Reform of Financing of Municipalities in SloveniaReport as inadecuate

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Financial theory and practice, Vol.32 No.2 May 2008. -

The article presents a comparison of the Slovenian Financing of Municipalities Act, which had been in force since April 20062, and the new act, which entered into force on 1st January 20072.The main question asked is how the changed formula for calculating the appropriate expenditure and the capitation introduced affect the financing of municipalities. The primary hypothesis is that the change introduced would positively affect the share of own revenues in the appropriate expenditure of the majority of municipalities, that the influence of financial equalisation would decrease and that the financial independence of municipalities would increase. Concurrently, the extent of municipal financial surpluses that have not been regulatory treated until this change would decrease. The results, presented in this article, confirm the suggested hypothesis that was proven by past data and a simulation of the new situation.

appropriate expenditure; financial equalisation; capitation; municipality diversity index surplus; Slovenia

Author: Franci Žohar - ; Government Office for Local Self-Government and Regional Policy, Ljubljana, Slovenia



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