Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 May 2025
In May of this year, regional budgets achieved their third-best historical result of CZK 19.3 billion, despite pressure on spending and weaker revenues. However, it should be noted that the surplus is distorted by subsidies received for direct education expenditures and subsidies for private schools, which had not been paid in full to schools and educational institutions by the end of May. The adjusted balance, which does not include these transfers, amounted to only CZK 2.6 billion. The budget balance declined year-on-year, with the main factors behind the decline being rising investment expenditure and a significant drop in non-tax revenues.
Compared to the previous year, total revenues of local budgets increased only slightly, mainly due to higher transfers received. While municipalities' own revenues increased slightly, regions recorded a year-on-year decline, mainly due to lower interest income and one-off non-tax revenues from the previous year (e.g., payments to Sberbank CZ creditors). Tax revenues, which are a key component of own revenues, recorded an overall year-on-year increase. Growth was evident in both municipalities and regions, mainly due to higher revenues from personal income tax, which reflected wage growth and the effect of tax adjustments effective from 2024.
On the expenditure side, there was strong growth in capital expenditure. Municipalities invested mainly in the development of primary education and public transport, while regions directed funds to cultural infrastructure and sports facilities. This trend confirms the efforts of local budgets to at least partially utilize available funds. Current expenditures, which make up the majority of total expenditures, grew much more slowly. In the regions, current expenditures even declined year-on-year, particularly in the area of education. Municipalities, on the other hand, reported growth in current expenditures, with higher spending on transport services playing a key role.
Detailed information is provided in the Monitor system (data for territorial budgets can be obtained in the Analytical section under Local organizations).
Management of Local Governments
In May 2025, regions, municipalities, and voluntary associations of municipalities had a budget surplus of CZK 19.3 billion. Although this represents a year-on-year decline in the balance (by 30.8%, or CZK 8.6 billion), it is still the third highest positive balance of local budgets since 2015 (see Chart No. 1). The decline in the balance was mainly due to an increase in expenditure, particularly on investments, and, on the revenue side, a significant decline in non-tax revenues (payment to Sberbank CZ creditors last year). After adjusting for direct expenditure on education and subsidies to private schools1, the adjusted budget balance was CZK 2.6 billion2, representing a year-on-year decline of 90.4%, or CZK 24.9 billion.
Revenues of territorial budgets:
Total consolidated revenues of regional budgets in May 2025 amounted to CZK 347.8 billion, representing a year-on-year increase of 1.8%, or CZK 6 billion. After adjusting the revenues of regions and municipalities (in the case of the capital city of Prague) for direct expenditures on education and subsidies for private schools1, the adjusted revenues amounted to CZK 239.1 billion. The own revenuesi of local budgets, which amounted to CZK 198.3 billion, fell by 1% year-on-year, i.e. by CZK 2 billion. The self-sufficiency of regional budgets, which represents the share of own revenues in total adjusted revenues3, was 83% in May this year and remained almost unchanged year-on-year.
The year-on-year increase in total revenues is mainly due to transfers (up 5.7% year-on-year, i.e. by CZK 8 billion), which reached CZK 149.5 billion. This was exclusively due to an 8% increase in non-investment transfers, i.e., CZK 10.3 billion, which amounted to CZK 139.1 billion. On the contrary, investment transfers, which constitute only a fraction of total transfers, decreased by 18.4% year-on-year, i.e., CZK 2.3 billion.
Tax revenues increased by 3.5% year-on-year, i.e. by CZK 5.6 billion, to CZK 165 billion. The year-on-year decline in non-tax revenues by 21.2%, i.e. by CZK 8 billion, to CZK 29.7 billion is related to the payment to Sberbank CZ creditors made in the previous year and a decline in interest income.
Expenditure of territorial budgets:
Total consolidated expenditure of regional budgets in May 2025 amounted to CZK 328.6 billion, representing a year-on-year increase of 4.6%, or CZK 14.6 billion. After adjusting expenditures for direct expenditures on education and subsidies for private schools1, adjusted expenditures amounted to CZK 236.5 billion.
Current expenditures increased by 1.6%, i.e. by CZK 4.4 billion, and amounted to CZK 277 billion. This was due to an increase in expenditure on transport services – railways. Capital expenditure increased by 24.7% year-on-year, i.e. by CZK 10.2 billion, to CZK 51.5 billion, mainly due to investments in primary schools and sports facilities owned by the municipality.
Management of regions
The budget balance of the regions reached CZK 15.8 billion in May 2025. The economic result increased significantly year-on-year (by 73.8%, or CZK 6.7 billion) due to a significant decrease in current expenditure. After adjusting the balance for direct expenditure on education and subsidies for private schools1, the economic result ended up with a deficit of CZK 0.8 billion and decreased significantly year-on-year2. The budget result is thus significantly distorted by subsidies received for direct education expenditure and subsidies for private schools, which had not been provided in full to schools and educational institutions by the end of May.
Regional revenues
Total regional revenues reached CZK 162 billion at the end of May 2025, representing year-on-year growth of 1%, or CZK 1.6 billion. After adjusting for direct expenditures on education and subsidies for private schools1, adjusted revenues amounted to CZK 66.8 billion. The regions' own revenuesi weakened year-on-year, reaching CZK 45.8 billion and accounting for just under 69% of total adjusted revenues3.
Tax revenues, which constitute the most significant part of own revenues, increased year-on-year by 3.9%, i.e. by CZK 1.5 billion, to CZK 40.4 billion. The most significant increase was recorded in income from personal income tax (by 7.9%, or CZK 0.7 billion), reflecting wage and salary growth, but also the impact of tax changes effective from 2024. Revenues from VAT also increased (by 2.5%, or CZK 0.5 billion) as a result of growth in nominal household expenditures. Other tax revenues, which account for only a small portion of total tax revenues, and revenues from corporate income tax increased only slightly year-on-year.
In May 2025, regions received transfers in the amount of CZK 116.2 billion (year-on-year growth of 4.4%, i.e. CZK 4.8 billion). Of these, non-investment transfers received by the regions reached CZK 113.6 billion (year-on-year growth of 7.3%, i.e. CZK 7.7 billion). Investment transfers received by the regions amounted to CZK 2.6 billion (half-way drop).
Regional expenditure
Total regional expenditure in May 2025 amounted to CZK 146.1 billion, down 3.4% year-on-year, i.e. by CZK 5.1 billion. After adjusting regional expenditure for direct expenditure on education and subsidies for private schools1, adjusted expenditure amounted to CZK 67.6 billion. The year-on-year decline was exclusively attributable to current expenditure (down 4.5%, or CZK 6.3 billion), which amounted to CZK 134.8 billion. Transfers to contributory and similar organizations amounted to CZK 99.9 billion and accounted for 74.1% of total current expenditures, mainly non-investment transfers provided to primary and nursery schools as part of direct expenditures on education. Capital expenditure increased by 12% year-on-year, i.e. by CZK 1.2 billion, to CZK 11.3 billion, mainly due to increased investment in sports activities, museums, and galleries.
The balances on bank accounts and the debt of regions are only available for March 20254 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 March 2025.
Management of Municipalities
In May 2025, municipalities reported a budget surplus of CZK 3 billion, which is one of the lowest results in history (see Chart No. 3). Of this, the budget of the capital city of Prague ended with a surplus of CZK 5.7 billion (a year-on-year decrease of 20.6%, i.e. CZK 1.5 billion) with total revenues of CZK 54.4 billion and expenditures of CZK 48.7 billion. Excluding the City of Prague, the total consolidated revenues of municipalities amounted to CZK 135.7 billion, expenditures to CZK 138.4 billion, and the budgetary result even ended in a deficit of CZK 2.7 billion.
Total municipal revenues in May reached CZK 190.1 billion, representing a year-on-year increase of 2.9%, or CZK 5.3 billion. After adjusting municipal revenues (for the capital city of Prague) for direct expenditures on education and subsidies for private schools, adjusted revenues amounted to CZK 176.5 billion. Municipalities' own revenuesi, which accounted for 86.1% of total adjusted revenues in May, recorded slight year-on-year growth and reached CZK 151.9 billion.
The largest share of own revenues is accounted for by tax revenues, which grew by 3.3% year-on-year, i.e. by CZK 4 billion, to CZK 124.7 billion. The most significant year-on-year increase was in income from personal income tax (by 7.8%, or CZK 2 billion), reflecting wage and salary growth, but also the impact of tax changes effective from 2024. Revenue from corporate income tax also increased (by 4.8%, or CZK 1.1 billion), as did revenue from VAT (by 1.9%, or CZK 1.1 billion). A year-on-year decline was recorded only in other tax revenues (by 1.7%, or CZK 0.2 billion).
By the end of May, municipalities received transfers amounted to CZK 38.1 billion (year-on-year growth of 11.7%, i.e. CZK 4 billion). Of these, non-investment transfers amounted to CZK 29.9 billion and increased year-on-year (by 10.7%, i.e. by CZK 2.9 billion). Investment transfers received by municipalities increased year-on-year (by 15.7%, i.e. by CZK 1.1 billion) to CZK 8.2 billion.
The balances on bank accounts and the debt of municipalities are only available for March 20254 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 March 2025.
Voluntary associations of municipalities
In May 2025, voluntary associations of municipalities managed total revenues of CZK 2.8 billion and total expenditures of CZK 2.5 billion. The budget balance declined year-on-year and ended with a surplus of CZK 0.4 billion.
1 The direct costs of education and subsidies for private schools represent funds from the state budget, which are distributed and directly allocated to the schools and school facilities by regions and Prague. It is therefore a non-investment flow transfer and the region and Prague cannot dispose of these funds in any way. For this reason, the total revenues and expenses of the regions and Prague are reduced so not to distort their results of management.
2 This difference is caused by a time lag between the moment when funds from the state budget are received by the regions and the City of Prague for direct expenditure on education and subsidies for private schools, and their transfer to schools and educational institutions. Specifically, funds from the state budget for these purposes for the month of May were received by the regions and the City of Prague in May 2025, but will not be sent to schools and educational institutions until the following month.
3 Total revenue net of revenue from transfers for direct expenditure on education and from subsidies to private schools.
4 The balance on bank accounts and debt are available from the financial statements, which are submitted to the Central State Accounting Information System on a quarterly basis.
i Own revenue = tax + non-tax + capital revenue