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

Abstract

.The outbreak of the COVID-19 pandemic forced governments to implement non-pharmaceutical interventions, i.e. solutions known as lockdown. Reduced business opportunities inhibited most economic processes, which resulted in a collapse of the global economy. Some sectors of the global economy (e.g. tourism) have been more severely affected by the pandemic. Therefore, both the national and local authorities provided special aid packages to support tourism. The Polish government decided to allocate additional funds, i.e. 250 million dollars (1 billion zlotys) to holiday resort communes, but the funds were reserved only for the communes located in the mountains. This study is an attempt to verify how the lockdown affected the finances of typical mountain and seaside resort communes and to assess whether the communes located in the mountains were affected to a greater extent. The authors of the study compared similar entities: a typical seaside resort commune — Mielno, and a typical mountain resort commune — Karpacz. The analysis covered the period of 2010–2020. Secondary data came from the Local Data Bank (BDL) of the Central Statistical Office (GUS) and annual reports on the implementation of commune budgets. The research was based on the index method, descriptive statistics and the least squares method. The Baretje-Defart index was used to determine the tourist function of the communes. Selected indicators developed by the Ministry of Finance were used to assess the financial situation. The study showed that the COVID-19 pandemic lockdown affected the financial situation of the typical mountain resort commune in Poland more strongly than the finances of the typical seaside resort commune. The study also showed that both types of holiday resort communes struggled with the problem of significantly reduced budget expenditures.