The team of the Regional Office of U-LEAD with Europe in the Kharkiv Oblast continues to consult local municipalities. It held an info session to answer questions from financial units of local self-government bodies.
According to Maryna Honcharenko, Adviser on Municipal Finance and Office Management, the topics that most pressing for local self-government include the limitation of the scope of directions for allocating the free balances of local budgets under martial law.
“In 2024, free balances of funds of local budgets and balances of funds of the special fund of local budgets (except for municipal institutions’ own revenues and subventions from other budgets, as well as funds from local internal and external borrowings), which were formed at the end of the budget period, will be allocated according to the decisions of the relevant local councils (of military administrations) exclusively within the directions provided for in Clause 22-8 of the Final Provisions of the Budget Code of Ukraine.
The list includes the following:
- Salaries and benefits of employees of budgetary institutions;
- Procurement of medicines and dressing materials;
- Provision of food;
- Payment for utility services and energy carriers;
- Service and repayment of local debt;
- Social welfare;
- Creation of conditions for the treatment, recovery and rehabilitation of persons affected by the armed aggression of the Russian Federation against Ukraine;
- Activities and work on territorial defence and mobilisation training;
- Support of security and defence forces;
- Design, construction and repair of protective civil defence structures (bomb shelters, anti-radiation shelters), dual-purpose facilities and arrangement of premises to be used for sheltering the population;
- Construction of fortifications;
- Payments related to the fulfilment of guarantee obligations of the Autonomous Republic of Crimea, the regional council or the urban municipality (with the possibility of transferring such funds to another local budget).
"Municipalities should keep in mind that one of the directions for directing free balances — service and repayment of local debt — applies to the service and repayment of the municipality’s total debt obligations for the return of received and outstanding loans as of the reporting date, arising as a result of local borrowing, but does not apply to accounts payable,” said Maryna Honcharenko.
She also answered the urgent questions of the municipalities regarding the use of an additional 4% of personal income tax; interbudgetary transfers, including the distribution of an additional subsidy for the functioning of local self-government; indexation of incomes in 2024; legally established mechanisms for financial support of national security and defence from local budgets.
The adviser provided clarification on the form of submission of forecast targets of local budgets for 2025-2026, planning of the minimum tax liability and implementation of effective legal requirements for disclosing budget information.