Areas of Improvement Legal and Methodological Intergovernmental Fiscal Relations

Intergovernmental fiscal relations – a relationship between the State, the Autonomous Republic of Crimea and local self-governments under budget financial resources necessary to carry out the functions envisaged by the Constitution and laws of Ukraine. The purpose of regulation mizhbyud-zhetnyh relations is to ensure consistency between the powers of expenditure stipulated by legislative acts of Ukraine on budgets and budgetary resources, which must enforce these powers. Importance of the subject determined that intergovernmental relations are the main instrument for ensuring the proper functioning of the national budget system.

Key problems in the legal regulation of intergovernmental relations should note the following. In the legal field, they remain nevrehulova procedural issues medium-term macroeconomic and budgetary planning, which in turn negatively affects the efficiency of relations between budgets. In the Budget Code provided only the general issue of implementation of this procedure, but does not provide a mechanism and procedure of the medium-term macroeconomic and budgetary planning. The Law of Ukraine “On state forecasting and elaboration of programs of economic and social development of Ukraine” laws do not envisage the formation of a consolidated balance sheet of financial resources in the medium term. And under this Act the term “key macroeconomic and other indicators and balancing economic and social development” – not specified, and does not need an aggregate balance of the financial resources of the budget system. Also nevrehul-ovanym consistency remains the medium-term budget planning purposes and priorities of the medium-term public policy.

The distribution of taxes and tax collection between the different levels must be established for a period of 3-5 years, because only on such a basis becomes possible effective financial and budget planning in the medium perspektyvi1.

As part of improvement planning procedures expenditure budgets of all levels and the transition to the use of software-based method at the local level should be reviewed to ensure methodological planning spending a year and medium term based on the analysis of budget programs in previous budget years and amend the Budget Code.

The current regulatory framework of inter-governmental regulation has a number of shortcomings in connection with what needs improvement. Specifically, it dealt primarily with inconsistencies by the Budget Code and the Law of Ukraine “On Local Self-Government in Ukraine” on the distribution of income and expenditures of local budgets. In the Budget Code provides no revenue sharing and local spending on their own and delegated. Art. 1982 Budget Code provides for expenditure on the exercise of powers that are performed by the state budget and local budgets: 1) costs of providing state of the constitutional order, public integrity and sovereignty, independent judiciary, and others provided by this Code that can not be transferred pursuant to the ARC and local government, 2) costs, which are defined functions of the State and can be transferred to the execution of the ARC and local governments to ensure the most effective implementation of the principle of subsidiarity, and 3) costs of implementation of rights and duties’ NMU ARC and local governments, a local nature and are defined by the laws of Ukraine.

It costs as defined claim 1, implemented by the State Budget of Ukraine and charges specified in paragraphs 2 and 3, shall be covered from local budgets, including transfers from the State Budget of Ukraine.

LK Voronova determines that the functional authority of state and local governments are divided into: nedelehovani delegated to and own. Nedelehovani state powers related to ensuring the constitutional structure of the state, with sovereignty, border protection and enforcement. Such powers belong only to state and can not be transferred to local governments. Therefore, the costs associated with them, financed from the State budget. Since it is funded by public administration, legislative and executive authorities, the Secretariat of President of Ukraine, the judiciary, international activities, basic research, public debt servicing and other national programs (Article 87 of the Budget Code). Delegated state powers related to the functions of the State, but they can pass local government to better their performance. However, Art. 1985 Budget Code has a warning: right on spending the state can delegate to the Council of Ministers of the Autonomous Republic of Crimea or local self-government only in terms of the transfer of budgetary resources as stipulated by the respective budgets of national taxes and duties (mandatory payments or shares, and transfers from the State Budget of Ukraine). Own powers of local governments – it functions entrusted by the Constitution and laws of Ukraine “On local government in Ukraine” to local authorities. Expenditures related to the execution of their powers of local governments, financed by local byudzhetiv2.

Art. 1986 Budget Code establishes criteria for the distribution of expenditures among local budgets – the fullness of Service and the approach to the ultimate consumer. According to these criteria and based on the principle of subsidiarity, expenditures are divided into groups:

The first group – the cost of financing of budget institutions and activities that provide essential social services guaranteed by the State and are located close to beneficiaries (financed from the budgets of villages, towns, cities and their associations);

second group – the costs of financing of budget institutions and activities, providing basic social services, government guaranteed to all citizens of Ukraine (funded from the budgets of the Autonomous Republic of Crimea and oblast significance, and district budgets);

third group – the cost of funding of institutions and activities that provide social services guaranteed by the state for certain categories of citizens, or funding, the need which exists in all regions of Ukraine (funded ARC and regional budgets)

The budgets of Kyiv and Sevastopol finance expenditures of all three groups.

Legal analysis of current legislation shows that the first duty of establishing the appropriate relationship between government officials and local government and local administrations imposed on the latter. In particular, it follows from part 6 of Art. 119 of the Constitution of Ukraine, which indicates that it is the local state administrations on their respective territory ensure collaboration with local governments, therefore, is enshrined legal principle of special optimal interaction of the executive power of local government. It should be remembered that the executive authorities interact with local governments, first, on their common interests, and second, ascribed to their competence, including the issues of law and order, protection of rights, freedoms and legitimate interests of citizens.

In the legal field, within a given jurisdiction, on the basis and manner specified by legal provisions, and a core of relations between local administrations of the subjects of local government are the latest delegate certain powers of civil authorities. In turn, district and regional councils which represent the common interests of territorial communities of villages, towns and cities within its authority and powers assigned to them by village, township and city councils (2 tablespoons. 10 of the Law “On Local Government in Ukraine) decision that the local administrations delegation of certain powers to address specific issues of local importance.

By the way the definition of the organizational and legal relationships between public administrations and local authorities in the implementation of the relevant authority is delegated in accordance with the administrative reform in Ukraine, one aspect of reform and territorial structure of local government.

Local governments, with decentralized nature, which excludes items of hierarchy (meaning the local governments of various municipalities), in exercise delegated powers associated with the solution of national problems in their activities combine cent ralizovane management. At the same time central government executive local public administrations combined with decentralization, ie implementation of local government powers delegated to them by the respective radamy3.

IO Lunin also stresses that the distribution of powers necessary for the law on local budgets for certain income. Local authorities, based on their assigned functions and revenues, costs have to plan relevant budgets and take responsibility for their vykonannya4.

However, in accordance with Part 4 of Art. 63 of the Law of Ukraine “On Local Self-Government in Ukraine”, the revenues of local budget revenues should be allocated separately required to carry out their powers and revenue to enforce the law delegated executive powers, and in accordance with Part 7 of art. 64 This requirement applies to the expenditures of local budgets, which must be divided into two parts: costs associated with implementation of their own powers of local governments, and the costs of carrying

delegated by law powers of the executive vlady5. Thus, the absence of a clear separation of delegated legislation and its own budgetary authority of local governments in planning and execution of local budgets does not allow transparent use of the State Budget funds provided for delegated functions. The negative side, certain inconsistencies in the legislation is the lack of effective financial control over the use of funds provided in the form of equalization.

Need to improve regulatory and methodological framework which regulates the formation and distribution volume of subventions from the state budget to local budgets. Today the procedure of forming and distributing subventions from the state budget to local budgets, creating conditions for ineffective use of subsidies in general is not sufficiently transparent. This contributes to the absence of legislatively established criteria for the distribution of subsidies between different areas, as well as the selection of projects to be financed by subsidies at the local level. General functioning system of intergovernmental transfers saves excessive dependence of local budgets from the center and also requires improving the relevant legislation.

Issues in intergovernmental relations require optimization of methodological support, especially improving the method using formula approach to inter-governmental equalization formula and intergovernmental transfers. Despite the changes and additions, the formula allocation of intergovernmental transfers between state and local budgets has several shortcomings and uncoordinated. The changes to the methodology of calculation of equalization, are unsystematic and non-transparent nature and thereby undermine the clear foundation formula system that operates in Ukraine. The main reason for imperfections formula allocation of intergovernmental transfers is the actual uncertainty of minimal social standards and norms for provision of minimum required list of services, calculating their costs (in social service, health care, providing educational institutions, etc.).

We support the position of 3.1. Peroschuk questions regarding the application of factor influence coefficients, which are in the Formula of distributing intergovernmental transfers. You must clearly write out the computation and use of these coefficients. As an index of relative fiscal expedient not expect this figure as an average tax revenue for the preceding three years, and determine through a trendline. In this case zhladzhuvavsya the effect of sharp fluctuations in collecting taxes for years. The same approach must be used to calculate indices of relative fiscal capacity for regional, district and the budgets of regional centers and cities of Kyiv and Sevastopolya6.

Therefore conclude that the optimization of the national model of intergovernmental relations requires appropriate amendments to legislation, while improving the appropriate methodological support. In this connection it is expedient to amend the Budget Code to align Budget Code and the Law of Ukraine “On local self-government in Ukraine on a clear separation of legislative and delegated budgetary authority of their own local authorities specify the distribution of expenditure responsibilities between levels of budgets based on the principle of subsidiarity, establishing criteria for the formation, distribution and order granting subventions for investment projects from the state budget to local budgets between different areas.

Methodological framework of intergovernmental relations requires improving the method using formula approach to inter-governmental equalization formula and on an equal footing with the obligatory definition: first, the size of minimum social standards and norms for provision of minimum required list of services, and second, calculating their value. Implementation of effective procedures for monitoring and analysis of intergovernmental relations need improvement criteria for assessing their effectiveness levels: State budget – municipal budget, local budget – municipal budget.