This time, participants talked about how local governments should respond to the ongoing financial standing deterioration. Local governments’ in-house revenue have been on the decline again this year, primarily for reasons of non-compensated gaps in personal income tax revenue. “Were it not for amendments to the respective Law from 2019 onwards, local governments could have earned an estimated 82 billion zlotys. As it is, revenues we will be lodging a total of 52 billion zlotys this year, according to a pre-designed schedule of 12 equal instalments. This translates into a decrease of 32 billion, whereas the government have provided for compensation of 13 billion, less than 40% of the deficit,” Executive Director of the Office of the Association of Polish Cities Andrzej Porawski remarked during the seminar.
He further reminded attendants that while 2023 was not the first year of financial troubles, it would be the one of their particular impact. Last year, the deficit totalled just under 20 billion zlotys, local governments compensated to an identical tune of a mere 13 billion.
Considerable local government budget gaps regardless, unfair allocation of funds provided by the central government is another factor. Funds are distributed in a manner in no way reflecting greatest shortage areas, the allocation criteria entirely different. Examples include Warsaw (recipient of less than 5% of law-resultant losses), and a small rural municipality (recipient of over 500% of what it had lost as a result of taxation law amendments).
The current financial condition has forced local governments into non-standard activities and “non-local-government” behaviour. Pursuant to laws designed to provide a structure for local governments in Poland, municipal units were expected to take an interest in development, and stimulate it with greater in-house revenue in mind. “Today, we are relegated to grants and compensations distributed with considerable delay, and to obscure criteria. Firstly, this affects our planning capacity; secondly, instead of nurturing local development, we have to meet requirements of people responsible for fund distribution in various competitions and programmes, and adjust local concepts to said competition rules accordingly. In consequence, people announcing competitions will in all actuality have the power to make decisions regarding the direction of local community development. Deprived of own development funding, local governments will be forced to reach for external sources ever more frequently,” the Association of Polish Cities Office Director emphasised.
Given the new circumstances, the Association of Polish Cities decided to organise a special-purpose seminar with a focus on aforesaid issues, and support cities and towns by identifying condition diagnosis tools on the one hand, and showcasing good practices in fundraising for development in taxing times on the other. Debates thus focused on the use and importance of social and economic data in financial planning based on the Local Development Monitor, responses to questions regarding minimising risk in financial planning, and public service cost estimating methods.
Representatives of cities and towns participating in the EMPIRIAE Experience Exchange Network shared their knowledge. Deputy Mayor of the Town of Krosno Tomasz Soliński, Ph.D., spoke of the local government employing factoring in investment delivery. Treasurer of the Stalowa Wola Municipality Michał Buwaj described the scenario-based take on financial strategy. The importance of information in project management from a project manager and municipal treasurer’s perspective was presented by “Urban Energy Generator as a Source of Konin’s Success” Project Manager Katarzyna Rejniak and Deputy Treasurer of the Zgierz Municipality Grzegorz Kowalczyk.