REVENUE POTENTIAL AND FINANCIAL AUTONOMY OF PANEVĖŽYS REGION MUNICIPALITIES

Abstract

The issue of revenue generation and financial autonomy is one of the greatest challenges in the local governance domain. The revenues at the disposal of the municipalities not only determine the socioeconomic development, implementation of the regional policy goals, but also reveal the situation of financial autonomy. The phenomena of local government revenue measurement and financial autonomy are viewed in the academic literature as multidimensional, as they are characterised by a wide range of indicators. Combining all the revenue indicators into a single index can therefore provide an indication of the level of financial autonomy of local government in terms of revenue.

The TOPSIS multi-criteria approach allows for a comprehensive and integrated assessment of the financial autonomy of municipalities by providing a single summary indicator composed of several revenues ratios.

The empirical research analyses the situation of the revenue potential of Panevėžys region municipalities, assessing the financial autonomy of municipalities in the period 2009-2022. The research shows that all municipalities in the region are very homogeneous in terms of revenue indicators and have a moderately low level of financial autonomy. The empirical results also show that municipalities' financial autonomy is changing slowly compared to the results of previous research. This confirms the dependence of municipalities on centralised financial management, which is governed by the legal acts that have a strong impact on the development of municipalities' financial autonomy and financial capability. Hence, the results in a way also show a lack of capacity on the part of municipalities themselves to seek opportunities to create sustainable, stable perspectives from an economic and social perspective.