Official Kyiv’s request to local governments to compensate for the difference between the real cost of gas and utility rates for populations will be a burden for most Ukrainian regions. This was stated by MP Serhiy Lovochkin on the Local Governance Day.

“Next year will be the most difficult for local governments. Despite all reforms that were supposedly designed to improve the regions’ financial condition, the reality turned even sadder than before the reforms. In 2022, this will be aggravated by the obligation imposed on local authorities to compensate for the difference between the real cost of gas and utility tariffs. Despite the memorandum, which fixes gas price for population’s heating needs and power plants and transfers 4 percent of personal income tax locally, this burden will be unbearable for most regions since gas price increased significantly, and the subsidy does not cover all local needs,” the politician said.

He reminded that three quarters of local budgets remain subsidized. In general, the share of local budget revenues (excluding transfers) in the consolidated budget remains lower than in 2013, before the reform of inter-budget relations. For ten months of 2021, local budget revenues without transfers amounted to 23 percent of the consolidated budget, while in 2013 they reached 23.8 percent.

“When during the ' decentralization reform' several taxes and fees were transferred to local governments, including 10 percent of income tax and real estate tax, the regions were promised that this would cover the 25 percent of personal income tax transferred to the central level. In reality, the quarter of the income tax was and remains a higher and more stable source of income for the budgets than all the so-called compensators,” the MP explained.

At the same time, the costs that the central government has shifted to local ones have grown significantly, Lovochkin said.

“Back in 2014–2015, promising the regions milk and honey, the government threw the support of almost entire social infrastructure upon them, which ultimately led to liquidation of the large-scale network of athletic and music schools, vocational schools, and much more. In recent years, ‘coronavirus’ costs were added: the center government requires the regions to increase the number of beds in infectious diseases wards while treatment fees do not cover all local costs, which results in a record rise in salary arrears to healthcare professionals. Under such conditions, the requirement to cover the difference in gas rates will simply kill most regions,” the opposition politician said.

“The situation will not change until central government stops solving its problems at the expense of the regions. We must legislatively ban the government from dumping its responsibilities on the regions without adding financial resources to them. Ukraine will be strong and united only when life in every corner of the country is equally comfortable for its citizens,” Lovochkin summed up.