Subsidy arithmetic

How Dmitry Kozak tried to manage interbudgetary relations

Russian Minister of Regional Development Dmitry Kozak denied information that his department, in connection with the expansion of its competence, will allegedly propose to the government a project for the redistribution of tax revenues between the center and the regions. The Ministry of Regional Development “does not intend to interfere with the competence of other departments ,” the head of the department assured. Nevertheless, the government is increasingly discussing upcoming changes in the field of interbudgetary relations. And it is possible that the architect or one of the architects of the next reform will be Dmitry Kozak, who already tried to improve this area when he was the plenipotentiary representative of the Russian President in the Southern Federal District.

Let us recall that in the fall of 2005, about a year after his appointment to the Southern Federal District, Dmitry Kozak proposed introducing external financial management in the most subsidized regions . Then the plenipotentiary announced the readiness of the relevant bills , which, if adopted, would allow the appointment of “crisis management” in the poorest provinces, the level of support from the federal budget “off the charts” for 80%. The plenipotentiary emphasized that in no case are we talking about punitive sanctions against the governors of such regions: the federal center would simply like to make the process of distributing budget money coming there more transparent. In addition to external management, Mr. Kozak proposed introducing a whole “ladder” of incentives, the meaning of which was that regions seeking to reduce their own subsidies would receive more freedom in making budget decisions compared to regions with “two-star students.” The participation of regions in federal target programs (which, by the way, has now transferred from the Ministry of Economic Development and Trade to the Ministry of Regional Development) was also supposed to be made dependent on the quality and effectiveness of their use of already allocated funds.

This proposal by Mr. Kozak immediately caused a very sharp reaction from the leadership of the republics, over which the threat of introducing external budget management hung in the first place. We are talking about Chechnya and Ingushetia, which, according to data for 2006, are the absolute leaders in the ranking of subsidies and receive over 80% of their budgets from the federal center. In Chechnya, which, despite the military destruction, lost first place to the relatively peaceful Ingushetia, they proposed introducing tax holidays for the recovery period instead of crisis management. The Ingush elite several times publicly and very harshly criticized the idea of ​​a plenipotentiary representative. The plenipotentiary, in turn, noted that he sees no great harm in criticism and considers it natural from people who have their own interests in the region.

The special bill on external management was never considered by the federal parliament. But last year, the plenipotentiary created an interregional and interdepartmental commission in the South to improve the socio-economic situation. The commission did not, as expected, turn into a permanent “government of the South,” but it fully mobilized the economic efforts of the governors. Almost all southern regions presented their investment strategies to Rostov, where the center of the embassy is located, and tried to improve their subsidy profiles.

According to data for 2006, all seven republics of the North Caucasus were in the top ten in terms of subsidies. Ingushetia and Chechnya (89.2 and 84.2%, respectively) were followed by Dagestan (78.8%), then, with a small margin, behind Tuva, Altai, Koryak and Buryat Ust-Orda Autonomous Okrugs, Kabardino-Balkaria (67 .3%), Karachay-Cherkessia (67.1%), Adygea (60.6%) and North Ossetia (60.1%). This year, these figures have been slightly reduced. Kabardino-Balkaria, for example, expects that by the end of the year the level of its subsidies will decrease from 67 to 62%, and next year it will reach 58%.

When analyzing all this subsidy arithmetic, one should take into account the greater degree of conditionality of the statistical data available in the southern regions. However, the overall positive trend is obvious and fully suggests that Dmitry Kozak will return to his ideas of budget management already in the rank of federal minister, which definitely gives him more real powers compared to the relatively limited capabilities of the plenipotentiary.

Ivan SUKHOV