Local Governments Cooperation in Poland: Conclusions on the Basis of Financial Links Analysis Julita Łukomska Katarzyna Szmigiel-Rawska

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1 Local Governments Cooperation in Poland: Conclusions on the Basis of Financial Links Analysis Julita Łukomska Katarzyna Szmigiel-Rawska Department of Local Development and Policy Faculty of Geography and Regional Studies University of Warsaw

2 Polish sub-national territorial system 16 regions (województwa) 314 counties (powiaty) INTRODUCTION 2480 municipalities (gminy) including 66 cities of county status Municipalities relatively large units, 70% of sub-national public spending Counties relatively small units, weak financially and functionally Main functions of municipalities pre-school and primary education, communal services, local roads, local public transport, several social services, local culture Main functions of counties Secondary education, county roads, social assistance

3 DEFINITION Definition of local cooperation: local government action, whose constitutive element is activity to another local government and which is expressed in "buying" services for residents and inter-local implementation of projects. The aim of this kind of cooperation is to improve the quality and scope of services provided and/or the use of development opportunities. As a measure of cooperation defined in such a way we accepted the size of financial transfers between the budgets of local governments.

4 RESEARCH QUESTIONS 1. How big is the scale of financial transfers in relation to the size of budgets? Does the scope change? 2. What is the subject of financial transfers (concerning cooperation) between budgets of local governments? 3. What are factors explaining the financial dimension of intermunicipal cooperation? - Size of local government (population) H: small local government cooperate more intensely than large one - Affluence of local budget H: the higher financial autonomy the higher capacity to cooperate - Location of the local government unit (distance to agglomerations) H: local governments located in metropolitan areas have higher prospensity to cooperate than those located outside of these areas

5 RESEARCH ASSUMPTIONS AND METHODS - Direct transfers: budget to budget (including analysis of agreement based cooperation not standing organization based cooperation) - Expenditures (revenues are not analysed) - Municipalities (only budgets of municipalities are taken into consideration); - Division into current and investment expenditures METHODS Indicator based on financial data (from financial reports on budget execution of all municipalities and cities with country status) Evaluation of the indicator by local treasurers (heads of the finance department) Spatial analysis

6 Scale of financial transfers and changes Financial transfers to other subnational governments as a % of budget expenditures of municipalities and cities with county status 4,5 total current investment 4 3,5 3 2,5 2 1,5 1 0, Political Studies ssociation - 65th Annual International Conference, Sheffield, 30 March 1 April 2015

7 The structure of current transfers from local budgets related to cooperation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% social assistance transportation education administration "communal services" agriculture other

8 The structure of investments transfers from local budgets related to cooperation 100% 90% 80% 70% 60% 50% transportation "communal services" education healthcare 40% 30% 20% 10% 0% public security agriculture other

9 Size Financial transfers to other subnational governments as a % of budget expenditures and size of municipalities and cities with county status (mean values, 2013) total transfers as a % of total budget expenditures 8 7 current transfers as a % of current budget expenditures investment transfers as a % of investment budget expenditures Decile groups of size, number of inhabitants 2013, 1-lowest, 10-highest Political Studies Association - 65th Annual International Conference, Sheffield, 30 March 1 April 2015

10 Affluence Financial transfers to other subnational governments as a % of budget expenditures and the affluence of municipalities and cities with county status (mean values, 2013) total transfers as a % of total budget expenditures 9 8 current transfers as a % of current budget expenditures investment transfers as a % of investment budget expenditures Decile groups of affluence per capita, 2013, 1- the least affluent, 10- the most affluent Political Studies Association - 65th Annual International Conference, Sheffield, 30 March 1 April 2015

11 Location of the local government unit Financial transfers to other subnational governments as a % of budget expenditures and distance from the largest agglomerations (mean values, 2013) total transfers as a % of total budget expenditures 9 8 current transfers as a % of current budget expenditures investment transfers as a % of investment budget expenditures up to 10 km km km km km km over 100 km

12 Gdańsk Poznań Warszawa Wrocław Łódź Kraków Current financial transfers as % of current expenditure%) Upper Silesia

13 Correlation analysis Pearson correlation coefficients among variables explaining financial transfers to other sub-national governments Number of inhabitants 2013 Affluence per capita 2013 Distance to the largest agglomerations current transfers as a % of current budget expenditures (2013) investment transfers as a % of investment budget expenditures ( ) +0,07** +0,06** -0,21*** -0,07*** -0,05* +0,08*** Note: * - coefficient significant at a 0.05 level; ** - coefficient significant at a 0.01 level; *** - coefficient significant at a level

14 Financial transfers to other sub-national governments as a % of budget expenditures 3 factors analysed together current transfers as a % of current budget expenditures investment transfers as a % of investment budget expenditures large, affluent and close to the biggest cities other small, poor and peripherally located

15 Conclusions 1. The role of financial transfers is not big (2,3% of total budget expenditures) but systematically increasing 2. The strongest linked function between municipality and other Polish sub-national governments is to provide the transportation services (local public transport and roads) but also social assistance and education. 3. Polish small, poor and peripherally located local governments cooperate in order to invest jointly. 4. More affluent, bigger and located close to agglomerations local governments work together to survive.