Settlement Level of Local Government in Russia: Social Functions and Financial Opportunities

Abstract

In this article the author analyzes the socially important powers of the settlement level of local self-government in Russia using statistical data of the Russia’s Ministry of Finance on the regional revenues and expenditures during the last decade both for all the settlements in Russia and for the particular regions. The main research goal was to define the really working functions (being probably different from those prescribed by law) of local self-government in the settlements. Besides it was important to study the degree of financial dependency of settlements and the volume of state support for them. The methodology is based on the theory of principal-agent relations which means that the local self-government in settlements can act as an agent of both the state and the local community. However in a centralized system it acts rather as an agent of the state dealing with the limited set of powers defined and partly sponsored by the state. The study shows rather unstable state support of the settlements and ever-changing structure of their expenditures. As a result settlements still cannot find an appropriate place in the system of multilevel government in Russia. Tiny political influence of settlements is entwined with the change of the state policy towards more pragmatism — from active state support of settlements to relative financial autonomy but with very small budget revenues. At the same time the state has moved to the policies of political business cycle recently, rising up the financial support of the settlements before the 2018 presidential elections. The study also shows that Russia’s settlements are mostly deprived of social functions while giving priority to infrastructure (housing, communal services, roads etc) and spending high shares of money on the maintenance of local administrations themselves. Finally the author reveals huge regional diversity of powers and influence of settlements which is the evidence of many regional models evolving according to the local policies of different regional governors.