Financial self-sufficiency of local budgets under crisis challenges

The article is devoted to the study of the financial self-sufficiency of local budgets in Ukraine under crisis challenges, particularly the decentralization reform, which plays a key role in forming the financial autonomy of regions. The author analyzes the impact of decentralization on the economic and social development of regions and examines the challenges arising during the implementation of this reform. The main focus is on the dynamics of the formation of amalgamated territorial communities, the efficiency of financial resource allocation, and the role of the tax base in ensuring the budgetary capacity of communities.It is noted that decentralization, launched in 2014, created fundamental conditions for changes in territorial management. The amalgamated communities gained financial autonomy, an expanded tax base, and the ability to form their own budgets. This has enabled more effective use of financial resources, attracting investments, and ensuring a high standard of living for the population. However, the slow pace of ATC formation in the initial stages of the reform is identified as a problem, caused by resistance from local authorities and a lack of understanding of the advantages of the new governance system Special attention is given to the challenges faced by local budgets in connection with the full-scale war that began in 2022. The article presents an analysis of the dynamics of local budget revenues, including transfers, tax revenues, and their dependence on the economic activity of regions. The statistics in the article demonstrate that the greatest challenges arise in frontline regions, whereas rear areas show some income growth due to increased taxes on the salaries of military personnel. It is concluded that the financial self-sufficiency of local budgets remains critical for the sustainable development of Ukraine’s regions. The recommendations presented in the study include optimizing the tax base, stimulating economic activity, and ensuring a balanced distribution of financial resources among regions. Keywords: decentralization, local budget, regional development, transfers, PIT, ATC, financial self-sufficiency.