Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 June 2025
Local government budgets ended the first half of 2025 with a surplus of CZK 64.6 billion. Although this represents a year-on-year decline, it is still the second-highest half-year surplus in history. However, it should be noted that the interim results of budget management in individual months during the year are often significantly distorted by funds used to finance the salaries of education workers. After adjusting the balance for these funds, the actual balance reached CZK 30 billion. This development is the result of a significant increase in expenditure, both current (e.g., on transport services) and, in particular, investment (e.g., in school infrastructure and sports facilities, and in public road transport). On the revenue side, the decline in non-tax revenues had a negative impact, caused mainly by the absence of one-off revenues in the previous year from the payment of Sberbank CZ creditors and lower interest on deposits.
This year, the negative trend of deficit budgeting continues as a result of underestimating tax revenues, overestimating capital expenditures, and creating unspecified reserves. This leads to a significant disproportion between the approved deficit budgets and the actual financial management of municipalities and regions. The approved budget for municipalities and regions anticipates a deficit of CZK 119 billion in 2025, but the ministry's current prediction is that the actual budget result will end up with a positive balance of at least CZK 35 billion.
In June, the unused investment potential of regional budgets reached CZK 60 billion (of which CZK 18 billion was in the capital city of Prague), although it should be noted that more significant investments are only made in the second half of the year. An assessment of the utilization of investment potential clearly shows that municipalities and regions have long been unable to utilize their investment potential, resulting in the accumulation of savings. In the first half of the year, their savings increased more than fourfold compared to 2013.
It is an indisputable fact that the savings of regional budgets are constantly increasing and have more than quadrupled since 2013, while the level of investment is stagnating or growing only slightly. As of June 30, 2025, the balance of local government budgets, including established public institutions, in bank accounts amounted to CZK 560 billion. According to our calculations, the balance in bank accounts will reach CZK 1 trillion within 10 years.
In the near future, it is therefore absolutely necessary to amend the law on budgetary allocation of taxes in order to stop this unfavorable trend, as it is extremely uneconomical for the state when one part of the public budgets (the state) finances mandatory expenditures with debt, while the other part (local governments) generates extreme surpluses.
Detailed information is provided in the Monitor system (data for territorial budgets can be obtained in the Analytical section under Local organisations).
Management of Local Governments
In mid-2025, regions, municipalities, and voluntary associations of municipalities had a budget surplus of CZK 64.6 billion, which represents a year-on-year decrease of 21.8% (i.e. CZK 18 billion), but it is still the second highest half-year surplus in history (see Chart No. 1). If we adjust the budget balance for direct expenditure on education and subsidies for private schools1, the surplus reached CZK 30 billion, a year-on-year decline of 42.1%, or CZK 21.8 billion.
Revenues of territorial budgets
Total consolidated revenues of regional budgets in June 2025 amounted to CZK 470.1 billion, representing a year-on-year increase of 2.5%, or CZK 11.4 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, revenues amounted to CZK 327.9 billion. The own revenuesi of local budgets, which reached CZK 266.4 billion, recorded a year-on-year decline. The self-sufficiency of local budgets, which represents the share of own revenues in total adjusted revenues2, also declined year-on-year and amounted to 81%. The year-on-year decline in own revenues is primarily due to a decline in non-tax revenues, which fell by 16.4% (i.e., by CZK 7.3 billion) to CZK 36.9 billion. This decline is a result of lower payments to Sberbank CZ creditors, which were made in the previous year, and a decline in interest income. Tax revenues also increased year-on-year to CZK 224.7 billion. Transfers received by local budgets increased year-on-year, reaching CZK 203.8 billion. This was caused exclusively by growth in non-investment transfers. In contrast, investment transfers received fell year-on-year in the middle of the year.
Expenditure of territorial budgets
Total consolidated expenditure of regional budgets in June 2025 amounted to CZK 405.5 billion, representing a year-on-year increase of 7.8%, or CZK 29.5 billion. After adjusting regional and municipal expenditures (in the case of the City of Prague) for direct expenditures on education and subsidies for private schools1, expenditures amounted to CZK 298 billion. Current expenditures reached CZK 335.7 billion (a year-on-year increase of 6.3%, i.e., CZK 19.8 billion), with expenditures on transport services contributing significantly to this growth. The dominant part of these current expenditures consisted of transfers that regions and municipalities transfer to contributory organizations and similar organizations. Capital expenditures increased year-on-year in the middle of the year (by 16%, i.e., CZK 9.6 billion) due to investments in school infrastructure and sports facilities, public road transport, and amounted to CZK 69.8 billion.
Management of regions
At the end of the first half of the year, the regions had a positive budget balance of CZK 35 billion (a year-on-year decline of 10.4%, or CZK 4.1 billion), which represents the second highest surplus in history (see Chart No. 2). If we adjust the regions' budget balance for direct expenditure on education and subsidies for private schools1, the result is only CZK 4.1 billion, a year-on-year decrease of 64.7%, or CZK 7.6 billion.
Regional revenues
Total regional revenues at the end of June 2025 reached CZK 216.2 billion, a slight year-on-year decrease of 2.1%, or CZK 4.4 billion. After adjusting regional revenues for direct education expenditures and subsidies for private schools1, revenues amounted to CZK 91.3 billion. The regions' own revenues decreased year-on-year to CZK 57.8 billion, accounting for 63% of total adjusted revenues2. The decline in own revenues was mainly due to non-tax revenues, as a result of payments to Sberbank CZ creditors, which were made in the previous year.
Tax revenues (up 2.8% year-on-year, i.e. by CZK 1.4 billion) accounted for the largest share of own revenues, reaching CZK 51.1 billion. The most significant year-on-year increase was in income from personal income tax, which rose to CZK 11.8 billion, continuing to reflect wage and salary growth, but also the impact of tax changes effective from 2024. Revenue from VAT recorded a slight increase to CZK 26.9 billion. Other tax revenues, which account for only a fraction of total tax revenues, also increased slightly year-on-year. On the other hand, revenue from corporate income tax decreased year-on-year to CZK 11.8 billion.
In June 2025, the regions received transfers totaling CZK 158.3 billion, representing a year-on-year increase of 5.1% (CZK 7.6 billion). Of this amount, non-investment transfers received by the regions amounted to CZK 154.8 billion, a year-on-year increase of 7.6% (CZK 10.9 billion). The largest year-on-year growth was recorded in direct education expenditures, which rose by 8.4% (CZK 9.2 billion). Investment transfers received by the regions totaled CZK 3.6 billion, representing a year-on-year decrease of 47.7% (CZK 3.2 billion). This was due to a year-on-year decline in transfers provided for transport infrastructure financing (by CZK 0.6 billion) from the State Transport Infrastructure Fund.
Regional expenditure
Total regional expenditure in June 2025 amounted to CZK 181.2 billion, representing a year-on-year increase of 4.9%, or CZK 8.5 billion. After adjusting regional expenditure for direct expenditure on education and subsidies for private schools1, expenditure amounted to CZK 87.1 billion. The largest share of the year-on-year growth in total expenditure was accounted for by current expenditure, which increased (by 4.9%, i.e. CZK 7.8 billion) as a result of growth in expenditure on transport services – railways, reaching CZK 166.1 billion. Transfers made by regions to contributory and similar organizations amounted to CZK 121.6 billion and accounted for 73% of total current expenditures, mainly non-investment transfers provided to primary and nursery schools as part of direct expenditures on education. Capital expenditures increased year-on-year (by 5.1%, i.e., CZK 0.7 billion) to CZK 15.1 billion, mainly due to increased investments in museums and galleries.
Debt and balance on the regions' bank accounts
The debt of regions, including contributory organizations established by them, amounted to CZK 25.2 billion at the end of the first half of 2025, a slight decrease compared to the end of 2024. The slight decrease in debt and higher investment activity of the regions indicate their good financial situation, as they are able to finance some of their investment projects without involving external sources. In terms of per capita debt, the highest debt was in the Karlovy Vary Region, followed by the Liberec Region and the Ústí Region.
The amount of deposits by regions in current accounts (including contributory organizations) amounted to CZK 145.7 billion in the middle of this year, which represents an increase in savings of 38.2%, or CZK 40.3 billion, compared to 2024. After deducting funds received from the Ministry of Education, Youth and Sports for direct education expenses and subsidies for private schools1, which the regions had not provided to schools and educational institutions by the end of June, the balance on the regions' current accounts in June reached CZK 114.9 billion, meaning that deposits increased by 9% compared to 2024, i.e. by CZK 9.4 billion. The highest savings (excluding contributory organizations) per capita were reported in the Vysočina Region and the Liberec Region.
As can be seen from Chart No. 3, while regional debt has fallen by 4.6% since 2015, current account balances are growing dynamically, by 425.2%. Regions are following this trend and, in the first half of 2025, are continuing to increase their savings.
Management of municipalities
In the first half of the year, municipalities recorded a budget surplus of CZK 28.9 billion, and their budget balance decreased year on year (see Chart No. 4). Despite the year-on-year decline in the surplus, this development reflects the stable financial health of local budgets. After adjusting the municipalities' financial results (for the City of Prague) for direct expenditure on education and subsidies for private schools1, the balance is CZK 25.1 billion. Of this, the budget of the capital city of Prague ended with a surplus of CZK 18.1 billion (year-on-year growth of 19.9%, i.e. CZK 3 billion) with total revenues of CZK 74.4 billion and expenditures of CZK 56.3 billion. Excluding the City of Prague, the budgetary result ended with a surplus of CZK 10.8 billion (a year-on-year decrease of 60%, i.e., CZK 16.1 billion).
Municipal revenues
Total municipal revenues in June reached CZK 259.8 billion, up 3% year-on-year, i.e. by CZK 7.6 billion. After adjusting municipal revenues (for the capital city of Prague) for direct education expenditures and subsidies for private schools1, revenues amounted to CZK 242.4 billion. Municipalities' own revenuesi, which accounted for 86% of total adjusted revenues2 in the first half of the year, recorded year-on-year growth and reached CZK 207.8 billion.
The growth in own revenues was mainly driven by tax revenues (up 2.7% year-on-year, i.e. by CZK 4.6 billion), which reached CZK 173.7 billion. The most significant year-on-year increase was in income from personal income tax, which rose to CZK 33.1 billion, reflecting growth in wages and salaries, but also the impact of tax changes effective from 2024. Furthermore, VAT revenue increased to CZK 71.9 billion, other tax revenues to CZK 28.9 billion, and corporate income tax revenue to CZK 39.7 billion.
In June, municipalities received transfers totaling CZK 52 billion, representing a year-on-year increase of 10.7% (CZK 5 billion). Of this amount, non-investment transfers reached CZK 41.4 billion and increased year-on-year by 8.4% (CZK 3.2 billion). The year-on-year growth was mainly due to transfers provided from the Ministry of Education, Youth and Sports budget for the Jan Amos Komenský operational program (by CZK 1.5 billion). Investment transfers received by municipalities increased year-on-year by 20.4% (CZK 1.8 billion), reaching CZK 10.6 billion. This growth was primarily the result of higher transfers provided under the Integrated Regional Operational Program 2021–2027, financed from public funds originating in the European Union.
Municipal expenditure
Total municipal expenditure in June 2025 amounted to CZK 230.8 billion, representing a year-on-year increase of 9.9%, or CZK 20.7 billion. After adjusting municipal expenditure (in the case of the capital city of Prague) for direct expenditure on education and subsidies for private schools1, expenditure amounted to CZK 217.3 billion. The year-on-year growth was mainly due to an increase in current expenditures (by 7.3%, or CZK 11.9 billion) to CZK 175.9 billion, mainly due to an increase in the salaries of local government employees. Capital expenditure also increased by 19.1%, i.e. CZK 8.8 billion, to CZK 54.9 billion compared to the previous year, mainly due to increased investment in the construction of sports facilities.
Debt and balance on the municipalities' bank accounts
The debt of municipalities, including contributory organizations established by them, amounted to CZK 63.6 billion in mid-2025, down 0.9% (CZK 0.5 billion) compared to the end of 2024. The year-on-year decrease in debt and, conversely, the increase in capital expenditure confirm the good financial situation of municipalities, which are able to finance their investment activities from their own funds. In June, the City of Prague had a debt of CZK 7 billion (a year-on-year decrease of 8.2%, i.e., CZK 0.6 billion). The largest debt (per the number of municipalities) was reported by municipalities in the Moravian-Silesian and Olomouc regions.
The balance of municipalities on current accounts (including contributory organizations) amounted to CZK 444.2 billion in the first half of the year, which represents an increase in savings of 5.3%, or CZK 22.3 billion, compared to 2024. After deducting funds received from the Ministry of Education, Youth and Sports for direct education expenses and subsidies for private schools1, which the City of Prague had not provided to schools and educational institutions by the end of June, the balance on the current accounts of municipalities in June reached CZK 440.4 billion, meaning that deposits increased by 4.4% compared to 2024, i.e. by CZK 18.5 billion. The balance of the City of Prague (including contributory organizations) amounted to CZK 177.1 billion (year-on-year growth of 16.8%, i.e. CZK 25.5 billion). As can be seen from Chart No. 5, while municipal debt has decreased by 26.8% since 2015, current account balances are growing dynamically, by 242.2%.
Management of voluntary associations of municipalities
In June 2025, voluntary associations of municipalities managed total revenues of CZK 3.9 billion and total expenditures of CZK 3.2 billion. The budget balance declined year-on-year and ended with a surplus of CZK 0.6 billion.
1 Direct education expenditures represent funds from the state budget (specifically from the chapter of the Ministry of Education, Youth and Sports), which the regions and the Capital City of Prague allocate directly to the respective schools and educational institutions. The regions and the Capital City of Prague have no discretion over how these funds are used. The same applies to subsidies for private schools. For this reason, the total revenues and expenditures of regions and the Capital City of Prague are adjusted to avoid distortions in their budgetary performance.
2 Total revenue adjusted for revenue from transfers earmarked for direct education expenditure and subsidies for private schools.
i Own revenues = tax + non-tax + capital revenues