On July 18 a working meeting of chairmen of the budgetary commissions of the regional councils of Ukraine on topic: “Interrelations between the local and state budgets: problems and solutions” took place at Kharkiv regional council. Representatives of twelve regions of Ukraine and the Autonomous Republic of Crimea, chairman of the Kharkiv regional council, head of the Kharkiv local affiliate of the Party of Regions Vasiliy Salygin, People’s Deputies of Ukraine, members of the Verkhovna Rada budgetary committee Yulia Kovaleva and Alla Aleksandrovskaya participated in the meeting.

Let us introduce you a speech of People’s Deputy, Party of Regions parliamentary faction member Yulia Kovaleva:



As a member of the Verkhovna Rada of Ukraine budgetary committee I participate in the budgetary process “from within”. Unfortunately, I should state that the trends which have appeared in the budgetary process this year are aggravating for the regions. There is, in fact, no budget. Parliament has not approved alterations to the 2008 budget, which were introduced in July instead of March, when work over the next year budget had to be underway. And the document which Rada adopted on December 26, 2007 and which functions today as the Law of Ukraine “On the State budget” has almost UAH 20 billion deficit.

The deficit was set down to be covered with money yielded from privatization of large holdings of the shares of state-owned enterprises. But, as we know, the privatization schemes proposed by the Cabinet of Ministers were severely attacked both by parliament and the President of Ukraine. Thus, the special fund of State budget and, accordingly, of regional budgets will not be filled. It will hit regions hard.

However, life in the regions cannot and should not stop. The same as deputies of local councils, we, People’s Deputies, are responsible to the people for the state of affairs in the regions. Therefore, we voluntarily agree to become “pushers” like suppliers at soviet time, active lobbyists of region’s interests in the Verkhovna Rada budgetary committee and cabinets of the Cabinet of Ministers.

As for prospects of developing inter-budgetary relations, it is high time special purpose program planning and implementation of a system for estimating the quality of state administration and state services were introduced in Ukraine. Otherwise all decisions on expenses, which are more sophisticated than a payment for water or gas, will be made at the level of parliament and government as they used to, and the Verkhovna Rada profile committee will annually submit multi-page resolutions for the Cabinet of Ministers’ endorsement, containing a list of capital construction units financed at the state’s cost. Down to appropriating ten thousand hryvnias for repairing hospital bathroom units.

Unfortunately, the government is often afraid of allocating money in the regions to a large extent due to the impossibility of tracing their use. Now all programs of development and a considerable part of capital expenses are financed from the State budget through main bodies of local self-government — cities, towns and villages. But there is no system of financial audit and control of local budgets. Both the Main Control and Revision of Ukraine and the Accounting Chamber systematically and purposefully monitor spending of the state budget funds.

It engenders the Ministry of Finance’s desire to pass the functions of spending local funds to the district and regional administrations. But such scenario of distributing budget funds will always leak because a Kyiv official is never to outwit a local bureaucrat.

The XXI century is often called the era of self-government flourishing not for nothing. The Western European countries have already recognized advantages of power decentralization, when a monopoly of the Center is being replaced by a principle of contractual relations between the state and self-government — two forms of society organization. Ukraine should also make up its mind to this step.

The state should engage in target financing of long-term government programs. Approaches to their financing should be revised as well. To invest state funds not in a system, say, of health care as such, but in the nation’s health. Not in a system of education, but in the scholarship level.

Public and private institutions should be enabled to compete for receiving state support depending on that which one is better at treating or teaching people, and officials — to control not so much the legality of spending funds as the result which is achieved for these funds. It is inefficient to spend money exceptionally on supporting a system, for example, of state health care if it is unable to provide medical aid on a level of world standards.

But all this is a matter of future when political tensions cease. For the time being state funds serve politicians, rather than people.

Nevertheless, I do not want to conclude my speech on a pessimistic note. I urge the deputies, who work over local budgets, to be diligent optimists, embrace every opportunity to draw state funds into the regions, and promote their efficient use as far as possible so that any hryvnia of budget funds was not lost for development.

I would also like to call attention of the assembled colleagues on active involvement in work on preparing materials as well as on close collaboration of representatives of all levels and parties while drafting the 2009 budget.

At the moment when the budget resolution comes out, the suggestions submitted by deputies and administration of towns and cities’ districts should be drawn in accordance with the existent decrees and instructions. They should have feasibility research, project and cost estimates, experts’ report and other due documents.

I hope for mutual understanding and support in preparation of the 2009 budgetary process.

Press service of the Kharkiv regional council