Possibility of decentralisation during the year of pandemic: what does the analysis of public budgets reveal?

Abstract

In the year of the pandemic transfers from the federal to the regional budgets increased by 50 per cent which led to an increase in budget revenues in most regions and made regional budgets more dependent on federal support. The proportion of earmarked transfers (subventions and subsidies) increased, making reassignment of budgetary funds difficult. The regions were forced to spend additional money on designated projects only, which resulted in further centralisation of budget management. The transfer calculation became less transparent, additional transfers were not linked to the decrease in regional budgets’ own revenues. Before the pandemic, «geopolitically» important regions had been prioritised for federal transfers. In 2020 interpretation of transfer distribution became much more difficult due to the lack of coordination between various federal ministries in their transfer calculations. Budget federalism in Russia had been limited to some freedom in choosing expenditure priorities for the regions, but in the year of the pandemic these opportunities dwindled. Health expenditure and social protectionbecame common priorities because a lot of additional transfers were earmarked for these purposes. Other regional priorities differed but most regions subsidised utility tariffs and increased spending on national economy in order to reach targets of the Presidential Decree. Hopes of decentralisation of the Russian budget system during the pandemic did not come true and regional dependence on the federal authorities increased.