State and municipal finance is an indispensable link in the chain of the financial system. They provide material means to all authorities at the state level and at the level of local self-government, so that they can carry out the work provided for by legislative acts, and especially the Constitution.
Municipal finance is a combination of economic and social relations that arise in connection with the formation of funds, their distribution, as well as their use in order to solve the tasks of the municipality. They are formed between the population living in the territory of the municipality, and the local government at the place of residence.
Municipal finance consists of:
- funds of the municipality itself;
- securities (state and municipal), which belong to local government, its executive bodies;
- extrabudgetary local funds;
- other finances owned by the municipality.
The principles on which municipal finance is based are:
- publicity;
- financial support from the state;
- independence.
The owner can use municipal finances through bodies representing local self-government on behalf of the population living in the territory of a particular municipality. Also, the rights of owners regarding this type of finance can be exercised by the population themselves, subject to local regulations.
Municipal finance, together with the property of the municipality, together with property that the state has transferred to the ownership of local authorities, together with other types of property that serve the needs of the population living in the territory of a particular municipality, constitute a powerful economic basis for local self-government.
Persons in power and managing the municipality have the right to transfer the listed property to legal entities or individuals for use (permanent or temporary), to alienate, and also to lease.
The conditions for the privatization of the property of a municipality, its procedure can be established either by the population itself or independently by bodies representing local government. The profit received from the privatization of those objects owned by the municipality is fully transferred to the local budget .
The financial resources of an individual municipality are centralized in the local budget. It is formed, approved and monitored by the bodies directly representing local self-government. The estimate of the local budget may also include the expenses of some territories that are not part of the municipality. Revenues of local budgets are replenished by:
- various fees, as well as fines;
- local taxes ;
- federal taxes and taxes of state entities in accordance with the norms established by law;
- funds transferred by state authorities to bodies representing local self-government so that they exercise state powers;
- funds received from the privatization of property of the municipality or from leasing it;
- funds from lotteries and loans;
- percent of the profits of enterprises;
- all kinds of subsidies, transfer payments, subventions and other means that do not contradict the law.
Bodies representing local self-government are entitled to dispose of the proceeds at their discretion. State power should not withdraw the amount exceeding income over expenditure, if any. It should also, through federal bodies, provide municipalities with a minimum local budget that can cover the minimum costs of the municipality using fixed, fixed sources of income. The minimum minimum of local expenditures is established by law on the basis of the norms of the least full budget.