Regional Assembly Approves Budget for Upcoming Year

The 2016 budget for the Region has been released and approved, and includes a surplus.

Where in previous years Moravian-Silesian Assembly members have approved either balanced budgets or deficits, the 2016 budget should put more money in Moravian-Silesian Region’s coffers than will be spent. This will reduce the Region’s indebtedness. Regional Assembly members voted on it today.

The budget for the Moravian-Silesian Region envisages revenues next year of 8.053 billion Czech crowns and spending to reach 6.813 billion. The 1.24 billion crown surplus will be used mainly to repay loans the Region has drawn and used to pre-finance projects co-funded by the European Union.

The basic priorities in the Moravian-Silesian Region’s budget for 2016 are to enable Region-funded organisations and transport services to operate at an appropriate level and to implement projects which have been planned and are being co-financed by European Union funds.

“Next year’s proposed budget amounts to over 8 billion crowns, but it can be realistically expected that we will be running with roughly 19 billion. This situation happens each year, and the reason is always the same. When the Region’s budget is prepared, decisions have yet to be made on most of the government aid to be included in it. This is especially true with aid from the Ministry of Education, Youth and Sports to cover direct educational costs and from the Ministry of Labour and Social Affairs to finance current expenditure related to providing social services. Once the decisions to grant these subsidies have been made, the Regional budget will be adjusted”, stated Moravian-Silesian Regional President Miroslav Novák.

Compared to 2015, receipts in the Moravian-Silesian Region (CZK 8.053 billion) fell 508 million crowns or 6% year-to-year.The amount received from Euro-funds will be lower, although more money will be flowing into the Region from shared taxes (CZK 550 million more). “This relates to changes to the Act on Budgetary Taxes. Starting on 1 January, the percentage of the nationwide gross yield from personal income tax and value added tax appropriated to the regions will return to the level at the end of 2011, in other words to 8.92 percent. Until now the Region’s share of personal income tax was 8.65%, and 7.86% for value added tax. Revenue from shared taxes is going to reach 5.3 billion crowns in 2016, while in 2015 it was around 4.8 billion” explained the Regional President.

The proposed spending of 6.813 billion crowns (current expenditure of CZK 5.124 billion and capital spending of CZK 1.689 billion) in the 2016 budget is around 30% or 2.884 billion crowns, lower in comparison to the approved 2015 budget. Capital spending will be markedly lower (62.2% or CZK 2.782 billion less than last year). This is due mainly to a significant drop in spending to complete projects co-financed by Euro-funds.

“As usual, the Region will be investing next year. Last year we invested roughly 6.5 billion crowns, with a substantial portion of this amount being European money. The programme period has now ended, and the volume of investment will not be so great. Investment will be concentrated mainly in transport infrastructure and things such as energy-saving improvements to school buildings. The Region will concurrently prepare documentation for other projects where 80 million crowns is being appropriated to do this,” said the President.

Also important on the expenditure side of the budget are contributions toward the operation of the Region’s funded organisations of around 2.082 billion crowns, a 6% rise compared to 2015. “ The funding for selected contributory organisations in the areas of health (though not hospitals), transport and culture will reflect the costs of government-approved three percent rises in staff base pay, as well as project sustainability needs. Funded social services organisations are going to be provided returnable financial assistance of 70 million crowns in the interim before they will receive government assistance”, mentioned Regional President Novák. He added that grant programs will be announced by the Region in almost all sectors. As opposed to last year, 19% more funding, totalling 274 million crowns, will be earmarked for grant programmes.

Although the Region will have new borrowing of about 400 million crowns, its debt load should fall next year. “Moravian-Silesian Region already has a good rating today, and by reducing the debt it is servicing it will keep that rating. At the beginning of next year the region’s debts should be only 3.789 billion crowns, falling to 2.5 billion crowns by the end of the year”, predicted the Moravian-Silesian Regional President.

Along with the 2016 budget, members of the Regional Assembly also discussed the Region’s financial outlook for 2017–2019. The budgetary forecast is an auxiliary tool for regional government’s medium-term financial planning and merely outlines expected revenue and primary expenditure trends in individual sectors in 2017–2019. It addresses in detail only funding already approved by the Regional Assembly. Budgeted amounts should be trending upward. This is mainly due to increasing revenues expected from shared taxes. Forecast 2016 shared-tax income should for the first time exceed revenues received before the onset of the financial crisis in 2008. Another expected significant impact will be projects co-financed by the EU in the new 2014–2020 programme period.The Region’s total indebtedness will be trending downward.

The Regional Assembly decided at its meeting today on a budget for the Moravian-Silesian Region Contingency Fund. It was established in 2002 and especially covers exceptional, unforeseen and unexpected spending, for example related to natural disasters and accidents threatening life, health, property or the environment and requiring rescue services, cleanup or reconstruction. These funds can be also used for short-term pre-financing of expenses for European projects that are being phased out when their internal and other funds do not suffice. There are currently 102 million crowns in the fund.

As in previous years, the Moravian-Silesian Region plans in 2016 to replace written-off and fully depreciated assets, via projects co-financed from European funds. Applications are gradually being prepared and submitted to steering authorities based on calls for proposals.

The Region will use its own funds to replace 441 million crowns worth of assets. Replacement funding will include:

  • CZK 50 million for ongoing repairs to 2nd and 3rd class roads
  • CZK 126 million for reconstruction and repair of school buildings and other related assets

Examples of particular projects:

  • CZK 41 million to fully outfit the Moravian-Silesian Regional Integrated Security Centre
  • CZK 20 million to revitalise the Domov Letokruhy building in Budišov nad Budišovkou
  • CZK 10.6 million to reconstruct an interdepartmental ICU at Třinec Hospital
  • One important project in 2016 and subsequent years will be the construction of a new industrial zone in the Moravian-Silesian Region to be located at Nad Barborou in Karviná. The total cost is estimated to be 1.238 billion crowns, of which at most 750 million crowns will be covered by national government assistance. Construction of the zone should be completed in 2018. The Region anticipates spending 285 million crowns on the zone in 2016, especially to purchase land. 20 million crowns have been appropriated in the proposed budget for 2016, while the remainder will be carried over from the 2015 budget.
  • In 2016, the Moravian-Silesian Region wishes to launch the preparation and completion of about 88 projects co-funded by European financial resources amounting to 1.086 billion crowns. Roughly 10 to 15% will come from this financing. Regional Assembly members have already decided to start preparatory work for the following projects:
    • Reconstruction and upgrading in 2016–2018 of 2nd and 3rd class roads from the Integrated Regional Operational Programme (IROP) totalling CZK 1.364 billion;
    • Construction of a crisis management communications platform totaling CZK 128 million to be completed in 2016–2018 (IROP);
    • Addition to the Art Centre – Gallery of the 21st Century, totalling CZK 500 million, to be completed in 2016–2019 (IROP);
    • RIS 3 Smart Accelerator totalling CZK 82 million, to be completed in 2016–18 (Research, Development and Education Operational Programme);
    • Cycling trails to the castles and manors in the Moravian-Silesian Region and the Žilina Region, totalling CZK 10.5 million, to be completed in 2016–2019 (Cross-Border Cooperation Operational Programme);
    • Socially therapeutic workshops and facilities to be run by Sagapo in Bruntál, totalling CZK 30 million, to be completed in 2016–2019 (IROP);
    • Support for social preventive services 1, totalling CZK 65 million, to be completed in 2016–19 (Employment Operational Programme);
    • Saving energy in schools and school facilities operated by the Moravian-Silesian Region – Stage IV, totalling CZK 390 million, to be completed in 2016–18 (Environment Operational Programme);
    • Modernisation of basic follow-up care at hospitals operated by the Moravian-Silesian Region, totalling CZK 178.5 million, to be completed in 2016–2018 (IROP);
    • Funding for boilers in the Moravian-Silesian Region, Grant Scheme 1, totalling CZK 509 million, to be completed in 2016 (Environment Operational Programme);
    • Development of the Moravian-Silesian Region’s ICT architecture, totalling CZK 33 million, to be completed in 2016–2019 (IROP);

In the 2016 budget, the Moravian-Silesian Region has appropriated 50 million crowns to prepare or complete other project ideas and 30 million crowns for the Region’s Road Administration to prepare structures and expropriate land.

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