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WG_News :: About WG :: Coordinators :: Activities :: WG_outputs
Activities: Working Group on Public Sector Finance and Accounting

Activities in 2010


Meeting of the Working Group on Public Sector Finance and Accounting

Place: 18th NISPAcee Annual Conference, Warsaw, Poland
May 12 – 14, 2010

The focus of the Working Group was the effect of crisis on local government finance. Papers covered new EU member states, the Western Balkans, the CIS, and advanced economies. The general conclusions from the work of group are briefed below.


A trend, observed in all countries examined is that higher levels of government shift the financial burden of crisis to lower levels of government - there is a delay or even a cut in transfers.


The year 2009 is crucial for local government finance – a severe drop in local government revenues is observed. The underlined reasons are various:

  • less tax revenues collected, especially from those related to business activities;

  • less revenues from fees charged for local services;
  • significant downsize in proceeds from property sales.

Facing a dramatic drop on its revenue side municipalities faced problems to provide local services to its citizens. Such a process was coupled with the increase demand for social assistance. In order to secure public service provision local governments either borrowed additional funds or stopped paying their liabilities, and municipalities started the new budget year heavily indebted.


Local approaches how to handle this problem were different:

  • some local governments focused on alternative service provision, mainly through contracting out and public-private partnerships;

  • many municipalities decided to postpone public investment for "better times”;
  • careful budgeting - the mismatch between forecasted and realized budget is negligible;
  • co-operation in service provision – local governments join efforts for overcoming difficulties faced;
  • increasing efficiency and effectiveness – municipal units were forced to perform better;
  • increasing local tax and local fee rates – the measure is not popular but it is easy to undertake;
  • in other cases local tax rate were reduced or exemptions were introduced for businesses – this requires more effective use of resources available to implement municipal services.

An interesting insight is the world crisis hit harder urban municipalities than rural ones, eliminating inter-regional disparities. In addition, less developed countries from the region are lagging behind with "infection” of crisis disease.

WG5 Research Protocol 2010

Activities in 2009


Meeting of the Working Group on Public Sector Finance and Accounting (2009)


Place: 17th NISPAcee Annual Conference, Budva, Montenegro
Date:  May 14 – 16, 2009

The NISPAcee Working Group on Public Sector Accounting and Finance focused on municipal asset management in the NISPAcee countries.

Next to eleven country-studies – from Central-Europe, the Baltic and CIS countries and the Balkan, and one from Canada –, which were elaborated based o the WG research protocol, four papers on other topics related to local government finance were presented. The country-studies dealt first with general questions like ‘What kind of assets municipalities posses?’, ‘How did they get these assets?’ or ‘How is asset management regulated?’. The second part of each paper was composed of a case study of a selected municipality and/or a type of municipal asset. Usage of the case approach proved to be very beneficial as it brought empirical component to the papers and in several cases the elaborated case studies highlighted additional issues or problems.

Despite the extreme heterogeneity of the cases we were able to observe some common issues like (1) problems with valuation of assets which was transferred to municipalities and was thus not bought or built, (2) strong perception of property as a resource of revenues instead of a tool for fulfillment of municipal tasks, (3) difficulties with register or inventory of municipal property, or (4) clear division between municipal and state property. Municipal enterprises were discussed as well, especially from the point of view of their purpose (e.g., should a municipality own a bakery?) and their organizational structure (e.g., holding).

The main conclusion of the discussed topic came out from the Canadian case: We should take Municipal Asset Management into the broader picture of local government finance and strategies. It is not only a potential source to generate revenue for local governments, rather a tool to implement local government strategies regarding local economic development, housing, improvement of local infrastructure etc.


The WG is going to continue in its research activities in the future and the agreed on topic for the next year's conference is: Local government finance in the times of crisis: How to respond?  

WG5 Research Protocol 2009

Activities in 2008

Meeting of the Working Group on Public Sector Finance and Accounting 


Place: 16th NISPAcee Annual Conference, Bratislava, Slovakia

Date:  May 15 – 17, 2008

The objective of the 8th meeting of the Working Group was to look at local property tax in the context of local government revenue system in the light of fiscal decentralisation and to identify the main barriers of a more effective use of this local tax in CEE and CIS countries. There were 27 applications, 19 accepted and 11 presented papers from 8 countries. Each presentation was based on the joint research protocol. Papers focused on tax on immobile property and we discussed who the taxpayers are, what the object of the tax is, what kind of rating is used and what are the future prospects of local property tax in each country.


Although there are innumerable differences among the analyzed countries we can summarize that in most countries, except of Poland and Moldova, local governments gain only small revenue from the property tax. Mostly unit base taxation is used. Czech Republic uses a coefficient matrix to modify tax base for simulating market value of property. Some countries utilise the value base tax but the revaluation of properties is irregular and not sufficient. Businesses are usually taxed with a higher tax rate than individuals. The extreme is Poland where the rate for businesses is 35 times higher than for individuals. Other countries reported 3-4 times differences. Some countries also exclude private houses from taxation. The tax objects differ significantly among the countries.


The level of the debate or interest to change or modify their present local property tax system is high some countries (for instance Ukraine) and very moderate (for example the Czech Republic). A market calibrated unit base property tax is more suitable for these countries than an ad valorem tax which is expensive to administer and needs robust revenues. Local governments should harmonise the distribution of tax burden between businesses and individuals: reduce the rate of overtaxed businesses and increase it for individuals based on both utility and ability to pay principle of taxation. Local governments should also turn more attentions to non-fiscal effects of property taxation, such as regulation of local real estate market when the property tax is levied against speculations and enforces property owners to develop their land and buildings.


Participants discussed the potential topic of the Working Group for the NISPAcee Annual Conference in 2009. More options came out from the discussion ensuring the activity of Working Group for years. Finally, the group accepted the theme on municipal asset management for the next year.

WG5 Research Protocol 2008

Activities in 2007


Meeting of the Working Group on Public Sector Finance and Accounting (2007)

Place: 15th NISPAcee Annual Conference, Kyiv, Ukraine
Date:  May 17 – 19, 2007

Working Group on Public Sector Accounting and Finance focused in 2007on the burning issues in the local public finance in a "named” country. At theconference held in Ljubljana (2006) it was felt that it would be useful to survey what are the perceived problems in different transitional countries in Europe.


Eleven papers from ten countries were presented: four of them were more general papers evaluating current state of fiscal decentralisation or local government autonomy and the other papers dealt with more specific topics. The main conclusion is that although the transition has not had the same place in all the countries of the Central and Eastern Europe and the fSU the sharing of experience is not a one way process, i.e., from West to East. The Armenian experience of introducing program budgeting at the municipal level was very inspiring for everyone as well as introduction of the flat tax in Georgia. On the other hand the fundamental questions about the optimal level of fiscal decentralisation and organisation of multi-level governmental system came from three fSU countries. 


The discussion that followed the presentations of country-specific issues like property management and property taxation, tax sharing or fragmented municipal structure, resulting problems and possible solutions was very useful and encouraged cross-national comparison. Results of two extensive research projects were presented: strategies municipalities use to support local economic development in Slovakia and arrangements of local public service delivery in the Czech Republic


Due to the fact that many very different topics were explored during the meeting the working group was able to identify several topics worth further research (for instance property taxation, strategic and multi-annual budgeting, and control and audit) and thus very good reasons for continuing and possibly extending its current remit.

WG5 Research Protocol 2007


WG5 coordinators 2007

WG5 2007

Activities in 2006

Meeting of the Working Group on Public Sector Finance and Accounting


Place: 14th NISPAcee Annual Conference, Ljubljana, Slovenia

Date:  May 11 – 13, 2006

The Working Group on Public Sector Finance and Accounting in 2006 focused on the issues facing management of public debt at the sub-national level.

The main conclusion is that local and regional, i.e. sub-national borrowing is on the rise, but should be controlled by the central government in order to maintain the healthy national macroeconomic balance and to ensure that the borrowing is used for the capital investments and not for financing current expenditures, especially in the cash stripped localities. It is also emphasised that the need to maintain the register of sub-national public debt and to have a database of credit ratings of different municipalities.

Quite different practices in the target countries have been duly reported and the discussion that followed was very useful and spurred cross-national comparison and the sharing of the best practices in a number of countries.

The Group also noticed the huge discrepancy between the advanced transitional countries that have already joined the EU and those aspiring members. Whilst in the former, the sub-national debt is quite developed, in late starters the situation is not really very much more encouraging, although the efforts have been made to catch up with those leading countries.


WG5 Research Protocol 2006


WG5 2006

Activities in 2005

Meeting of the Working Group on Public Sector Finance and Accounting


Place: 13th NISPAcee Annual Conference, Moscow, Russia

Date:  May 19 – 21, 2005


Eight papers were presented by scholars from seven countries in our working group sessions. They addressed theoretical, comparative and applied issues of local budget formation in the CEE countries.


Three papers addressed the issues of local authorities’ decision-making, considering the constraints under which they attempt to raise and utilize their funds, the interaction between city councils and administrators, and other fundamental problems. A pair of comparative studies made an overview of the entire region, comparing all of the countries involved. One looked at the relationships between deficit spending and balance of payments crises in the region. One study considered the principle/agent relationship with its attendant problem of moral hazard in the budgetary interaction between governmental levels. The emphasis in this paper was on the accountability of local officials in budgetary matters.


Several papers contributed comparative studies of current situations in Russia, Ukraine, Czech Republic, Estonia, and Armenia. Their conclusions reminded the listener of the ongoing budgetary difficulties in the region. Generally, the countries involved retain a high degree of centralisation with an inadequate level of autonomy for CEE countries. But progress is being made with reforms of public administration and continuing efforts to achieve greater fiscal decentralization.  Russia remains a special problem; since recent actions have tended to roll back some of the institutional changes that had been intended to establish greater autonomy for local governments and democracy for the country as a whole. The paper of Krisztina Toth, a Hungarian PhD student in Switzerland, stirred a good deal of interested discussion. She tried to see elements of the Swiss system that might be of interest in Hungary, recognizing that each system must develop institutions designed for prevailing conditions and traditions in the locality. The role of legislatures and citizens in budget formation through implementation was discussed and different models of management were considered.


Changes of the recent past have been of considerable importance throughout the region. The accession of several countries to the European Union resulted in considerable effort to develop compatible institutions in the new members.  Several countries have established a new intermediate level of government, the region. Institutions and legislation have established in some cases a greater role for municipalities, for community and city councils, as well as for citizens in the budgetary processes.  Much remains to be done and progress seems to come slowly and unevenly across the region, but the movement is mostly in the right direction. That direction is toward greater local autonomy.


WG5 Research Protocol 2005


WG5 2005

Activities in 2004

Meeting of the Working Group on Public Sector Finance and Accounting 


Place: 12th NISPAcee Annual Conference, Vilnius, Lithuania

Date:   May 13 – 15, 2004


The NISPAcee Working Group on Public Sector Accounting and Finance focused in Vilnius on the theory and practice of user charges and fees in the sub-national government revenue raising. The members of the group hailing from the Region presented a number of country studies analysing the legal framework and current practices of local user fees and changes, whilst the Western participants mainly focused more on the background of the user charges and fees, their fiscal rationale and on the logic and use of local taxes in ensuring relative fiscal independence of sub-national level governments.


The research presented has shown that it is very difficult to provide a common comparative framework for the use of user fees and charges, as the practices amongst the surveyed countries differed significantly. However, the common point is that this non-tax revenue sources participate very little in the sub-national budgets, amounting to less than 10 per cent in all countries, with 3 to 5 per cent being the most reported participation. Interestingly, the similar practices could have been seen in many other Western European countries, especially those that are highly centralised, like Holland, for instance. It has been concluded (although without strong empirical support) that there is more of a divide between Europe on one side and the US and Canada on the other. User fees and charges are more widely used over the Atlantic, especially in times when the federal and/or state level transfers are decreasing due to reallocation of funds to new priorities (primarily inland national security) and/or publicly supported stream to downsize the government and reduce public sector spending. It is also believed that the perception of the State and its role in the society may be one of the crucial factors in deciding on the spread of the use of non-tax revenue sources such as user fees and charges. In the Welfare State the citizens are more supportive of financing of public services through taxes, whilst in Anglo-Saxon countries the public is more receptive to the introduction of fees and charges, as they are, usually perceived by the general public, as being more transparent and fair.


The research conducted this year based on the well-developed research protocol enabled the members of the Group to produce a number of high-quality studies and to enable sound comparison between different countries, promoting the sharing of good practices, achieving through this, its goal of promoting policy relevant research. The next year the Group plans to conduct a comparative research provisionally widely defined as ‘Political Economy of Budgeting’, where it is expected that a number of studies will be produced focusing on budgetary practices in CEE and selected Western countries, as the number of both CEE and Western participants is growing steadily.


WG5 Research Protocol 2004


Activities in 2003

Meeting of the Working Group on Public Sector Finance and Accounting


Place: 11th NISPAcee Annual Conference, Bucharest, Romania

Date:   April 10-12, 2003


The Public Sector Finance and Accounting Working Group focused at the Bucharest NISPAcee Annual Conference on the problems of local government capacity building with respect to their ability to raise local revenues.


Over 20 papers were presented, ranging from a number of country studies analysing the capacity of local government to raise local revenues or administer the fiscal collection on behalf of the central (national) government. The authors were generally in agreement that it is a priority to enable local governments to set and collect their own original revenues and to reduce their dependence on block and specific grants given by the central government. However, the authors also noted that quite often local governments are reluctant to have their fiscal capacity extended, as it leads to their more accountable position. It has been noted that there is not enough accountability and social responsibility on the side of local governments for the resources received through general and specific transfer funding. All papers supported the idea of decentralisation and emphasised the importance of capacity building and organisational learning for local governments in transitional countries. Besides papers addressing the main topic of this year’s research, a few papers addressed the problems of higher education funding reform, theoretical models of decentralisation, and influence of accession criteria on local government finance reform.


The Group, launched two years ago, has grown significantly and has included scholars from both transitional and Western countries. It was agreed that the group will work on a book assessing the problems of local government finance reform. In order to produce more timely and socially rational research it has been agreed to hold, every year in the future, prior discussions of research plans with interested stakeholders.


It was agreed to enlarge the leadership of the group. Ms. Juliana Pigey, USA started to cooperate with the Group Coordinator Mr. Zeljko Sevic at the WG meeting in Bucharest, Romania (2003).


WG5 Research Protocol 2003


Activitivities in 2002


Meeting of the Working Group on Public Sector Finance and Accounting


Place: 10th NISPAcee Annual Conference, Cracow, Poland

Date:   April 25-27, 2002


The NISPAcee Public Sector Accounting and Finance Working Group focused on the Cracow conference on the issues of grant transfers and fiscal supervision in the countries of the Region. There were 12 papers scheduled for presentation and all of them initiated interesting and often thought-provoking discussion. Often heated discussions occurred, especially between colleagues coming from the same sub-region. The Group reiterated the importance of decentralisation to ensure successful functioning of the local government.


All the presented papers were prepared following the research protocol that has been developed in Summer 2001. The papers were prepared as country studies that focused on the issues important to a particular country. The papers carefully described the current local government model that is applied in their respective country and the implications of the model of the organisation and execution of the local public finance function. However, the majority of authors entered into a deeper analysis as to why certain policy actions were taken at certain points in time and what was achieved by that. Different types of grants were analysed both as a source of revenue for a local government unit and a policy instrument that often enables the central government to exercise more power than otherwise assumed. From the discussion it was concluded that an interesting research question might be why the basic local government units (i.e. municipalities) often do not want to have their original income and prefer to remain dependent on central government grants. Some participants brought in the issues of accountability and social responsibility, especially in small countries with a large number of local government units. From the limitation that the local government preferences imposed on this year’s research focus, the Group has started discussing a possible topic for the next NISPAcee conference.


WG5 Research Protocol 2002



Activivties in 2001


Establishment of the Working Group on Public Sector Finance and Accounting


Place: 9th NISPAcee Annual Conference, Riga, Latvia

Date:   May 10 - 12, 2001


The Public Sector Finance and Accounting Research/Working Group has been formally established at the Riga Conference May, 2001 by Dr. Zeljko SEVIC, Principal Lecturer in Accounting and Finance, Head, Department of Accounting and Finance, The Business School, University of Greenwich, Old Royal Naval College, UK.


The group members presented six academic papers which dealt with fairly diverse issues in the field, from the analysis of regional public finance policies and tactics and EU initiated changes to a political economy analysis of grant transfers in a unified country. The presented papers initiated a heated and open discussion, which shed more light on different public finance practices in various CEECs. The Group has concluded that public sector finance and accounting related issues have been neglected in theory and practice, and that it is necessary to reverse the negative trends and work on the promotion of public sector accounting and finance research at the member institutions.

The Working Group on Public Sector Finance and Accounting is supported by a grant from The Local Government and Public Service Reform Initiative Open Society Institute, Budapest, Hungary http://lgi.osi.hu/