Assessment of the Reaction of the Local Financial System During the Transformation of the Structure of the Local Self-Government System

In the context of the reform of the local self-government system (LSG) in the Russian Federation, the consolidation of municipalities, the transition to a single-level system within the framework of the transformation of the structure of the LSG and the lack of funds to finance the development of municipalities, it is important to assess the reaction, the degree of activity of local budgets to government stimulus measures. It is necessary to understand the budgets of which type of municipalities (urban district or municipal district) they are reacting more actively to the controlling influences of state policy, which will more effectively stimulate the development of the municipalities in the conditions of financial constraints of government authorities. The article uses a methodological approach based on the maximin criterion and implemented on the example of municipalities of the Far Eastern Federal District (FEFD) to assess the stability of the local financial system. The information base is the data of the Federal Treasury on the state of the consolidated municipal budgets of all 11 Far Eastern subjects of the Russian Federation for 2011–2020. It is shown that the formation of single-level LSG systems based on urban districts in the Magadan and Sakhalin regions did not lead to an increase in the activity of budgets of newly formed urban districts. The enlarged calculations performed on the data array of the municipalities of the FEFD indirectly confirmed the hypothesis expressed about the underestimation of the two-level system of local self-government and a certain overestimation of the single-level system of local self-government in the Far East. This poses a dilemma for regional governments – to maintain a two-level structure of municipalities in the region («municipal district – settlements») or to abandon municipal districts in favor of urban districts and a single-level system of LSG? It is shown that the development of inter-municipal cooperation can be an additional tool to support the financing of the institute of LSG