Evolution of Debt, Revenue and Budget Balance in the Hungarian Local Government System between 2012 and 2021

Abstract

The study examines the Hungarian local government subsystem from a management perspective. The study analyses revenues, the budget balance and the debt stock in detail for the period 2012-2021. During the period under study, there were significant changes in the financing and the functions of Hungarian local governments. A striking change is that the decentralised local government system has been replaced by a centralised local government system. Centralisation was mainly in the area of the tasks performed, mainly in the area of public human services. Debt consolidation. Following consolidation, municipal revenues fell sharply as responsibilities were reduced, but the system stabilised. In terms of revenue, it can be noted that the election year has an influence on revenue trends. This fact naturally also affects expenditure, with the municipal subsystem running a deficit in 2019. However, debt has started to increase again since 2017, despite the existence of rule-based practices. The measures taken in the wake of the COVID-pandemic have significantly reduced the revenue potential of local governments, and the sector faces a significant challenge.