The financial backbone of the municipal investment policy in the towns of the Far North

One of the major issues of the municipal investment policy is its resource provision, the priority of which belongs to financial resources. Availability of own revenue sources and economic and financial base is a prerequisite for ensuring assigned to themunicipalities the authority to ad--‐ dress local issues and effective implementation and development of the main areas of social and economic policies of cities.

Currently, the northern regions are quite attractive for all kinds of investment projects. In most cases, this is due to implementation of oil and gas projects, the development of new depos--‐ its, the development of the processing industry. The problem is that despite the investment at--‐ tractiveness of the northern territories, replenishment of such projects takes place mainly at the federal and, to a lesser extent, on the regional level, and local budgets received only minor finan--‐ cial contribution.

In areas related to the Far North and equivalent areas, according to the list of regions clas--‐ sified as such, there are 123 cities with a total population of 6306.4 thousand people. For further study were chosen city with a population of 20 to 100 thousand people.1, due to the fact that the number of cities and population living in them, is of predominant importance in the total number of cities in the Far North. Were excluded from the federal centers, since they have their own char--‐ acteristics and are in more favorable conditions for the formation and implementation of the in--‐ vestment of municipal policies. Cities with a population of 20 thousand people, also have their own characteristics namely the lack of financial, resource, staffing, to form their own municipa investment policy.

Due to the fact that urban districts are the most promising in the formation and imple--‐ mentation of the municipal investment policy, since most have a wide range of the local issues within their field, as well as the amount of authority to address these issues and have the most advanced infrastructure, financial and material resources for the development of the territory, it is suggested further research to analyze the financial feasibility of the municipal investment policy is urban districts.

Of the 63 cities with populations of 20 to 100 thousand people. and not having the status of the federal center to the city's districts are 29 municipalities. Were excluded urban districts Tynda Zeya (Amur region), Dalnegorsky (Primorye), Strezhevoi (Tomsk region) Ust--‐Ilim (Irkutsk re--‐ gion) Lesosibirsk (Krasnoyarsk region) due to the fact that in their subjects of the Federation, they occupy a minor place, and the actors themselves largely do not apply to the Far North.

In the analysis of the public sector has been used municipal statistical information database of the State Statistics Committee of the Russian Federation2.

Municipal budjets

Within the concept of the municipal reform the functioning of thebmunicipalities and their solutions in local matters was supposed to provide real independence of local budgets by assign--‐ ing them permanent revenue sources and increasing the role of local taxes, as well as providing municipal financial assistance from the regional budgets. The main source of the permanent in--‐ come of the municipal budget are taxes and fees that make up the base of the municipal budget. After the reform of the local self--‐government, held in 2005--‐2007. As local taxes were identified only land tax and personal property tax. These types of taxes are the most time--‐consuming in terms of data collection and low--‐income [1, p. 20]. The share of tax on personal property in the incomes of the local budgets of the most northern territories does not exceed 0.1% of the land tax --‐ 1% [2, p. 6--‐7]. The share of tax on personal property in the incomes of local budgets of most northern territories does not exceed 0.1% of the land tax --‐ 1% [2, p. 6--‐7]. Previously existing taxes on advertising, inheritance and gift taxes, as well as local license fees were abolished. Have changed fundamentally and of deductions from federal and regional taxes and fees to local gov--‐ ernments depending on the type of municipality. So there was a decrease rates of assignment of the single most profitable for local budgets and tax on personal income (10%) and an increase in standards of uniform agricultural tax and the tax on imputed income for certain types of activities, which also have very low share in the total income of the northern municipalities.

From 2008 to 2012. the Budget Code was further amended, which, apart from the regular income redistribution and the norms of the deductions from federal and regional taxes and fees, ordered state authorities of the Russian Federation to establish uniform and (or) additional stand--‐ ard allocations to local governments from the tax on personal income on the basis of enrollment in the local budgets of at least 20 % of the tax revenues of the consolidated budget of the region from the tax, which should lead to an increase in the share of own revenues in the municipa budgets. These changes came into effect on January 1, 2013. At the moment, due to the lack of statistical data can not be analyzed how these changes affect the income structure of the munici--‐ pal budgets.

In accordance with Federal law from 03.12.2012 N 244--‐FZ 3 in the Budget Code also made additional changes to the statutory rates in local revenues from non--‐tax revenues. So, from 1 Jan--‐ uary 2014 to the budgets of urban districts to the state ownership of land revenue will come from the lease of land, state ownership is not differentiated and are located within the boundaries of urban district, from the sale of the rights to lease these plots, as well as income from land sales, state ownership is not differentiated and are located within the boundaries of the urban districts under the specification is not 80, but 100%. From 1 January 2016 to the budgets of municipalities and urban districts budgets will be subject to enrollment fee for the negative impact on the envi--‐ ronment according to the norm of 55 instead of 40%, operating now.

Analyzing municipal budgets for 2004--‐2012 of the Far North region., We can say that the majority of municipalities in the regions of the Far North are still scarce. With surplus on average in a municipality in 2012 ended Arkhangelsk and Murmansk regions, as well as the NAO. On aver--‐ age, there is an increase of budget revenues in the northern regions and municipalities deficit of --‐

0.8 vs. --‐3.7% in the whole of Russia. Despite the growth of the local revenues of the northern re--‐ gions, the majority of the municipalities are still deprived of the financial independence and re--‐ main subsidized.

Budjets of the urban sectors of the North

As for the budgets of urban districts of the North , in the course of the analysis for 2007 and 2011 (Table 1) shows that the share of own revenues in total budget revenue of municipalities in 2011 grew by 1.3 times in comparison with 2007 and amounted to an average of 79.4%, while the share of tax revenues in total own revenues, on the contrary, decreased by 1.5 times and amounted to 43.2 against 63.2 % in 2007, the greatest increase in the proportion of its income came in cities of the Komi Republic and some cities of the Khanty--‐ Mansi Autonomous District, as well as in Monchegorsk Murmansk region.

The share of own tax revenues and municipal budgets of the Far North

Table 1

№	Urban region	The share of own revenues in total revenues MO%, %		The share of tax revenues in personal income МО, %
		2007	2011	2007	2011
Karelia republic
1	kostomuksha	96,4	82,7	56,6	49,4
Republic Komi
2	Inta	22,4	86,9	96,1	35,4
3	Usinsk	83,1	84,1	66,9	67,0
4	Vorkuta	35,3	86,0	92,6	50,0
5	Uhta	63,8	86,0	83,5	52,6
Arkhangelsk region
6	Koryajma	73,7	76,0	92,9	96,9
7	Novodvinsk	71,0	74,5	89,7	89,0
8	Kotlas	71,6	77,2	90,5	64,0
Murmansk region
9	Apatiti	70,1	74,5	57,4	50,4
10	Kirovsk	77,4	82,5	47,7	52,1
11	Monchegorsk	26,1	81,3	72,7	58,3
Ymalo Nenets AO
12	Gubkinskiy	47,2	84,1	90,7	24,1
13	Muravlenko	85,6	82,0	33,5	17,9
14	Labitnangi	78,7	87,5	23,0	15,2
Hanti Mansiiskiy AO
15	Urai	26,8	83,1	61,8	29,5
16	Langepas	85,5	81,5	23,9	28,2
17	Radujnii	25,6	82,1	90,0	30,8
18	Pit Yah	85,5	79,1	29,4	33,0
19	Nyagan	85,1	81,9	26,2	31,2
20	Megion	83,2	77,2	29,4	34,9
Sakhanlin region
21	Ohinskiy	57,5	93,6	34,2	35,1
22	Korsakov	40,0	94,0	85,0	25,9
23	Homsk	36,9	93,3	79,1	23,9
Totally according the region:		62,1	79,4	63,2	43,2

If a comparative analysis of urban districts, located in the Far North and without status monotown with monoprofile urban environ--‐gami, their fiscal capacity is somewhat worse than in mono. Analysis of budgetary security company towns in 2007 and 2011. showed that most of the surveyed cities have budget surplus. In 2007 ended with a deficit of only two cities, and the aver--‐ age surplus budgets monotowns 4% of total revenue. In 2011 budgets were scarce four cities, and the average budgetary provision was reduced to 3.4%. In urban districts, is not related to single--‐ industry towns, the average fiscal capacity in 2011 amounted to 0.4% of revenue, while in 2007 was at the level of single--‐industry towns (3.9%). The share of own revenues in total revenues monocities and share of tax revenues in total own income is also somewhat higher than in urban areas, do not have the status of mono towns.

Own revenues of the municipalities increased by non--‐tax revenue in the municipal budget, which as well as tax revenues determine the economic independence of the budget and depend solely on the efficiency of the local authorities. Non--‐tax revenues include revenues from business and other activities, the sale of tangible and intangible municipal property, payments for use of natural resources, income from the state and municipal property, etc. A comparative analysis of the share of non--‐tax revenues in total revenues of cities shows that in this direction have some, but very limited growth prospects. Therefore, there is some reserve supply revenue base in this direction.

Analysis of income (Table 2), namely the revenue from the tax, and the gratuitous use of the state and municipal property, in total budget revenues suggests that any changes in the reve--‐ nue structure of the municipalities did not happen. Municipal budgets continue to depend heavily on gratuitous receipts, while the share of income tax revenue is on average 35%. In this case, when compared with other regions of Russia, the smallest share of tax revenues in local budgets celebrated exactly northern regions of Russia 4.

The largest share of tax revenues recorded in the Arkhangelsk region cities (average 60.8%) and the lowest rate in the cities of the Yamal--‐Nenets Autonomous District (about 16%). According--‐ ly, the share of gratuitous receipts Labytnangy largest in the Yamal--‐Nenets Autonomous District (85%) and the lowest Koryazhma Arkhangelsk region (26%). On average, the urban districts of the North gratuitous receipts account for more than 60%.

The share of the revenues from the use of the state and municipal property--‐lebletsya to 13% in Kirovsk Murmansk region to 0.8% in Kholmsk Sakhalin Oblast and the average for the urban districts is about 4%. The most favorable situation in this part of the income consists of the munic--‐ ipal budgets in the Murmansk region, where the figure reaches an average of 9.7% of the total in--‐ come of the local budgets.

Income structure of the municipal budgets urban districts of the Far North

Table 2

№	Urban region	Share of tax revenues,%		Share of income from the use of state. and municipal. property%		Share of income from gratuitous receipts,%
		2007	2011	2007	2011	2007	2011
Karelia republic
1 \	Kostumuksha	54,5	40,8	4,7          \	3,4       \	34,6	51,1
Komi republic
2	Inta	21,0	30,8	1,9	2,5	77,4	66,7
3	Usinsk	55,2	56,1	13,1	12,2	31,7	32,0
4	Vorkuta	32,7	43,0	0,2	3,7	64,8	53,4
5	Uhta	53,2	45,3	10,8	6,4	36,2	41,7
Totally the subjects of the republic		40,5	43,8	6,5	6,2	52,5	48,4
Arkhangelsk region
6	Koryajma	49,3	71,7	5,2	3,2	28,7	26,2
7	Novodvinsk	62,7	62,3	3,0	2,5	35,3	36,0
8	Kotlas	62,8	48,4	6,8	4,3	34,0	48,2
Totally the subjects of the republic		58,2	60,8	5,0	3,3	32,6	36,8
Murmansk region
9	Apatiti	40,2	37,5	4,6	8,4	56,9	55,7
10	Kirovsk	34,9	43,0	5,4	13,0	61,0	41,5
11	Monchegorsk	19,0	34,4	3,0	7,8	73,9	61,2
Totally the subjects of the republic		31,3	38,3	4,3	9,7	63,9	52,8
Yamala--‐ Nenetskii AO
12	Gubkinskiy	42,8	20,3	1,6	1,3	54,0	77,2
13	Muravlenko	28,7	14,7	1,4	1,5	64,1	83,0
14	Labitnangi	18,1	13,3	1,8	1,5	78,8	85,1
Totally the subjects of the republic		29,8	16,1	1,6	1,4	65,6	81,7
Hanti--‐Mansiiskiy AOX
15	Urai	16,6	24,5	2,5	4,2	73,2	71,8
16	Langepas	20,4	22,9	3,2	2,4	69,1	74,8
17	Radyjnii	23,0	25,3	2,6	2,2	69,0	72,2
18	Pit yah	25,1	26,1	2,4	4,0	68,8	70,7
19	Nyagan	22,3	25,5	2,4	2,5	61,5	73,2
20	Megion	24,4	26,9	2,2	3,7	67,9	67,7
Totally the subjects of the republic		21,9	25,2	2,5	3,1	68,2	71,7
Sakhalinskaya region
21	Ohinskiy	19,6	32,8	1,1	1,9	55,3	65,1
22	Korsakov	34,0	24,4	6,9	2,7	51,1	73,6
23	Holmsk	29,2	22,3	1,1	0,8	63,0	78,0
Totally the subjects of the republic		27,6	26,5	3,0	1,8	56,4	72,2
Totally the subjects of the republic		34.4	35,0	3,8	4,1	57,1	61,2

As for the gratuitous receipts, up to 2008 [3, p.39] there is a tendency to move from listing subsidies areas of spending are determined by the municipalities themselves, to subsidies, ie equi--‐ ty higher--‐level budget system costs that it considers necessary.

Grants, subsidies and subventions

The reform of the local government a significant role was assigned to support the loca budget from the higher--‐level budget system through targeted transfers --‐ subsidies (for equity fi--‐ nancing priority expenditures) and subsidies (to finance the transferred powers).

The share of grants, subsidies and subventions gratuitous receipts in the amount of local budgets, %

Table 3

№	Urban region, Subject region	Share in total non-repayable receipts , %
		Dotation		Subsidion		Subvenzii
		2007 5	2011 6	2007	2011	2007	2011
Republic Karelia
1 п	Kostomuksha	3,2        1	0,3        1	32,7	36,5	64,1	33,8
Republic Komi
2	Inta	43,4	59,6	10,1	13,8	46,5	19,6
3	Ysinsk	29,1	24,5	18,1	23,2	52,9	49,5
4	Vorkyta	45,5	46,1	12,4	25,2	42,1	26,3
5	Yhta	25,9	32,1	21,3	29,7	52,8	33,6
Totally the subjects of the republic		35,9	40,5	15,4	22,9	48,5	32,2
Arkhangelsk region
6	Koryajma	–	–	7,9	15,9	91,7	82,1
7	Novodvinsk	–	23,0	19,9	9,9	79,8	70,7
8	Kotlas	–	7,2	19,1	15,1	80,7	46,4
Totally the subjects of the republic		–	10,0	15,6	13,6	84,0	66,4
Murmanskaya region
9	Aoatiti	30,6	19,1	18,5	34,1	50,9	45,9
10	Kirovsk	6,6	6,2	56,7	47,2	36,4	42,2
11	Monchegorsk	19,9	25,3	60,8	42,8	19,3	30,1
Totally the subjects of the republic		19,0	16,8	45,3	41,3	35,5	39,4
Yamalo--‐Nenzkiy AO
12	Gubkinskiy region	53,3	40,9	0,7	36,5	43,9	20,5
13	Muravlenko	57,5	48,8	0,9	28,1	41,5	21,7
14	Labitnangi	72,4	47,6	0,6	37,8	27,0	14,7
Totally the subjects of the republic		61,0	45,7	0,7	34,1	37,4	18,9
Khanti Mansiiskiy АО
15	Uray	43,1	37,5	31,2	31,5	17,3	23,6
16	Langepas	33,2	47,4	36,3	17,0	21,2	24,7
17	Radyjniy	43,8	46,3	35,7	25,3	20,0	24,7
18	Pit --‐yah	39,2	44,1	38,2	13,9	21,0	29,4
19	Nyagan	48,0	35,8	26,1	36,0	24,7	24,6
20	Megion	37,9	41,8	35,1	21,1	24,9	33,6
Totally the subjects of the republic		40,8	42,1	33,7	24,1	21,5	26,7
Skahalinskiy region
21	Ohinskiy	7,3	36,7	62,5	32,6	28,8	9,7
22	Korsakov	2,4	29,1	15,7	45,7	81,8	8,0
23	Holmsk	2,4	48,5	60,6	16,3	35,7	8,5
Totally the subjects of the republic		4,0	38,1	46,2	31,5	48,7	8,7
Totally on cities:		28,0	32,5	27,0	27,6	43,6	31,4

Over the past years, the ratio of grants, subsidies and subventions (Table 3) depends on the subject to which the Federation relates a particular city district. For example, in Costa mukshe Ka--‐ relia share grants from higher budgets in 2011 is almost zero--‐hand, a low share of subsidies urban districts also observed in Murmansk and Arkhangelsk regions. In other northern regions of Russia the share of the subsidies in 2011 is about 40 %. And in Sakhalin and Arkhangelsk regions, on the contrary, there was a redistribution of income in favor of non--‐repayable grants.

Analyzing the data in 2007 and 2011., We can conclude that the urban districts in different regions have different capabilities implementing its own investment policy due to the fact that the share of grants, areas of spending are determined by the municipality alone, ranges from 0.3 to 59.6 %, which gives (or does not) a certain freedom in the implementation of municipal invest--‐ ment policy.

In relation to the subsidies received the federal subjects leeway for choosing areas of fund--‐ ing. As a result, the priority areas of the socio--‐economic development of cities funded in areas that regional authorities consider priorities and their own direction of the development financed by the local budgets on leftovers.

In general the structure of theincome suggests that the main problem of the municipal in--‐ vestment policy is the lack of budget and budget DotA insulating most municipalities of the North, as well as the dependence of the municipalities of the Federation in terms of the financial support and, as a consequence, in terms of implementing its own socio--‐economic policies and investment in particular. Low share of local taxes and, conversely, a high proportion of regulatory taxes, annu--‐ al change which, as well as the uncertainty of standard allocations to the local budget increases the dependence of the municipal budget from higher levels, which reduces the autonomy of the municipal formation in the sphere of investment activity.

Investitions

With regard to investment, there are two types: in the form of the capital investment, en--‐ suring reproduction of fixed assets, and portfolio (securities purchases) providing reproduction of funds. For municipalities play a major role capital investments --‐ costs of new construction, expan--‐ sion, renovation and modernization of existing facilities, purchase of equipment, etc.

With regard to investment, there are two types: in the form of the capital investment, en--‐ suring reproduction of fixed assets, and portfolio (securities purchases) providing reproduction of funds. For municipalities play a major role capital investments --‐ costs of new construction, expan--‐ sion, renovation and modernization of the existing facilities, purchase of equipment, etc. Trends and the share of budgetary investment in all different cities, but traditionally high share of funding of housing and communal services (average 43%), on the financing of education and health care are sent approximately 20 and 15 % of investments, respectively, and about 2 % for cultural ob--‐ jects. As for sports facilities, if in 2008 on their investments on average accounted for about 8 %, and in some urban districts, this value reached 63% (Costa muksha), in 2011 none of the urban dis--‐ tricts of sports facilities not envisage the investment from the municipal budget.

Trends and the share of budgetary investment in all different cities, but traditionally high share of funding of housing and communal services (average 43%), on the financing of education and health care are sent approximately 20 and 15 % of investments, respectively, and about 2 % for cultural objects. As for sports facilities, if in 2008 on their investments on average accounted for about 8 %, and in some urban districts, this value reached 63% (Costa muksha ), in 2011 none of the urban districts of the sports facilities not envisage the investment from the municipal budg--‐ et.

Trends and the share of the budgetary investment in all different cities, but traditionally high share of funding of housing and communal services (average 43%), on the financing of educa--‐ tion and health care are sent approximately 20 and 15 % of the investments, respectively, and about 2 % for cultural objects. As for sports facilities, if in 2008 on their investments on average accounted for about 8 %, and in some urban districts, this value reached 63% (Costa muksha), in 2011 none of the urban districts of sports facilities not envisage the investment from the munici--‐ pal budget.

If we consider the investment in fixed assets at the expense of the municipal budget, the investments made by organizations located on the territory of the municipality (except small busi--‐ nesses) and municipal organizations form of ownership, then compared with 2008 in many cities there was a significant reduction in investment in fixed assets at the expense of the municipa budget. Of the 23 cities, only six, this figure has not decreased, and the four cities of them are sin--‐ gle--‐industry towns, and only in four cities (Kotlas Ukhta, Kirov and megion) increased by approxi--‐ mately 1.5 times.

Investment organizations in the territory of the municipality, on the contrary, most of them (except for the cities "champions") increased approximately 1.3 times (in mono --‐ 3.4 times). It is worth noting the town Inta Komi Republic and Okha, Sakhalin region, where growth of this indica--‐ tor increased by 42 and 27 times, respectively, compared to 2008 in six urban districts participat--‐ ing in fixed capital investment at the expense of decreased organizations.

Investment by the municipal organizations form of ownership has declined slightly, with the exception of cities and Okha Korsakov Sakhalin region, where the rate increased by 185 and 40 times, respectively.

On average, the share of the investments from the municipal budget is only 5.6% (in mono --‐ 2.7%), while the share of investment organizations in the territory of the municipality, an average of almost 90%, and in six monotowns reaches almost total level on the organization of the munici--‐ pal ownership form accounts for about 7%.

Spread monies are also very significant, especially in the investment of the organizations in the territory of the municipality. Where are quite successful large enterprises including city--‐ forming, the investment amount increased significantly. So, if we take, for example, the Murmansk Region, the Kirov and Monchegorsk, which are single--‐industry towns in which there are large en--‐ terprises, investment by organizations is much higher than in Apatity. The volume of investment organizations Kirovsk 33 times higher than the level of Apatity, the amount of the investment or--‐ ganizations in Monchegorsk --‐ 3 times higher.

Currently, municipal budgets do not have the available funds comparable to the cost of fi--‐ nancing investment projects, and cases where an outside investor fully financed investment pro--‐ ject, are rare [5, p.373]. Most often, a certain percentage of the investment costs, mainly in infra--‐ structure, have to pay the municipality. One way of the financing investment projects may be re--‐ ceiving funds through the sale of the municipal property, but this method is a one--‐time solution to the problem, since the leads to a decrease in assets of the municipality. In this regard, to finance their needs municipal governments borrow funds.

Volumes of the municipal debt, borrowing methods

Volumes of municipal debt, according to the Ministry of Finance (see Table 4), has steadily increased, and in 2012 they increased to 2010 by region was about 20% of the North, which is 3 times lower than in the whole of Russia, where the figure was 65%7.

Table 4

The volume of the municipal debt by region, Russia, thous

№	Subject of RF	2010	2011	2012	Growth in% by 2010
1	Republic Karelia	1308871	1441343	1702244	130%
2	Republic Komi	1333833	1446063	1491696	112%
3	Arkhangelsk region	879857	1514506	2221300	252%
4	Nenetskiy AO	н/д	н/д	30000	–
5	Murmansk region	2231920	2342482	2341291	105%

7 The official web site of the Ministry of Finance. [Electronic resource]. URL: (date accessed: 18/06/2013).

6	Khanti--‐Manskiy АО — Ugra	3030017	3992514	3118441	103%
7	Yamalo--‐Nenetskiy AO	2289991	2424367	1886719	82%
8	Republic Tiva	21550	196664	301604	1400%
9	Republic Sakhа (Yakutia)	1386704	1495574	1538822	111%
10	Kamchatskiy region	1636879	2001872	1977447	121%
11	Magadan region	1509354	1554401	1628513	108%
12	Sakhalin region	2040452	2411331	2726123	134%
13	Chukotskiy AO	–	–	–	–
Totally the subjects of RF		17671438	20823128	20964200	119%
Totally in RF		130337616	169810885	215474394	165%

On average, municipal debt of the Far North regions is about 10% of the total debt in the country, which is the average. For example, the Volga and Central federal districts have 30% debt and 21 municipal entities of the total municipal debt, respectively. The lowest rates of the munici--‐ pal debt in the North Caucasus (2%) and in the Far East (6%) federal districts.

In foreign practice to borrow funds local authorities use the following forms of borrowing: a bank loan, bill loan, bond issue. Abroad every form of municipal borrowing has its scope: bank loans used to cover short--‐term cash shortages, promissory notes --‐ to cover the deficit of the mu--‐ nicipal budget, bond loans --‐ to finance long--‐term investments [6, 2000].

In the national practice widely used loans from other budgets budgetary system of the Rus--‐ sian Federation, which, according to the Budget Code of the Russian Federation, are not more than three years, by virtue of which can not be used as the financing of the investment projects designed for the long term, to the same the possibility of obtaining funds from higher budgets are extremely limited if the project is not ranked in any federal or the regional program. In this regard, the main source of financing for the investment projects at the municipal level, according to many authors [7, 8, 9], are the loans (bonds) and loans from commercial organizations.

Bond loans are the traditional and widely used method of borrowing in the world for re--‐ gional and local authorities. On international stock markets municipal bonds occupy one of the main places, received a special development in federal states with a high degree of economic in--‐ dependence of the regions. Volumes municipal bond market is leading the U.S., a significant share of the market occupied by European countries. Bond form of borrowing local authorities is the de--‐ velopment in Asia (primarily Japan), emerging equity markets of Latin America. In Western Europe, the role of bonds as a source of financing is one of the most important ways to replenish loca budgets. For example, in France, borrowed funds amount to 32--‐35% of the total budget of the lo--‐ cal government [10, 2000].

Currently, the Russian market of the municipal bonds (cities and districts are not subjects of the Russian Federation) is not highly developed, as opposed to the market regional bonds (mu--‐ nicipal bonds). According to the Ministry of Finance, on January 1, 2012 has been registered and are 79 issues of the securities of 28 subjects of the Russian Federation in the amount of 343,878,363 rubles. A larger share of the sum of which is occupied Moscow (49.9 %) and Moscow region (11.8 %). From the Far North 13 registered securities issues only four subjects of the Rus--‐ sian Federation ( Republic of Komi , Karelia, Yakutia and the Khanty--‐Mansi Autonomous Area), the total share of 5.9 % of the total amount of the securities issued by entities of the Russian Federa--‐ tion.

As for municipalities, if in Russia in 1997, bond issues have been reported in 16 municipali--‐ ties where only three cities were the centers of the federal, and in 2006 registered their bonds on--‐ ly three cities, and in 2007 was registered any issue of municipal securities. Currently, according to the Ministry of Finance 8, on January 1, 2012, only seven cities have been released and are munici--‐ pal bonds, six of which are federal centers (Ufa, Tomsk, Volgograd, Krasnodar, Krasnoyarsk, Kazan) and one urban district Dubna, Moscow Region, with a population of 70 thousand people. The amount of debt on municipal bonds is only 2% of the total amount of debt securities of Russian regions and municipalities.

Currently, there are a set of different restrictions on the possibility of issuing municipa bonds by local governments. Such restrictions are fixed within the Budget Code of the Russian Federation of 31.07.1998 N145--‐FZ (as amended. From 07.05.2013); The federal law from 05.08.2000 N 116--‐FZ (as amended on 24.06.2007) "On amendments and additions to the Budget Code of the Russian Federation"; The federal law from 29.07.1998 N 136--‐FZ (as amended from. 14.06.2012) "On the specifics of the issue and circulation of state and municipal securities."

The main legal restrictions on the issuance of bonds municipalities are: 1) according to Art. 107 of the Budget Code, the maximum amount of municipal debt must not exceed the approved total annual revenues of the local budget, excluding the approved amount of gratuitous receipts and income tax revenues on additional statutory rates; 2) according to the law "On peculiarities of circulation of the state and municipal securities 'issuance of the municipal securities shall be per--‐ mitted only when approved by the decision of the local government on the budget for the current fiscal year (1) limit the size of the municipal debt and (2) the maximum volume of borrowed funds allocated municipal entity during the current fiscal year to finance the budget deficit, or the devel--‐ opment programs of the municipality. At the same time limiting the amount of borrowed funds allocated municipal entity during the current fiscal year for these purposes, shall not exceed 15% of the revenues of the local budget for the current fiscal year, excluding financial aid from the fed--‐ eral budget and the budget of the Russian Federation, and excluding involved in the current fisca year borrowing. And the maximum amount of debt service municipality in the current financia year shall not exceed 15% of the expenditure budget of the appropriate level, and excluding in--‐ volved in the current fiscal year borrowing. And the maximum amount of debt service municipality in the current financial year shall not exceed 15% of the expenditure budget of the appropriate level.

According to the program of the municipal domestic borrowing urban districts of the Far North in 2012 , 11 of the 20 cities (in three urban districts unknown) attract loans from other budget system of the Russian Federation, 15 towns using loans from commercial organizations and 10 cities use both of these sources of deficit financing local budget. Of these three cities ( Inta, Vorkuta and Labytnangy ) in 2012 did not plan to use credit, but only repaying earlier loans . Loan funds using securities is not provided in any of the studied municipalities.

Another type of loan is to guarantee the return of funds provided by the municipal authori--‐ ties. Of surveyed cities in 2012 guarantees, according to the program of municipal guarantees, provided only four cities: Rainbow and Pyt--‐Yah (Khanty--‐Mansiysk) and Korsakov and Kholmsk (Sa--‐ khalin region). Performance on earlier guarantees provided in seven urban districts.

Specificity of the municipal loans is that, unlike those of other issuers, they are aimed at solving local problems and not for profit. In this regard, municipal loans are unattractive to foreign investors and largely focused on population and economic entities located in the municipality and is not interested in maximizing dividends on the loan and obtaining social effects in this area.

R.V. Baboon and Z. Z. Mullagaleeva municipal loans are classified into several groups [8, p. 74--‐77]:

• 1)    Loans for the investments in the infrastructure and the social facilities with an impact as a public good, but not cash income. In the current economic situation, these loans can afford a single, most prosperous financially municipalities, since they participate in outside inves--‐ tors is unlikely.

• 2)    Loans for investments in the expansion of the tax base of the local budget, iein the con--‐ struction or reconstruction of facilities, the revenues from which will replenish the budget (eg, parking garages, shops, markets, etc.). Such a loan can be seen as a purely commercial, it can participate and external investors.

• 3)    Loans for investment in energy saving and other technologies to reduce the cost of the lo--‐ cal budget. For example: the replacement of street lighting to more efficient replacement mains isolation, accompanied by reduction of heat loss, etc. This loan can also be regarded as a commercial, although there is difficult to identify the real source of repayment

Resource--‐saving projects

A.N.Shvetsov notes that among these types of loans for the major municipal loans should be aimed at resource--‐ modernization of the social objects, because in the future they will allow to reduce budget expenditures [7, p.21]. He suggests that the share of these investments in the structure of the total investment must be at least 50%. This statement is true for most cities in the Far North, where any kind of resources are several times more expensive than in other regions of the country, and loss, for example, heat, extreme climatic conditions are much higher then in the northern regions of the depreciation rate of buildings, facilities and equipment are much higher than in the whole country. Due to the fact that the main mechanism for the implementation of the investment projects are municipal target programs, analysis of the directions of their implementa--‐ tion leads to the conclusion that resource programs on average in urban districts of the Far North falls 7.4% of the total municipal expenditures for the specific programs. These data range from 0% to 31% to Kostamuksha Ukhta (Table 5).

Table 5

The share of expenditures budget for the implementation of municipal programs aimed at resource in total budget expenditures for specific programs

The largest share resource programs			The lowest proportion resource programs
№	Urban region	specific gravity , %	№	Urban region	specific gravity , %
1	Uhta	31,7	1	Kostumuk	0,0
2	Urai	20,2	2	Labitnangi	0,4
3	kirovsk	19,4	3	Muravlenko	1,0
4	vorkuta	16,5	4	Radyjnii	1,0
5	holmsk	10,9	5	Langepas	1,3

Virtually all municipalities realized long--‐term departmental target program "Energy saving and energy efficiency in the municipality" to 2015--‐2020. In most municipalities, and it is the only one. The amount of funding this program are also quite different. So, in Kirovsk for its implemen--‐ tation in 2012, has more than 19% of total spending on targeted programs and Labytnangy --‐ 0.4%. The greatest number of targeted programs aimed at resource conservation, implemented in Ukhta and Monchegorsk (6 and 5, respectively). In addition to energy conservation and efficiency in the--‐ se urban districts provided : increased reliability Electricity saving, heating, water and sanitation and other programs. Only in Ukhta for these purposes is more than 31 % of the costs for specific programs, and Monchegorsk --‐ about 10%. Use of energy--‐saving technologies municipalities lack of funds hindered from enterprises, insufficient solvency of the population, difficulties in obtaining loans on reasonable terms. In this regard, by a decline in budget revenues at the local level there is a tendency to abandon the investment costs in favor of the current --‐ various social payments, up--‐ keep of infrastructure, etc. The vast number of targeted programs in the municipalities of the Far North, directed to the social sphere, maintenance and repair of the municipal property and hous--‐ ing and communal services. Costs for repairs and maintenance of the buildings and structures op--‐ erating in the territory of the Far North, much higher than the national average due to harsh cli--‐ matic conditions and in view of their increased wear.

The situation is the general lack of funds does not allow for significant investment projects from the budget of the territorial education. The very process of such financing, given the magni--‐ tude of the necessary structural reforms , possible only for critical infrastructure areas. All other , non--‐critical for the functioning of the territory of the objects can only rely on the budgetary alloca--‐ tion for leftovers. As a result, the organization of targeted loans for the implementation of the specific investment projects of the local authorities in addition to the primary investment objec--‐ tives and solve of the socio--‐economic problems of its territory.

Capital expenditure envisaged for the construction in the social sphere and infrastructure are recorded in eight urban districts (Apatity, Gubkin Kostamuksha, Kotlas Muravlenko Ukhta No--‐ vodvinsk, Urai). Costs of broadening the tax base of the local budget, ie in the construction or the reconstruction of the facilities, the revenues from which will replenish the budget can not be pro--‐ vided in any of the municipalities.

In addition to these types of people can also act participant municipal loans. For such par--‐ ticipants are most typical housing loans. It is in order to attract additional financial resources to invest in housing in Dubna, Moscow region with a population of 70 thousand people. in 1995 and 1997. were issued bonds totaling $ 10,722 thousand rubles. with maturities in 2025 and 2022. In subsequent years, cities such bonds, non--‐federal centers have been issued. As for the urban dis--‐ tricts of the Far North, the three municipalities (Inta Kostamuksha, Rainbow) implemented pro--‐ grams to promote housing construction and in five districts (Gubkin Labytnangy, Inta, Korsakov, Kholmsk) --‐ housing construction program with the participation of the federal and regional levels. So, for example, Gubkinsky Yamal--‐Nenets Autonomous District for several years running and im--‐ proving the system of housing, based on raising funds under the equity businesses and individuals. In 2010, the population of the city has invested in housing 16,630,000 rubles. City Administration concluded municipal contracts to participate in the joint construction of 21 apartments in the amount of 82.2 million rubles9.

Conclusion

Summarizing consideration the financial basis of the municipalities of the North based on the analysis of budgetary security and income structure, it can be concluded that most urban dis--‐ tricts of the North remain highly subsidized, and the investment policy of the municipal govern--‐ ment depends on the investment policy of the regional authorities. This is due to the fact that the independent investment policy of the municipalities is extremely limited and is possible only in very rare cases and in high--‐formations. Most municipalities forced to seek the financial support for higher budgets and thus take into account the development priorities of the regional and federa programs. In this single--‐industry towns are in a better financial position compared to other urban districts, have a stable budget and a much larger investment opportunities through participation in investment company towns.