The importance of fluctuations in the economic situation for own revenues of Local Government Units

Abstract

The article addresses the issues of public finances. The main emphasis was placed on the aspect of income of local government units and their structure against the background of the changing economic situation. The following research tools were used in the article: review of scientific literature, as well as analysis of empirical data from the Central Statistical Office and the Ministry of Finance. On the basis of empirical data from the years 2003–2017, the structure of budget revenues is presented, divided into the commune, poviat and voivodships level. A hypothesis has been put forward that the amount of inflows to the budgets of communes, poviats and voivodships is strongly related to the currently prevailing economic situation. For the research hypothesis put forward, the main objective of the study was to show whether the impact of the economic situation in a given country measured by the Gross Domestic Product is reflected in the level of LGU own revenues. In connection with the above, an analysis was carried out, which shows that at every level (ie the commune, poviat and voivodeship), the structure of income shows the effects of changes taking place in the economy. The analysis of empirical data also shows that such an impact is significant at the level of municipalities. However, in the case of poviats and provinces, this is hardly visible. The effects of fluctuations in the economic situation have the greatest impact on the functioning of communal budgets, and, to a lesser extent, on poviat and voivodship budgets.