| Abstract: |
The Baltic countries’ local governments have been functioned during the last
decade in a permanently changing environment. Like other transition countries,
they inherited from the past extremely centralized administrative system.
Along with radical reforms, administrative system was decentralized and
various functions were devolved from central to lower levels of government.
Despite that, municipalities are still fiscally strongly dependent from
central authorities. Often their fiscal capacity is not adequate to act in
accordance with functions stipulated by laws. Many local governments’ revenues
from taxes and user-charges are insufficient to finance efficiently their
expenditures. Disparities in municipalities’ fiscal situation are correlated
with unbalanced regional growth, social degradation in the low-income regions
and growing differentiation by municipalities’ residents on access to
education and healthcare. Membership of the European Union brings new tasks
and responsibilities for the Baltic local governments. Municipalities should
increase their economic sustainability and enhance administrative capacity to
explore EU accession funds and implement EU policies. Considering the
above-mentioned problems, the paper focuses on current fiscal situation of
local governments in the Baltic countries. The main interest is to analyze
local municipalities’ revenue level and structure, expenditure composition and
fiscal autonomy conditions |