Municipalities’ own revenue as an instrument for financial independence

Abstract

Research background: The article presents an analysis of the trends relating to the relation of the own income of municipalities and the received from the state budget financial resources compared with other countries which are chosen according to their form of state organization, as well as the financial relations of the municipal budget and the state budget, the budgetary relations and the applied fiscal rules. Purpose of the article: The topicality of the issues connected with the financial decentralization of municipalities and the existing problems is indisputable, as the analysis and the assessment of the financial independence of municipalities are made according to a basic index – their own income. The main problem that is connected with the independence of municipalities - lack of enough own income requires the exertion of serious efforts so that the financially weaker and local communities are protected. The globalization and the free movement of people have an adverse effect on the own income of the municipalities in the country because of their depopulation and to a large extent, they depend on the state subsidies and transfers which seriously limits their independence. Methods: The methods of analysis include a comparative one and an analysis of the constitutional and legal organization of municipal budgets in Bulgaria as well as an analysis of the structure of their own income. Findings & Value added: The analysis allows us to make suggestions about legal changes and recommendations for more useful budgetary relations between the municipal budgets and the state budget.

Keywords

• budgetary income
• budgetary relations
• fiscal rules
• budgetary process