The process of residential suburbanisation as a factor influencing the financial management of municipal budgets: case study of population-small municipalities of the Czech Republic

Abstract

The influence of residential suburbanisation on the financial management of municipalities is evident. The main goal of the research was to evaluate whether the process of residential suburbanisation proves a financial threat or an opportunity for specific small municipalities in the suburban zones of core cities in the Ústí Region of the Czech Republic. The research evaluates the financial status of the municipalities under review, using a combination of qualitative and quantitative research methods (interviews with mayors, multidimensional indicator, income and expenditure analysis, balance calculation). The results show that the process of residential suburbanisation is a financial threat to affected municipalities. The influx of a new population forces municipalities to increase the capacity of local public goods and services, thus creating greater capital expenditure, with rising costs adding to the budget deficit. The situation results in conflict between the central level and municipalities. The central level requires municipalities to be more self-sufficient in procuring the necessary resources themselves. However, municipalities have limited tax jurisdiction, which they do not utilise due to moral barriers ofsocial closeness to their citizens. As the administrative process for obtaining subsidies is demanding, the capacity building of public goods and services is most often financed by bank loans.