Local Budgets

budgets of local bodies of state authority and state administration.

In the socialist countries, local budgets are plans for the formation and use of the monetary resources required by local bodies of power for implementation of assigned functions. The plans are compiled on the basis of economic development plans. The system of local budgets of each socialist country is dependent on the state structure and is fashioned on principles of democratic centralism in economic management. Local budgets are ratified by local governing bodies and are an integral part of the state budget of each country.

In conjunction with the administrative-territorial division of the USSR, each krai, oblast, okrug, raion, city, and settlement and rural soviet has its own local budget. These budgets are organically linked to and included in the state budgets of the Union republics, which in turn are part of the state budget of the USSR. In this way the unity of the budgetary system of the USSR is reinforced. Basic budget rights of local Soviets are defined by the Constitution of the USSR, constitutions of Union and autonomous republics, and laws on budget rights of Union republics and local Soviets of working people’s deputies. Local budgets, including the budgets of autonomous republics, increased in size from 6.6 billion rubles in 1950 to 32.2 billion rubles in 1972 (almost five times). In 1972 they amounted to more than one-third of the overall total of the budgets of the Union republics and about one-fifth of the total of the state budget of the USSR. Local budgets finance enterprises and economic organizations under the jurisdiction of local Soviets, sociocultural institutions (including schools, kindergartens, and hospitals), and local governing bodies. In 1972 local budget expenditures included 9.6 billion rubles for economic financing and 21.2 billion rubles for sociocultural measures.

Local budget revenues are derived from enterprises under local jurisdiction (payments from the profits of industrial, construction, communal, commercial, and other enterprises), rent, and local taxes and charges. Moreover, local budgets receive deductions from state taxes and revenues in defined amounts in the territory of corresponding administrative unit (including the turnover tax, the population income tax, and the kolkhoz income tax). This raises the incentive of local Soviets to fulfill the plan for national state revenues and taxes.

Some of the profit payments from enterprises of republic jurisdiction may also be entered into local budgets. Such entries may also be made for raion, rural, and settlement budgets from supplementary sums of turnover taxes, depending on the amounts of commodity turnover of consumer cooperation organizations. Between 1967 and 1971 the rights of local Soviets were significantly expanded, thereby strengthening their material-financial base.

In capitalist countries local budgets represent annual estimates of probable receipts and expenditures of local administrative bodies. They are confirmed by local bodies and are not included in the structure of state budgets (that is, formally they are kept separate). In actual fact, the rights of local administrative bodies, including budgetary rights, are determined by the acts of central governments. Local budgets in Great Britain claim about 30 percent of all resources of the budget system, compared with about 20 percent for France and 26 percent in the USA. Today, local budgets are widely used for state-monopoly regulation of the economic system. Local budgets pay for all expenditures for communal services, a significant share of the costs of construction and maintenance of roads, transport, and housing, and expenditures for the support of police, the courts, and public attorneys. They finance the social infrastructure (education, public health, and social welfare). Despite the fact that the proportionate share of local budgets has noticeably increased, V. I. Lenin’s statement on the inability of the bourgeois state to attend to social needs is still just: he observed that “the bourgeoisie in a bourgeois state can give nothing but farthings for real cultural purposes, for it requires the large sums to secure its rule as a class” (Poln. sobr. soch., 5th ed., vol. 16, pp. 321–22).

Revenues of local budgets consist of local taxes and charges (mainly from the working class), nontax receipts (mainly from property of municipalities), local loans, and subsidies from central budgets. In the early 1970’s, taxes accounted for 58 percent of local budget revenues in the USA, 45 percent in France, nearly 40 percent in the Federal Republic of Germany (FRG), and 38 percent in Great Britain. Nontax revenues were 29 percent of local revenues in the USA, 37 percent in France, 37 percent in the FRG, and 21 percent in Great Britain. State subsidies ranged from 13 percent to 41 percent of the local budgets of these countries. Through subsidies the central government is able to determine the direction and scope of all activities of local administrative bodies and, in essence, to direct their fiscal policy.