As already reported, 10% of fines for traffic violations will begin to be credited to the municipal budgets starting from February 2023. However, under budgetary legislation, this should have happened a year earlier – after February 15, 2022. U-LEAD with Europe experts analysed the data for 2022 and found the main disproportions in the distribution of such revenues last year.
The share of administrative fines for administrative offenses in the field of road safety, recorded automatically by the respective control devices – is a new revenue source for municipal budgets established in 2022. Amendments to the Budget Code of Ukraine (BCU) dated February 15, 2022 allocated 10% of such administrative fines to the municipal budgets depending on where the offense was recorded.
It was assumed that the fines allocated to municipal budgets would motivate local authorities to install auto-fixation cameras, thus improving traffic safety in municipalities and providing additional revenue source for their budgets. Local authorities have mandate to install such cameras after National Policy approval.
Many of the cameras were turned off after the russian invasion on February 24. Regain of the fines recite to the budgets became possible only after May 16, except for municipalities located in the combat zone and adjacent areas of Kharkiv, Luhansk, Donetsk, Zaporizhzhia, Kherson and Mykolaiv regions where the cameras have been still turned off.
Since July 2022, revenues began to be credited to municipal budgets. However, in July, the only hromada to which such revenues were enrolled was Ternopil municipality. In August, 25 municipal budgets already received such revenues. The improper work of system of transferring revenues to the municipal budgets is evidenced by a different number of municipalities that received revenue in different months. In particular, 9 municipalities received fines to their budgets just in one month.
Monthly dynamics of enrollment in 2022
|
|
July |
August |
September |
October |
November |
December |
|
Number of municipalities |
1 |
25 |
28 |
26 |
32 |
37 |
|
Credited to municipal budgets, thousand UAH |
4.3 |
353.7 |
351.6 |
286.0 |
393.7 |
799.0 |
Due to BCU, 90 % of the collected fines should be enrolled to the state budget while 10% - to municipal budgets. As total collection of the fines was UAH 620.6 mln by the end of 2022 it was expected to have 10% of this sum for municipal budgets that is UAH 46,8 mln. However, the actual distribution of these revenues demonstrates miserable incomes to the budgets of municipalities.
Distribution between the state budget and municipal budgets
|
|
Revenues in 2022, mln UAH |
Distribution proportion, % |
Expected normative distribution, mln UAH |
Difference (1-3), mln UAH |
|
|
1 |
2 |
3 |
4 |
|
State Budget |
466,1 |
90 |
421.5 |
44,6 |
|
Municipal Budgets |
2,2 |
10 |
46.8 |
-44,6 |
|
Total |
468,3 |
|
|
|
Disproportions identified in the fines’ distribution between the state budget and local budgets are also accompanied by uneven allocation of this revenue among regions as well as municipalities within regions.
Receipts to the budgets of municipalities in 2022
|
Oblast |
Number of municipalities |
Total fines receipts, UAH |
|
Ivano-Frankivska |
1 |
376 427.1 |
|
Vinnytska |
2 |
239 972.7 |
|
Dnipropetrovska |
2 |
221 850.0 |
|
Poltavska |
4 |
213 550.5 |
|
Kyivska |
6 |
199 359.0 |
|
Khmelnytska |
5 |
168 504.9 |
|
Kirovohradska |
2 |
142 404.6 |
|
Kyiv city |
1 |
112 338.8 |
|
Cherkaska |
2 |
102 850.0 |
|
Volynska |
2 |
83 300.0 |
|
Ternopilska |
10 |
74 222.0 |
|
Zhytomyrska |
3 |
68 495.8 |
|
Zakarpatska |
2 |
49 300.0 |
|
Zaporizhska |
1 |
46 415.0 |
|
Rivnenska |
1 |
39 956.8 |
|
Chernivetska |
1 |
34 850.0 |
|
Lvivska |
1 |
14 450.0 |
|
Total |
46 |
2 188 247.1 |
The probable inconsistency of the volume of revenues to municipal budgets is indicated by a small number of municipalities with such type of revenues – 46 municipalities, only 7 of which account for 57% of such revenues.
The record holder was the Dolyna municipality, which was the only one in the Ivano-Frankivsk region with such revenues credited – 376.4 thousand UAH, or 17 % of revenues for all municipalities in Ukraine.
The highest share the fines were allocated to the Dolyna municipality of the Ivano-Frankivsk oblast – UAH 376 427, that is more than 17% of total fines receipts to municipalities in Ukraine. The largest number of municipalities that received the fines are in the Ternopil oblast – 10 municipalities. The total amount is not significant – only UAH 74,000, main share of which was enrolled to three municipalities (Berezhany, Chortkiv and Ternopil).
The low level of receipts in cities-regional centers is also noticed. Such revenues were enrolled to budgets of just 3 cities – Ternopil and Khmelnytsky, as well as in Kyiv.
Main findings:
1. The fines revenue allocated to the municipal budgets are not consistent with the 10 % of the overall amount collected based on the traffic law violations recorded by the cameras located in municipalities. This is evidenced by the limited number of municipal budgets that received such payments – only 46.
2. Only UAH 2.2 mln of the fines were allocated to the municipal budgets, which is UAH 44.6 mln less than the amount is to be received by the local budgets according to the set proportion of distribution.
3. The revenues to the budgets of most municipalities looks unrealistically low (for example, a measly UAH 136 in the city of Khmelnytskyi).
4. In most oblasts, revenues were allocated only to 1 municipal budget, and in Chernihiv oblasts such revenues were not allocated to municipal budgets at all.
5. Among the regional centers, such revenues occurred in 3 cities only – Ternopil and Khmelnytskyi, as well as in the city of Kyiv.
6. The share of revenues of municipal budgets is less than 0.5%, while it should be 10% according to the Budget Code of Ukraine.
7. Low receipts of the fines to the municipal budgets are related to deficiencies in the system of distribution of collected fines between the state and municipal budgets.
Revenue potential
The amount of revenue from administrative fines in the field of road safety have increased in the previous years. The amount collected in 2021 made up UAH 2.3 bln, of which UAH 626.4 mln were allocated based on the traffic law violations recorded by the means of automatic fixation. This indicates the potential to increase revenues to municipal budgets by more than UAH 62.6 mln if the distribution system works properly and the network of control devices is expanded.
An increase in the share allocated to the municipal budgets can further strengthen the motivation of LSGs to take such measures. ACU advocated allocation of corresponding 50% of such type of revenues to municipal budgets. Considering the fact that the local network of fixed technical control devices can be developed at the expense of the local budgets, the increase of the relevant share of revenues to 50% seems quite justified.
