The deteriorating state of municipal budgets creates a number of obstacles to their use as a tool for policy-making. The discontinued fiscal decentralization process and some of the recent attempts to address the problem of increasing indebtedness among local authorities created prerequisites for an increase in the local tax burden, while prospects for improving the fiscal situation of municipalities are still lacking. The structure of municipal expenditures shows an increasing importance of the absorption of EU funds and a continuing dependence on the decisions of the central government. The relocation of personal income tax proceeds back to municipalities seems the only viable alternative within the existing tax system.
Yavor Alexiev (Sun,) studied this question.