‘Model’ Budgets: Consequences for the Russian Federal Subjects

Abstract

The article studies the proposed method of distribution of subsidies among the subjects of the Russian Federation based on the calculations of ‘model’ budget. The authors analyzed the real consequences of the mechanism of redistribution of total subsidies aimed at equalizing the budgetary security and clarified the method of increasing the subsidies to the least secure regions to realize two goals: 1) provide equal access to constitutional rights to all the citizens; 2) limit the burden on federal budget and decrease the level of subsidies to the federal subjects of Russia. The analysis of consequences of using ‘model’ budget was based on the Far Eastern subjects of Russia. There are positive and negative sides to changing to the ‘model’ budget method for the Far East. In case of using the ‘model’ budget there is a discrepancy between budget expenses and estimated demand for subsidies. It is necessary to fully account for appreciation factors and coefficients, population numbers and the specifics of transportation expenses of institutions that provide the access to constitutional rights, including the specifics of transport network of every federal subject. The hypothesis is that the ‘model’ budget has to be based on the norms of financial expenses required to carry out the authority by a particular subject. Otherwise the regional budgets will be based on the current actual average expenses, which will lead to the transfer of budgetary means from the northern and Far Eastern subjects to the others

Keywords

• ‘model’ budget
• budget transfers
• subsidies on equalizing the budgetary security
• inter-budget relations
• subject of the Russian Federation
• Far Eastern Federal District
• Russian Federation