Problems related to regional budgeting amid fiscal consolidation

The development of the major financial plan of the Vologda Oblast for 2018-2020 was carried out amid stagnating GRP growth rates, a sharp decline in investment activity, further decrease in population’s real money incomes. In this regard, conceptual approaches to budgeting, which should be determined in view of its orientation on providing conditions for future sustainable development, is becoming more relevant. However, according to the study, the concept of a new financial cycle is based on fiscal consolidation, which is reflected in extremely low average annual growth rates of own revenues and budget expenditure which do not compensate for inflation. Such approaches to regional budgeting are predetermined by federal guidelines, which absolutize the principle of achieving surplus at the cost of reducing the funding of the territory’s future development. Year after year, the opportunities of using budget as a tool for triggering the investment policy are being missed. It is not by accident that in 2018-2020, the growth rate of investment will be near-zero, which does not indicate the income generation potential. The article presents the results of analysis of the regional budget of the Vologda Oblast for 2018-2020, the main purpose of which is to assess the compliance of budget parameters with the objectives of the region’s development. The research novelty of the work is determined by a comprehensive study which made it possible to assess the impact of budget consolidation set by the Ministry of Finance on the regional budget policy in conjunction with macroeconomic forecast and develop specific proposals to mobilize the few remaining domestic reserves to increase fiscal capacity. The main conclusion is that the new budget continues to simulate stability without actually overcoming the stagnation of budget revenues or increasing funding for significant spheres of the society. The materials of the article can be used by public authorities in the development of the budget policy, experts in finance, and researchers.