Impact of the global COVID-19 pandemic on the use of local government funds

Abstract

Research background: Municipalities, as entities of local government, finance the performed activities on the basis of the budget, which has a program structure. However, due to the global COVID-19 pandemic, municipal incomes have declined. Municipalities therefore had to adjust their budgets and reduce expenditures, which could disrupt several processes in municipalities. Purpose of the article: The main aim of the paper is to analyse the budgets of selected local government entities and assess the impact of the COVID-19 pandemic on the use of funds by municipalities with an emphasis on the security area. Methods: In order to assess the impact of the COVID-19 pandemic on the use of funds by municipalities, a detailed analysis of the budgets and final accounts of selected municipalities will be carried out. The amount of income and expenditure in these municipalities before and after the outbreak of the COVID-19 pandemic will be examined. For this purpose, basic scientific methods and methods of mathematical statistics will be used. Findings & Value added: Based on the assessment of the COVID-19 pandemic impact on the budgets of municipalities, it will be possible to determine the activities that experienced the largest revenue shortfalls due to the fact that the municipalities could not finance them from their revenues. The contribution of the paper will be recommendations that should prevent such situations in the future and thus prevent the amount of damage that has been recorded as a result of the loss of income of municipalities.

Konsekwencje kryzysu COVID-19 dla finansów jednostek samorządu terytorialnego w krajach UE

“…Analiza wydatków największych miast na Słowacji wykazała, że pandemia COVID-19 nie dotknęła ich znacząco, a wzrost wydatków w 2020 roku nie odbiegał od trendu. Choć w długim okresie nie zaobserwowano znaczących zmian w rozwoju finansowania bezpieczeństwa zdrowotnego miast, w 2020 r. można było zauważyć większy wzrost tych wydatków w połowie wybranych miast w porównaniu do lat poprzednich [Soltes, Stofkova, Durica, 2021]. Čajková, Šindleryová i Garaj [2021] zwrócili jednak uwagę, że głównym źródłem pokrywania ubytku dochodów lokalnych (głównie spowodowanych mniejszymi wpływami z podatku od dochodów osobistych) były zwrotne pożyczki otrzymywane z budżetu państwa.…”

The Impact of the COVID-19 Pandemic on Local Government Finances — a Case Study of Holiday Resort Communes in Poland

“…The global decrease in the income of communes around the world amounted to 10% in 2020 (Emergency Governance Initiative, 2021). As NPI tools limited budgetary revenues, it was necessary to limit expenditure in order to minimise the risk of an excessively high deficit (Soltes, Stofkova, and Durica, 2021). The analyses of the World Bank (2021) showed that local governments reduced their expenses, especially on investments.…”

“…For the same reasons, tourism was one of the most strongly affected sectors by the COVID-19 pandemic (Zhang, Hu, and Ji, 2020;World Bank, 2021). The diversified influence of the lockdown on specific sectors of the economy resulted in different effects of the pandemic in specific regions and communes (Soltes, Stofkova, and Durica, 2021) with certain specialisation in the economic structure. This fact was confirmed by Hu, Li, and Dong (2022), who conducted a case study of Chinese cities.…”