Budget workers may be left without pay on the eve of the New Year

Kyivpastrans employees will work without pay

Photo: Konstantin Melnitskiy

At the end of the year, the workers of the budget-funded institutions may be left without pay. “Already now there is no money in the local budgets for the payroll, utility services and energy resources for budget-funded institutions in November-December,” reads the letter of the Association of the Cities of Ukraine (ACU) addressed to the parliament.

On Tuesday the association appealed to the Verkhovna Rada with a request to introduce changes to the national budget of this year by envisaging “additional subsidies for the cities in the amount of UAH 4 bn” in it.

Old problems

Budget organizations continuously lack money for payroll. The Cabinet of Ministers, having delegated the settlement of this issue to the local authorities, regularly ‘forgets’ about the need to allocate corresponding subventions from the national budget. The local budgets were underfunded last year and two years ago. Back then the government allocated UAH 10 bn in additional transfers for the settlement of the problems of the budgets and payroll, according to ACU expert on local budgets Oleksandr Slobozhan.

In the process of preparations for the revision of the budget in June this year, the association warned the Ministry of Finance that there would not be enough money in the local budgets for the last quarter of the year, he told Capital. Already in October, several weeks prior to the elections, the VR Budget Committee sent an appeal to the Ministry of Finance with a proposal to allocate the lacking funds. The ministry’s officials then verbally confirmed their readiness to add UAH 3 mn for the payroll, but after the elections this promise was somehow forgotten. As a result, there is currently not enough money in the local budgets to cover around two monthly payrolls of the employees of institutions funded by the budget, according to Slobozhan.

The local authorities also cannot pay wages out of their own pockets, because the proceeds to local budgets are fulfilled not much better than the revenues of the national budget. “The funds at disposal are extremely limited,” says Slobozhan. Furthermore, not so long ago the money of the cities was blocked by the State Treasury. As a result, the local self-government, without having access to finances, accumulated debts to contractors, let alone the impossibility of fulfilling any local socio-economic development programs or infrastructural projects.

The Ministry of Finance practically agreed to the amount stated by the association, specifying that this was not about the UAH 3 bn for the payroll, but UAH 2.7 bn. At that, the ministry insists that it had no intention of ignoring this problem. “With the objective of resolving this issue the ministry has prepared a draft of the Cabinet’s resolution, which proposes to increase the specified amount of the volume of additional subsidies to level up with financial provision of the local budgets,” the press service of the ministry told Capital yesterday.

To lose a moment

ACU representatives say that the volumes of shortage of funds for the payroll in different regions differ depending on the number of workers in different areas of the budget sphere. Large debts to budget workers have accumulated in Donetsk for all the known reasons. In fact, according to the city’s mayor Oleksandr Lukyanchenko, the wage arrears to budget workers have reached UAH 120 mn. Director of the Economy and International Relations Department of the Kharkiv OSA Viktor Kovalenko says in order to pay wages and pay for energy resources, the local budgets need UAH 198.4 mn, of them UAH 134 mn for the payroll.

Yesterday, the Cabinet discussed the issue of low financing of the budget sphere. Kyiv Mayor Vitaliy Klitschko, who was invited to the government’s session, stated that the city was short of UAH 700 mn for paying wages to employees on the budget payroll until the end of the year. The wage arrears of the municipal company Kyivpastrans are the highest. By the end of the year, the debt to this company alone could reach UAH 100 mn, said Klitschko. At that, Kyiv already received UAH 1.7 bn in subventions from the government for the fulfillment of its functions as a capital, including paying wages to employees of the budget sphere. The VR allowed the Finance Ministry to transfer the funds to Kyiv at the end of July, when the budget was revised.

There is not that much time left for introducing amendments to the budget and avoiding social tension, representatives of the ACU claim. However, Slobozhan believes this situation could have been avoided. Before the elections the Cabinet could have issued a resolution on re-distributing expenses and directing the finances to the cities. Moreover, approval of such a decision by the VR Budget Committee without voting in the session hall would have been sufficient, just as in the case with amendments to the national budget.