Koval V. Mechanisms for ensuring financial self-sufficiency of territorial communities under decentralization

In the context of increasing security challenges, falling economic growth and slowdown in decentralization reform due to the effects of the pandemic, and now Russia's large-scale invasion of Ukraine, the issue of strengthening the financial self-sufficiency of territorial communities is of particular relevance, since strong local self-government and self-sufficient communities are the basis for Ukraine's sustainable development. As a result of the research, the author has improved the meaningful interpretation of the concepts of "self-sufficient territorial community" and "financially self-sufficient territorial community", which allowed to deepen the theoretical foundations of territorial community finance. The author's position is based on the assumption that a financially self-sufficient territorial community is a community that has an established effective mechanism for the formation and use of financial resources, is able to independently ensure the full implementation of public services for community residents, and is capable of self-development in the long term on the basis of self-realisation, self-government and self-financing. The role of decentralization in ensuring the financial self-sufficiency of territorial communities is determined and its impact on the development of local self-government is substantiated. It is shown that the significance of decentralization in strengthening the financial self-sufficiency of territorial communities is manifested in: a) strengthening interaction with all subjects of the community economy; b) ensuring the sufficiency of financial resources for the balanced development of the community through the formation of targeted financial resource flows; c) improving the efficiency of financial resource management of the territorial community through the use of project and process approaches. The article proposes a scientific and methodological approach to assessing the financial self-sufficiency of territorial communities, which involves: the consistent implementation of the compositional, empirical and taxonomic stages, based on the calculation of empirical indicators of financial self-sufficiency for urban, settlement and rural communities. The application of this approach on the example of 73 territorial communities in the Lviv region allowed the author to draw conclusions about the ability of communities to self-develop and ensure sustainable progress. The use of economic and mathematical modelling allowed to establish and substantiate the cause-and-effect relationship between the financial self-sufficiency of territorial communities and their local economic development. This allows to deepen a comprehensive understanding of the processes and factors of strengthening the financial self-sufficiency of territorial communities as the basis for their sustainable development. The author specifies the directions for improving the mechanisms for ensuring the financial self-sufficiency of territorial communities in the context of the war in Ukraine and the slowdown in the pace of decentralization reform, in terms of: clarifying measures to expand the powers of local authorities to administer local taxes and fees; updating the methodology for calculating the horizontal equalization of the tax capacity of local budgets; expanding the rights of communities to access investment resources; and regulating the institutional framework for completing the decentralization reform. The study of European practices of ensuring the financial self-sufficiency of territorial communities made it possible to determine the possibilities of their implementation in terms of such financial instruments as taxes on economic activity and local borrowing. The theoretical provisions, scientific, methodological and practical recommendations formulated in this paper will contribute to improving the financial self-sufficiency of territorial communities, and thus to their recovery and sustainable growth.