The Financing of Local Self-Government in Conditions of Slovak Republic

Abstract

The local self-government represents in the Slovak republic the most abundant component of public administration. Due to the fragmentation of our territory and abundance of villages in it, it is the issue of their financing, one of the most important. System of financing municipalities has been developed which were signed in his current form. Significantly changes in this area helped fiscal decentralization, strengthening municipalities‘ right to raise their own resources. The fiscal decentralization also changed system of financing in Slovak local self-government. The municipality is able to make their own decision about tax incomes and their amount. And they can make decisions about areas where will be incomes used. But on the other hand, there is also financial dependence on higher level of government. The biggest part of local revenues consists of shared taxes. Decisions about this kind of incomes makes central government, so self-government cannot influence them. Although shared taxes are important source of finance, municipalities in Slovak republic have very low financial self-sufficiency. It means that municipalities have lower tax incomes than total revenue. The cash flow of local self-government is weak, too. The municipalities have usually higher expenditures than their incomes are. And there are a lot of externalities such as financial and economic crisis, which limited resources for municipalities. At present municipal budgets consist of tax and nontax incomes, fees and charges, incomes from business, financial gifts, state budget subsidy, loans and advances. But the most important is to help local self-government to improve make their own revenues and also minimizing the effects of government.