THE FINANCIAL AND BUDGETARY CAPACITY OF LOCAL AUTHORITIES AS AN OBJECT OF PUBLIC ADMINISTRATION IN THE CONTEXT OF GLOBAL CHALLENGES AND THREATS
DOI:
https://doi.org/10.34132/pard2026.31.16Keywords:
public administration, decentralisation, European integration, regional policy, local authorities, local authority capacity, sustainable development, financial and budgetary capacity, local authority revenue, local authority expenditure, tax revenue, local self-government, local government bodies, threats, risksAbstract
This article examines the financial and budgetary capacity of local authorities as a key prerequisite for effective public administration in the context of contemporary global challenges and threats. It is argued that financial and budgetary capacity plays a decisive role in the system of local self-government, as it serves as the resource base for the exercise of own and delegated powers, the provision of high-quality public services, the maintenance of budgetary sustainability, and the achievement of sustainable local development goals. An analysis of academic approaches to interpreting the capacity of a territorial community has been carried out, the regulatory and legal foundations for its formation have been summarised, and the role of the financial and budgetary component within the structure of the community’s overall capacity has been defined. The concept of a territorial community’s financial and budgetary capacity has been clarified as an integral, multi-component and dynamic characteristic of its ability to generate, accumulate, allocate and effectively utilise financial resources on the basis of a sufficient and stable revenue base, budgetary autonomy, financial stability, strategic planning and adaptive management. The main components of financial and budgetary capacity have been identified, in particular revenue, expenditure, investment and management capacity, as well as budgetary autonomy and financial stability. It has been demonstrated that the formation of financial and budgetary capacity is significantly influenced by military risks, economic instability, inflation, migration processes, and energy, demographic, environmental and digital challenges, which lead to the transformation of the revenue base of local budgets, an increase in the expenditure burden and heightened financial risks. It is argued that strengthening the financial and budgetary capacity of local authorities requires a comprehensive combination of financial and economic, organisational and managerial, human resources, innovation and digital, and partnership tools. Priority areas include expanding and diversifying the revenue base, improving budget planning, enhancing the efficiency of budget expenditure, strengthening financial stability, stimulating investment activity, developing the human resource capacity of local self-government bodies, digitising financial management, and expanding cooperation between the authorities, business and the public. The practical significance of the results obtained lies in the possibility of using them to improve local budgetary policy, enhance the effectiveness of public administration and strengthen the socio-economic security of local communities.
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