Smolny began to actively utilize budget funds
The first statements by officials about the results of the execution of the St. Petersburg budget in the first quarter sound optimistic. In 3 months, the city mastered a fifth of the annual plan, and in terms of income in January–February it exceeded the result of the entire first quarter of 2023.
Plans for filling the city treasury for 2024 are ambitious: 1.18 trillion rubles should be received in revenue, and the city is ready to spend 1.34 trillion. St. Petersburg has never had such indicators.
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Why they began to spend budget money faster
At the beginning of the week, the relevant vice-governor Alexei Korabelnikov reported on the results of budget execution for expenses in January-March in his telegram channel. Compared to the first quarter of 2023, the figure increased both in absolute (+56 billion rubles) and in relative (+3%) terms. In total, the city managed to absorb 250 billion rubles (19% of the annual plan) versus 194 billion a year earlier (16%). In March alone, officials spent 117 billion at once, while in January-February only 133 billion.
There is no information yet on the structure of expenditures: we only know that, according to plans, the bulk of them (22%) will go to the development of the transport system, and the second most important (21%) will go to healthcare. In the first 2 months of the year, money was most actively spent on social support for citizens (15% of the limit approved for the year). Separately, Korabelnikov noted that by April 1, 2024, the level of contracting, taking into account government procurement that is in the placement stage, was 71% (excluding 64%). The KPI set by officials to reach the 80% level expires only on July 1.
According to Vice-Governor Valery Moskalenko, city customers received 498 billion rubles for purchases this year. Of this amount, 319 billion have already been contracted, which is 4% more than the level of the same period in 2023.
It is worth clarifying that this year the city has become more active in absorbing funds for the implementation of the targeted investment program: according to the results of the first quarter, 10% of the planned volume of 218 billion rubles was completed, by April 1, 2023, this figure was equal to 3%.
Due to which the city began to earn more
Preliminary results on the revenue side of the budget have not yet been published. It is noteworthy that the Federal Tax Service has also stopped disclosing the structure of tax assessments and revenues to regional budgets (previously, the information was published with a delay of only a month). Nevertheless, from the data of the Finance Committee as of March 1, it is clear that the city budget has at least 5 times increased the rate of tax collection: if last year, for example, the treasury received 3% of the plan for personal income tax by March, then this year it is already 15 %, or 69 billion rubles. This is more than a billion more than the amount collected by the city for the entire first quarter of 2023. It is worth recalling, however, that throughout the first half of 2023, officials struggled with the consequences of tax reform and the transition to a single tax account, which resulted in a shift in payment deadlines and an imbalance in reporting.
An indirect reason for the increase in tax collection was the growing income of city residents. According to Petrostat, the average salary at the end of February 2024 exceeded 104.9 thousand rubles, having increased by 16% over the year.
A multiple increase in dynamics is visible in property taxes of organizations (21% of the plan versus 0.6%): since January, the results of revaluation of the cadastral value of real estate came into force, which led to a significant increase in the tax base. Citizens will also face a similar rise in prices. In total, the budget is expected to receive 60 billion rubles in property taxes at the end of the year, which is 10% more than in 2023.
In addition to personal income tax, the city continues to actively take advantage of high bank rates. According to Comfin, unplanned income from placing temporarily free budget funds on deposits with commercial banks at the end of the first quarter amounted to 13.2 billion rubles compared to 6.2 billion for the same period last year. And if a year ago money was placed on average at 7.44% per annum, now it is at 15.91%. Turnovers are actually comparable: 2.2 trillion in the current period and 2.1 trillion in the past period.
However, it is unknown whether the current dynamics of replenishment of the city treasury will continue. For example, the Central Bank of the Russian Federation in its recent report predicts a decrease in the growth rate of wages, and therefore, the growth rate of personal income tax receipts.
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The increase in budget indicators is associated with the administration of the tax service. Despite periods of crisis, personal income tax is growing, plus income tax and self-employed people, whose number is also constantly increasing. And federal funds – over the past 3 years we have never received such a volume as we do now, albeit for national infrastructure projects. The budget deficit is, to some extent, artificial; it is not associated with the city’s failure to fulfill its obligations, but with borrowing on foreign markets. We have never had such indicators at AIP. If earlier its performance reached 75%, now it is under 90%.
Alexander Khodachek
President of the St. Petersburg branch of the National Research University Higher School of Economics
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We are quite optimistic, we have a surplus of just over 23% in terms of revenue, which is even better than last year. In terms of expenses – almost 19%, but this is also a traditional indicator. We are having a unique year because a resort tax has been introduced; we expect to receive about 430 million rubles, which the city will be able to additionally spend on building resort infrastructure. Accordingly, this will free up funds that were previously planned to be allocated to these objects and spend them on other purposes.
Denis Chetyrbok
Head of the Budget and Financial Committee of the Legislative Assembly of St. Petersburg
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Intra-annual inequality and the relative irregularity of the flow of quarterly budget expenditures are an objective feature of the budget process. The first quarter almost always looks more modest than the fourth. It is hardly possible to avoid this, but it is necessary to strive to smooth out and level out imbalances. Behind the figures in financial reports there are always real recipients of services or benefits financed from budgetary allocations. And for them, a relative lag in financing means access to demanded and, in fact, already secured financial resources at the planning level, delayed for months and quarters. The rising dynamics of the share of budget expenditures actually financed for the first quarter of 2022–2024 indicates an increase in financial discipline and the overall efficiency of organizing the budget process in St. Petersburg.
Dmitry Desyatnichenko
k.e. Sc., head of the educational program “Economics” of the Presidential Academy in St. Petersburg
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