ECONOMIC ESSENCE OF DEVELOPMENT BUDGET FORMATION IN TERRITORIAL COMMUNITIES

The article examines the theoretical foundations and economic essence of development budget formation in territorial communities under decentralization conditions. The research reviews the current state of local budgeting in Ukraine, focusing on the development budget as a key instrument for ensuring investment capacity of territorial communities. The legal framework governing the formation and use of development budgets is analyzed, highlighting its strengths and weaknesses in the context of financial decentralization reform. The study identifies the development budget’s dual nature as both a financial plan and a fund of resources aimed at implementing investment projects and programs for territorial development. It reveals the main functions of territorial community budgets including distributive, control, regulatory, stimulating, stabilizing, social, investment, and informational functions, emphasizing their interconnection and comprehensive impact on socio-economic processes at the local level. The article explores specific features of development budgets in united territorial communities, analyzing their normative-legal, financial-economic, administrative-territorial, institutional, socio-cultural, infrastructural, and strategic aspects. It identifies key challenges in development budget formation, including insufficient revenue sources, organizational deficiencies, structural imbalances, monitoring and control issues, and interbudgetary relations problems. The research proposes comprehensive approaches to enhance the effectiveness of development budgets through legislative improvements, revenue base strengthening, planning mechanism modernization, institutional support, optimization of interbudgetary relations, transparency increase, and implementation of innovative financial instruments. The findings significantly enhance our theoretical understanding of local finance development, particularly within the context of European integration processes and the complexities inherent in post-war recovery challenges. They illuminate how regional financial systems adapt and evolve in response to the economic and political dynamics of integration, while also addressing the unique obstacles local economies face during reconstruction and growth following conflict. This research emphasizes the interplay between local financial governance and broader socio-economic factors, providing valuable insights for policymakers and stakeholders engaged in regional development initiatives.