHs-cities of oblast significance with expenditures on management maintenance exceeding 20% of their own revenues.

 

Indicator 4. Salary share in general fund expenditures is defined as a percentage of general budget expenditures on salaries with accruals to the amount of general budget fund expenditures excluding transfers from the AH budget to other budgets.

The average salary payment expenditures per AH is: 74.8% in Group 1 (the highest ratio of expenditures on salaries is 83.9%), 73.7% in Group 2 (the highest indicator of salary expenses amounts to 91.3%), 74.8% in Group 3 (the highest indicator of salary expenditures is 96.4%), 76.7% in Group 4 (the highest ratio of expenditures on salaries makes up 93.2%), 42.6% in Group 5 (the highest indicator of salary expenses amounts to 84.3%).

Based on the analysis, experts have suggested that one of the best options for further development of hromadas with low financial capacity is their accession to other hromadas and formation of a larger AH by area and population. Even if such an AH does not have economic prospects for development at the moment, such an amalgamation will allow to optimise the territorial structure of local councils, increase territory management efficiency, improve investment attractiveness (due to larger territory and more labour resources) and increase the level of expediency of capital investment in the hromada.

These materials were prepared as a result of local budget performance by 806 AHs over January-June 2019 on the basis of the data provided by the Ministry of Finance of Ukraine, State Treasury Service of Ukraine, State Statistics Service of Ukraine, openbudget.gov.ua data, by the experts of the U-LEAD with Europe Programme and SKL International project:

• Viktor Ventsel, U-LEAD with Europe Programme expert
• Igor Gerasymchuk, SKL International project expert

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