Impact of economic crisis on municipal budgets in the Czech Republic

Abstract

The aim of the paper is to outline an impact of the economic crisis on municipal budgets in the Czech Republic and to evaluate how selected municipalities with different level of delegated state administration dealt with the economic slump from the financial perspective. The results of our research so far suggest that Czech municipal budgets have been affected by the economic crisis more than regional budgets, but less than the central budget. The reason is that the budgets contain different proportion of cyclically sensitive items. This conclusion applies mainly to the financial situation of municipalities in 2009, when municipalities were able to draw on financial reserves they accumulated in the past few years. Due to these reasons, among other things, the crisis has affected the municipal budgets not so seriously; the municipalities in general did not have much trouble coping with the situation. The relatively good constitution of the municipal budgets is also evident in three examples of municipalities the South Moravian Region that are described and briefly compared in the final part of the paper.