OVERVIEW OF FISCAL DECENTRALISATION
The organisation of sub-national government in Slovakia is based on a two-tier structure: eight regions and 2,890 municipalities. The statistics in this factsheet refer to the sub-national government level as composed of regions and municipalities.
Legal acts governing fiscal decentralisation
Municipalities are defined as the basic units of territorial self-administration by the Slovak Constitution and regions have been introduced as higher territorial units. Both regions and municipalities are territorially and administratively independent and are also independent from each other.
The legislative framework of fiscal decentralisation comprises of the following legal norms:
• Act No. 564/2004 Coll. of Acts on the budget determination of income tax yields to regional self-government and on amendments and supplements to certain laws,
• Decree of the Government No. 668/2004 Coll. of Acts on the distribution of income tax yields to the regional self-government,
• Act No. 582/2004 Coll. of Acts on local taxes and local charges for municipal waste and small rubble,
• Act No. 583/2004 Coll. of Acts on the budget rules of the regional self-government and on amendments and supplements to certain laws, and
• Act No. 523/2004 Coll. of Acts on the budget rules of the public administration and on
amendments and supplements to certain laws.
Qualifying fiscal decentralisation
In 2018, sub-national governments' expenditures in Slovakia accounted for 18% of total government expenditures (see the pie chart below).
Sub-national governments units have been assigned both autonomous and delegated responsibilities. Autonomous competences are carried out under the discretion of the competent authority and, above all, need to be financed through own revenues. In performing delegated responsibilities, local governments are bounded by specific guidelines centrally imposed and, even if the actual financial disbursement is done through the local budgets, they are financed through earmarked resources transferred to the local government by the relevant central government ministry.
Revenues for both regions and municipalities come from own revenues, shared taxes and grants. In 2016 subnational governments together had 74.2% of their revenues come from grants and subsidies, 17% from tariffs and fees, 1% from property income, 0.6% from social contributions, and 7.3% from taxes.
Source: authors’ elaboration on EUROSTAT data. For further details, see methodology.
LEVEL of FISCAL DECENTRALISATION
Revenue autonomy (own revenues relative to total resources available) at the local level (regions and municipalities) is lower than the EU average (24% versus 53% in 2018), which entails a dependency on central government transfers that is higher than the EU average (77% versus 48% in 2018). Local own revenues represented 4% of total government revenues in 2018which was below the EU average of 13%.
Source: authors’ elaboration on EUROSTAT data. For further details, see methodology.
The composite ratio, which captures aspects of fiscal decentralisation of both revenue and expenditure, suggests Slovakia has a degree of fiscal decentralisation (5% in 2018) that is lower than the EU average (16% in 2018).
Fiscal rules and borrowing capacity
Beyond the obligation of approving a balance budget, sub-national governments are limited in their borrowing activity by debt ceilings. A debt rule stipulates that local governments are allowed to take out credit/loan/issue bonds only if: (a) the total sum of the debt of the municipality or self-governing region does not exceed 60 % of the final current revenues of the preceding budget year; and (b) the sum of the annual instalments of the loans does not exceed 25% of the final current revenues of the preceding budget year.
From 2015, a new constitutional law came into effect meaning that if the total debt of a municipality or a higher territorial unit reaches 60% or more of the actual current income of the previous financial year, the unit is obliged to pay a fine imposed by the Ministry of Finance amounting to 5% of the difference between the total debt and 60% of the actual current income of the previous financial year.
Deficit and debt at sub-national levels
In 2018, the consolidated gross debt of the Slovak local government sector amounted to 2.1% of GDP, having decreased by 0.2 percentage points over the last four years.
Source: authors’ elaboration on EUROSTAT data. For further details, see methodology.
EXPENDITURE BY GOVERNMENT LEVEL AND BY POLICY AREA
Expenditures of local governments represent a significant part of total general government expenditures in the fields of housing and community amenities (88% in 2017), education (72% in 2017), recreation, culture and religion (51% in 2017) and environmental protection (50% in 2017).
Source: authors’ elaboration on EUROSTAT data. For further details, see methodology.
In 2017, local governments' spending was most concentrated, and more so than the EU averages, in the fields of education (39% of total local spending), economic affairs (16%) and general public services (15%). In all other areas, expenditures are quite limited or below the EU average values.
Source: authors’ elaboration on EUROSTAT data. For further details, see methodology.
