Opportunities for Decentralization in a Pandemic Year: What Does Budget Analysis Show?

Abstract

Abstract—In the year of the pandemic, assistance to Russian regional budgets increased by more than 1.5 times, which ensured an increase in budget revenues in the vast majority of regions, but led to a significant increase in dependence on federal assistance. In the structure of aid, the share of targeted transfers (subsidies and subventions) increased, so the possibility of maneuvering budget resources for regions has decreased. Regions are forced to spend additional aid mainly on top-prescribed goals, which has led to a further increase in centralization of management. The transparency of allocation of transfers to regions worsened, and the amount of additional aid did not depend on the reduction of own revenues of regional budgets. Before the pandemic, priority “geopolitical” regions had received special support; for 2020, it is much more difficult to explain the distribution of aid due to the uncoordinated allocation of transfers by different federal ministries for different purposes. In the past, budgetary federalism in Russia had manifested itself only in a certain freedom of choice by the regional authorities in spending priorities, but in 2020, this was even less. Health care and, almost everywhere, social security of the population became an overall priority, since transfers were significantly added for these purposes. Regarding other types of expenditures, the priorities of regions differed, but most of them subsidized fees for housing and communal services and increased spending on the national economy to meet the targets of the presidential decree. Hopes for decentralization of the Russian system of government during the pandemic were not realized; in interbudgetary relations, the degree of regional dependence on the federal authorities increased.