Kommersant: "Government to discuss regional budget deficits"
Governors will be persuaded to cut expenses by one trillion roubles.
On March 12, during a meeting in Novokuznetsk, the commission for regional development will discuss the stability of regional budgets in 2009. A planned Federal Budget allocation of an additional 300 to 400 billion roubles will cover for the expected 1.4 trillion rouble second tier budget revenue reduction and provide additional funding for road construction. The Governors are expected to ask for much more considering that the first meeting of the commission on December 2 resulted in increasing regional financing to 120 billion roubles.
Yesterday, Prime Minister Putin unexpectedly announced that "in the coming days" the Government commission on regional development would convene to discuss regional budgets. According to Aman Tuleev, Governor of the Kemerovo Region, the meeting is scheduled for March 12 in Novokuznetsk and will discuss "consolidated budget issues." Based on Kommersant information, one of the five Government commissions, personally headed by Vladimir Putin, will indeed convene in the Kemerovo region.
The regional commission was formed by the executive order of the Prime Minister at the end of November 2008. It consists of two parts - eight Government representatives, including the Prime Minister, Deputy Prime Ministers Igor Shuvalov, Alexander Sobyanin, Alexei Kudrin, and Dmitry Kozak; as well as an unlimited number of regional government representatives. Mr Putin can include as many of them in the commission as he wants for each meeting. The commission's decisions are mandatory, as is the case with other commissions. Its responsibilities mainly cover the issues of territorial and regional development as well as inter-budgetary strategy.
The first regular meeting of the regional commission was held on December 2, 2008. At that meeting, Mr Putin announced that as a compensation for reduced taxes, the regions were to receive 100% of the excise taxes on petroleum, oil, and lubricants (POL; about 50 billion roubles), a share in the 0.5% income tax (about 53 billion roubles) and 18.4 billion roubles from the federal fund for balancing the budgets of the constituent entities of the Russian Federation. This time, however, the commission is facing a more complicated task. Despite the urgent measures the regional authorities started using to revise their budgets in October 2008, the estimated revenue volume for the year was more or less clarified only by late January to mid-February. In 2008, the consolidated regional revenue amounted to 4.37 trillion roubles. Of that amount, 1.75 trillion roubles was accrued from income tax and 1.66 trillion roubles from individual income tax. Based on Federal Tax Service (FNS) collection of taxes in January and February, regional budgets' revenue will decrease by at least 30% or about 1.4 trillion roubles, compared to the same period in 2008.
At the beginning of March, the Finance Ministry said that the draft 2009 budget provided an additional 300 billion roubles for regional budget support. The draft also included 100 billion roubles in "reserve" funds, which could be allocated to support the regionally financed medicine supply programs. The latter are financed at a deficit due to rouble devaluation and the large share of imported pharmaceuticals. Nevertheless, even with account of one trillion roubles, the implementation of necessary expenditure cuts in regional budget is an extremely difficult task. The second tier budget system is the largest employer in Russia, and it would be very hard to reduce expenditures there, considering the great share of social expenditures in the budget system.
The Government has already hinted that some additional assistance for the regions was possible. Yesterday, a government resolution was published that would increase the limit of the federal government's co-financing share in road construction from 80% to 95% within the framework of the federal transport targeted program (FTP). The FTP's sub-program for road construction is worth 486 billion roubles, out of which 42.9 billion constitute federal budget allocations. The increased co-financing level will give the Governors some 10-15 billion roubles. Finance Minister Alexei Kudrin announced another support measure yesterday - the Government would lift the 10% limit on municipal financing by the regions and regions by the federal budget until 2012.
The few billion roubles received from this measure are hardly sufficient, though. The regions' additional financing requests in 2009 amount to no less than 200 to 250 billion roubles. At the previous meeting of the commission, Prime Minister Putin promised the regions financing through Vnesheconombank (VEB). It is possible that this time as well, government banks will provide regional assistance. All the more so, considering that the Governors are mostly unhappy with the latter's policies.
Butrin Dmitry
