Translated material
Another year on loan
The Moscow government approved the 2011 budget
Moscow Mayor Yuri Luzhkov approved the capital's budget for next year. Yesterday, at its meeting, the metropolitan government adopted as a basis a draft law designed to determine the income and expenses of the metropolis in 2011. In September, the project will be submitted to the Moscow City Duma for consideration. It is possible that on September 29 the document will be adopted by the capital’s parliament in its final reading. According to the mayor, “this is a very voluminous material.” “It was worked out, discussed in different departments, it can be accepted as a basis,” Mr. Luzhkov noted.It is noteworthy that according to the draft budget in 2011, the main Moscow “piggy bank” will remain in deficit, as in previous years. As Yuri Korostelev, head of the capital's government's finance department, told reporters yesterday, next year expenditures are planned in the amount of 1.29 trillion rubles, while the budget revenues should amount to about 1.19 trillion rubles.
The “delta” between income and expenses this year (taking into account amendments to the budget adopted by the Moscow City Duma in June) amounts to 190.2 billion rubles. The replenishment of the capital's budget depends on how effectively two federal taxes are collected - on profit and on personal income (NDFL), Mr. Korostelev recalled yesterday. According to him, in 2009, personal income tax collection decreased by half, which could not but affect the increase in the budget deficit. At the same time, we note that this year the Federal Tax Service expects significant revenues to the Moscow budget from taxes from oil and gas companies registered in the capital - according to the head of the capital department of the Federal Tax Service Lyudmila Vorobyova, in the past seven months alone the income should amount to over 110 billion rub. In the near future, the Moscow authorities expect an increase in revenues - the forecast of the department of economic policy and development of the capital suggests that in three years the gross regional product of Moscow will reach the pre-crisis level, and the average salary of a capital resident will be 48.8 thousand rubles.
In the meantime, the Moscow treasury cannot do without loans. “The forecast for the 2011 budget is very tense, related to the attraction of borrowed funds,” noted Yuri Korostelev in a commentary to RIA Novosti. “It is planned to attract loans in the amount of up to 53 billion rubles, while the maximum volume of Moscow’s public debt in 2011 is set at 371 billion rubles.”
Judging by the draft budget, next year the city government plans to spend 5% more money than this year. This is due to the indexation of salaries for public sector employees, an increase in social benefits, “as well as decisions in the field of tariff policy,” Mr. Korostelev explained. “It is necessary to pay more attention to improving the efficiency of budget expenditures, their significance and expediency,” the official added. -- The effectiveness of spending is also important. We must clearly see a concrete result in the socio-economic development of the city.”
As for the budget structure, according to Mr. Korostelev, out of 1.29 trillion “expenses” rubles, 592 billion will be allocated for social services. “We will spend 45.8% of the total budget on social needs,” assured the capital’s chief financier. In particular, 249 billion will go to salaries of public sector employees, taking into account double indexation. It is expected that from January 1, 2011, the salaries of public sector employees will be increased by 3%, and from September 1 - by 5%.
The expenditure side also includes spending on social protection (RUB 123 billion). RUB 53 billion allocated to subsidize the capital's Compulsory Health Insurance Fund. About 14 billion rubles. should be transferred for the construction of clinics and other health care institutions. Approximately 50 billion rubles. will be spent on the construction of schools, kindergartens and other educational institutions as part of the investment program. Next year it is planned to use these funds to build and reconstruct ten schools, one college and 100 pre-school educational institutions. As Marina Ogloblina, head of the Moscow Department of Economic Policy and Development, noted during yesterday’s meeting of the capital’s government, “the analysis showed the high need of the population for kindergartens.”
The draft budget for 2011 implies that 53 billion rubles will be allocated for the improvement of the city. and 231 billion rubles. will go towards investment projects. “About 26 billion rubles. it is supposed to be allocated for the construction of the metro,” Ms. Ogloblina clarified. The draft budget also includes 38 billion rubles. for road construction. In particular, the Moscow authorities plan that in 2011 construction will begin on the second section of the fourth transport ring towards the Open Highway. Expenditures in the amount of 400 million rubles are provided for the arrangement of pedestrian crossings on Moscow streets alone.
According to Ms. Ogloblina, next year 66 billion rubles. should be allocated from the budget for housing construction. The Moscow government's medium-term plans provide that over the next three years more than 9 million square meters of housing should be built, of which about 3 million will be financed from the city budget. The authorities intend to allocate about 222 billion rubles for this project over three years.
Yuri Luzhkov, summing up the discussion of the city’s main financial document for the next year, emphasized that Moscow’s budget “is distinguished by its social orientation, as well as rationalism.” “Indeed, the crisis made adjustments to the formation of the capital’s budget, and it must be said that these adjustments were positive - the budget became less wasteful and more realistic. Including the budget deficit is quite real,” said Sergei Mitrokhin, leader of the Yabloko party and chairman of the Committee for the Defense of Muscovites, in a conversation with a Vremya Novostey correspondent. Greater “closeness of the budget to life” than in the pre-crisis years, however, does not exclude a number of questions, in particular regarding how objective the high price of road construction is, Mr. Mitrokhin noted. In addition, the leader of Yabloko emphasizes, deputies actually refuse control over the formation of the budget (primarily those items that relate to the expenditure of funds), and therefore the city treasury in fact turns into the “treasury of the Moscow government”, which is disposed of by the executive branch at your own discretion.