Financial Mechanisms in Local Government across the Russian Federation

Abstract

The article examines negative trends in the development of local government in Russia. In many regions, despite the measures taken to avoid this, municipal budgets are still in deficit. Indeed, this phenomenon is becoming chronic in character. The main research objective of the article is to discover whether these trends are a result of fundamental causes that cannot be resolved by using partial tax system reforms or improving inter-budgetary alignment mechanisms at the sub-regional level. Negative trends in the development of local government in Russia is linked to the ignoring of important theoretical ideas about the nature of local government and economic mechanisms of its implementation. One way to avoid these problems is to clarify the nature of local government as a special system of governance separated from public administration. It is also desirable to highlight the particular financial resources that local authorities can deploy. On this basis the authors propose mechanisms that will help to form a stable financial base for the organization of local communities in Russia. It is concluded that the financial mechanisms of the local government system in Russia is in need of radical reform first of all at the institutional level. It is revealed that the solution to this problem can be achieved through the democratization of the budget process at the local level, as well as through the formation of new institutions that contribute to the implementation of this goal.