The Odesa City Council session scheduled for February 21 raises far too many questions, especially regarding amendments to the city budget. Green Leaf examined the issue in detail.
What financial resources does the city have available for distribution?
At present, the city has the ability to distribute more than UAH 3 billion in financial resources. This amount consists of:
1. Balances from previous periods totaling UAH 1,537.8 million. If UAH 2 million in working cash balance is excluded, the city can distribute UAH 1,535.8 million.
2. The reserve fund, which at the beginning of the year amounted to UAH 1,645.4 million, but was reduced by UAH 92.9 million — to UAH 1,552.5 million — by Odesa City Council Decision No. 1773-VIII of January 17, 2024. Under the Budget Code, the reserve fund is formed to cover unforeseen expenditures that are not permanent and could not have been anticipated when the draft budget was prepared. However, as Green Leaf previously noted, the Odesa authorities do not use the reserve fund for its intended purpose.
What is proposed to be changed in the city budget
On the city’s official website, in the section “Draft City Council Decisions”, there is only a draft decision on amendments to the city budget, published on February 7 and 9.
If these changes are presented in table form, they look as follows:
More extensive changes to the draft are introduced by Amendment No. 1 of the Standing Commission on Planning, Budget and Finance. But there is no point looking for it on the official website. Although the amendment was sent to deputies on the afternoon of Friday, February 16, it was still absent from the city’s official website on Friday evening. Thanks to information sources in Odesa City Council and the assistance of Iryna Hryb, Green Leaf obtained the document.
An analysis of the proposed amendment gives us the following:
1. The city’s revenue receives UAH 18,255,108 from the regional budget from the unused balance of the education subvention carried over at the beginning of the budget period.
2. UAH 3,504,586 is allocated from balances of previous periods to finance expenditures.
3. The expenditure side, broken down by chief spending units, is as follows:
The figures reveal nothing fundamentally new. They include multimedia equipment for schools, financed both from the subvention and co-financing from the city budget, as well as office equipment for executive bodies. There are also expenditures to close out contracts concluded in previous years for major repairs of Shota Rustaveli Street and the passage from Zhytomyrska Street to Ovidiopolska Road. And all of this is financed mainly by reducing the reserve fund.
The only unclear point is why the draft budget contains no proposal from any city council deputy on distributing the deputies’ fund. It is also unknown whether any such proposals were submitted by deputies at all.
In summary
Looking at the proposed draft amendments to the city budget, it is hard to escape the feeling that either the city authorities are completely incompetent or the city authorities themselves consider Odesa residents fools.
With about UAH 2.8 billion still undistributed, it is difficult to believe that the UAH 337.2 million included in the budget under budget program 2218240 for purchasing equipment and durable goods for volunteer formations and military units of the Territorial Defense Forces of the Armed Forces of Ukraine — most of which, though not all, can be transferred to the Armed Forces — is an adequate contribution to the fight against Russian aggression.
This is despite protesters demanding every week that the city authorities direct funds specifically toward the immediate needs of Armed Forces personnel defending Ukraine at the front.
Another possible scenario is that part of the money is being held back to finance projects opposed by the public, or that additional financing has to be found because of negligence by local officials.
Green Leaf has already written about problematic unfunded city projects, including uncertainty over what sources will be used to replace the UAH 191 million returned to the state budget because of negligence by the Capital Construction Department or the still-uncancelled contract for reconstruction of the Kyiv District Court building, which became the trigger for the “Money for the Armed Forces” civic protests across the country.
In any event, Green Leaf will continue to monitor the city’s budget process closely.