Contrasts in Budgetary Opportunities of City-Regions and City-Municipalities in Russia and the Experience of Germany

Abstract

This paper compares the experience of Russia and Germany in terms of the differentiation of cities of various status in the territorial system according to their powers and fiscal revenues. We analyze the data on the number and population sizes of urban districts (okrugs) in Russia and their analogues in Germany, as well as the data on the execution of budgets of city-municipalities and city-regions. It is shown that the system of territorial division in Russia at the municipal level differs from the German one by significantly greater fragmentation and the dominance of urban districts with a small population. In both countries, local budgets are aimed at solving social problems and developing local infrastructure, and their approaches to secure tax sources for local budgets are also similar. At the same time, the contrast between the fiscal indicators (revenues and expenditure per capita, the share of interbudgetary transfers in revenues) of city-regions and city-municipalities in Russia is much greater than in Germany, which limits the ability of the authorities in urban districts to pursue an independent economic policy, including support for the development of foreign economic relations. We suggest the directions for the growth of the revenue base of local budgets in Russia (the complete transfer of tax payments from small businesses to local budgets, improving the quality of accounting for land and real estate, and management of nontax revenues) and endowing different powers to local governments of urban districts with different population sizes.

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Notes

  1. 1.

    Spatial Development Strategy of the Russian Federation for the Period until 2025. Approved by Order of the Government of the Russian Federation no. 207-r of February 13, 2019. http://static.government.ru/media/files/UVAlqUtT08o60RktoOXl22JjAe7irNxc.pdf. Accessed February 28, 2020.

  2. 2.

    Federal cities may include intracity municipalities, but in practice the latter do not play an important role. In this paper, we do not consider urban settlements (municipalities) that are formed from cities with a smaller population size (than urban districts) and therefore they are not of interest for our study because, due to their small size, they cannot claim the status of global cities.

  3. 3.

    Daten aus dem Gemeindeverzeichnis Kreisfreie Städte und Landkreise nach Fläche, Bevölkerung und Bevölkerungsdichte. https://www.destatis.de/DE/Themen/Laender-Regionen/Regionales/Gemeindeverzeichnis/Administrativ/04-kreise.html. Accessed February 28, 2020; Finanzen und Steuern. Rechnungsergebnisse der Kernhaushalte der Gemeinden und Gemeindeverbände (2019). https://www.destatis.de/DE/Themen/Staat/Oeffentliche-Finanzen/Ausgaben-Einnahmen/_inhalt.html. Accessed February 28, 2020; Finanzen und Steuern. Vierteljährliche Kassenergebnisse des öffentlichen Gesamthaushalts (2018). https://www.destatis.de/GPStatistik/receive/DEHeft_heft_00077589. Accessed February 28, 2020.

  4. 4.

    Population of the Russian Federation by Municipalities as of January 1, 2019. Statistical Bulletin of Rosstat. http://rosstat.gov.ru/compendium/document/13282. Accessed August 8, 2019.

  5. 5.

    Consolidated Budgets of Federal Subjects and Budgets of Territorial State Extra-Budgetary Funds. Federal Treasury. http://www.roskazna.ru/ispolnenie-byudzhetov/konsolidirovannye-byudzhety-subektov/. Accessed February 17, 2020.

  6. 6.

    Amendments by Federal Law no. 87-FZ of May 1, 2019 to Federal Law no. 131-FZ of October 6, 2003 On the General Principles of Organization of Local Self-Government in the Russian Federation. http://pravo.gov.ru/proxy/ips/?docbody=&nd=102083574. Accessed February 28, 2020.

  7. 7.

    Germany’s situation in terms of the level of socioeconomic development of the capital city is not typical for countries worldwide; in the system of interbudgetary relations, Berlin is one of the regions-recipients. The level of economic development of the former East Berlin, like all the eastern regions after the unification of Germany, turned out to be below the level of development of the western regions. The former West Berlin faced economic difficulties, because after the unification of Germany its entrepreneurs lost the support they had been previously receiving as compensation for the exclave position of West Berlin.

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Funding

This study was supported by the Russian Foundation for Basic Research, project no. 18-014-00044 A “The Role of Global Cities in the Transformation of State Regulation of Territorial Development (Experience of OECD Countries).”

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Correspondence to O. V. Kuznetsova.

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Translated by K. Lazarev

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Kuznetsova, O.V. Contrasts in Budgetary Opportunities of City-Regions and City-Municipalities in Russia and the Experience of Germany. Reg. Res. Russ. 10, 522–529 (2020). https://doi.org/10.1134/S2079970520040152

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Keywords:

  • Russia
  • Germany
  • federal subjects
  • municipalities
  • urban districts
  • local budgets
  • taxes
  • nontax revenues
  • interbudgetary transfers
  • globalization
  • foreign economic policy