Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 31 August 2025
In August this year, regional budgets recorded a surplus of just under CZK 35 billion, which fell by almost half year-on-year. The main factors behind the decline in the balance were rising expenditure, particularly investment expenditure, and a significant decline in non-tax revenues, which was related to extraordinary one-off revenues in the previous year from the payment of Sberbank CZ creditors. Although local budgets achieved a lower surplus, this development is largely the result of growth in investment activity, which can be assessed as a positive trend.
Total revenues of local budgets recorded year-on-year growth mainly due to higher non-investment transfers. On the contrary, own revenues fell year-on-year, mainly as a result of lower non-tax revenues of regions (own revenues of municipalities increased). Tax revenues, which are a key component of own revenues, increased year-on-year, with the most significant increase recorded in corporate income tax revenues in connection with the completion of adjustments for the 2024 tax period. Revenues from personal income tax also grew, reflecting wage growth and the impact of tax changes effective from 2024, while revenues from value added tax grew more slowly in line with the development of nominal household expenditure.
On the expenditure side, there was strong growth in capital expenditure. Municipalities invested primarily in the development of primary education, sports facilities, and transport infrastructure, while regions directed investments towards museums and galleries. Local budgets thus continued their intensive investment activity in the second half of the year, which is in line with the legal obligation of municipalities to take care of the comprehensive development of their territory and the needs of their citizens. In absolute terms, current expenditure grew more, mainly as a result of higher non-investment transfers to primary schools.
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 August 2025, regions, municipalities, and voluntary associations of municipalities had a budget surplus of CZK 34.6 billion, which fell by almost half year-on-year (see Chart No. 1). The decline in the balance was mainly due to the significant growth in investment expenditure and, on the revenue side, a sharp 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 33.5 billion, representing a year-on-year decline of 44.2%, or CZK 26.5 billion.
Revenues of territorial budgets
Total consolidated revenues of regional budgets in August 2025 amounted to CZK 592 billion, representing a year-on-year increase of 3.9%, or CZK 22 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 446.1 billion. The own revenuesi of local budgets, which amounted to CZK 368.1 billion, fell by 1.8% year-on-year, i.e. by CZK 6.4 billion. The self-sufficiency of regional budgets, which represents the share of own revenues in total adjusted revenues2, was 82.5% in August this year and decreased year-on-year.
The year-on-year increase in total revenues is mainly due to transfers (up 7.5% year-on-year, i.e. by CZK 15.6 billion), which reached CZK 223.8 billion. This was exclusively due to an 8.5% increase in non-investment transfers, i.e., CZK 15.9 billion, which amounted to CZK 203.1 billion. On the contrary, investment transfers, which constitute only a fraction of total transfers, decreased year-on-year.
Tax revenues increased by 4.2% year-on-year, i.e. by CZK 12.7 billion, to CZK 313.4 billion. The year-on-year decline in non-tax revenues by 12.9%, i.e. by CZK 7.2 billion, to CZK 48.5 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 August 2025 amounted to CZK 557.4 billion, representing a year-on-year increase of 9.4%, or CZK 47.9 billion. After adjusting expenditures for direct expenditures on education and subsidies for private schools1, adjusted expenditures amounted to CZK 412.6 billion.
Current expenditures increased by 7.2%, i.e. by CZK 30.2 billion, and amounted to CZK 449.4 billion. This was due to an increase in transfers to primary school. Capital expenditure increased by 19.6% year-on-year, i.e. by CZK 17.7 billion, to CZK 108 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 6.2 billion in August 2025. The operating result fell by more than half year-on-year as a result of a significant increase in current expenditure. After adjusting the balance for direct expenditure on education and subsidies for private schools1, the economic result ended up with a surplus of CZK 5.1 billion.
Regional revenues
Total regional revenues reached CZK 249 billion at the end of August 2025, representing year-on-year growth of 2.9%, or CZK 7.1 billion. After adjusting for direct expenditures on education and subsidies for private schools1, adjusted revenues amounted to CZK 121.4 billion. The regions' own revenuesiweakened year-on-year, reaching CZK 82.2 billion and accounting for just under 67.7% of total adjusted revenues2.
Tax revenues, which constitute the most significant part of own revenues, increased year-on-year by 4.8%, i.e. by CZK 3.4 billion, to CZK 73.9 billion. The most significant increase was recorded in income from personal income tax reflecting wage and salary growth, but also the impact of tax changes effective from 2024. Revenues from corporate income tax also increased, influenced in August by the settlement for the 2024 tax period. Revenues from VAT also increased as a result of growth in nominal household expenditures. Other tax revenues, which account for only a small portion of total tax revenues increased only slightly year-on-year.
In August 2025, regions received transfers in the amount of CZK 166.8 billion (year-on-year growth of 5.1%, i.e. CZK 8.1 billion). Of these, non-investment transfers received by the regions reached CZK 161.6 billion (year-on-year growth of 7.5%, i.e. CZK 11.3 billion). Investment transfers received by the regions amounted to CZK 5.3 billion, down by more than a third year-on-year.
Regional expenditure
Total regional expenditure in August 2025 amounted to CZK 242.8 billion, increased by 6.3% year-on-year, i.e. by CZK 14.3 billion. After adjusting regional expenditure for direct expenditure on education and subsidies for private schools1, adjusted expenditure amounted to CZK 116.3 billion. The year-on-year growth was especially attributable to current expenditure (increase 6.1%, or CZK 12.7 billion), which amounted to CZK 219.2 billion. Transfers to contributory and similar organizations amounted to CZK 161.7 billion and accounted almost for 74% 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 7.3% year-on-year, i.e. by CZK 1.6 billion, to CZK 23.6 billion, mainly due to increased investment in museums, and galleries.
The balances on bank accounts and the debt of regions are only available for June 20253 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 June 2025.
Management of Municipalities
In August 2025, municipalities reported a budget surplus of CZK 27.9 billion, down CZK 17.7 billion year-on-year (see Chart No. 3). Of this, the budget of the capital city of Prague ended with a surplus of CZK 16.4 billion (a year-on-year decrease) with total revenues of CZK 97 billion and expenditures of CZK 80.6 billion. Excluding the City of Prague, the total consolidated revenues of municipalities amounted to CZK 253.8 billion, expenditures to CZK 257.3 billion, and the budgetary result even ended in a deficit of CZK 11.5 billion.
Total municipal revenues in August reached CZK 350.7 billion, representing a year-on-year increase of 4.6%, or CZK 15.5 billion. After adjusting municipal revenues (for the capital city of Prague) for direct expenditures on education and subsidies for private schools1, adjusted revenues amounted to CZK 332.4 billion. Municipalities' own revenuesi, which accounted for 85.7% of total adjusted revenues2 in August, recorded year-on-year growth and reached CZK 284.9 billion.
The largest share of own revenues is accounted for by tax revenues, which grew by 4.1% year-on-year, i.e. by CZK 9.3 billion, to CZK 239.5 billion. The most significant year-on-year increase was in income from corporate income tax also increased, which was affected in August by the settlement for the 2024 tax period. Furthermore, income from personal income tax increased significantly reflecting wage and salary growth, but also the impact of tax changes effective from 2024. Revenue from VAT increased too. A year-on-year slight growth was recorded in other tax revenues.
By the end of August, municipalities received transfers amounted to CZK 65.8 billion (year-on-year growth of 14.2%, i.e. CZK 8.2 billion). Of these, non-investment transfers amounted to CZK 49.3 billion and increased year-on-year more than 10%. Investment transfers received by municipalities increased double year-on-year to CZK 16.5 billion.
Total municipal expenditure in August 2025 amounted to CZK 322.8 billion, representing a year-on-year increase of 11.5%, or CZK 33.2 billion. After adjusting municipal expenditure (for the capital city of Prague) for direct expenditure on education and subsidies for private schools1, adjusted expenditure amounted to CZK 304.5 billion. The year-on-year growth was mainly due to an increase in current expenditures (by 8%, i.e., CZK 17.6 billion) to CZK 238 billion, in particular due to an increase in non-investment transfers to primary and nursery schools. Non-investment transfers to contributory and similar organizations, which amounted to CZK 40.7 billion, accounted for the largest share of current expenditures. Capital expenditure increased significantly compared to the previous year (by 22.6%, i.e. CZK 15.6 billion) to CZK 84.8 billion, mainly due to increased investment in sports facilities and roads.
The balances on bank accounts and the debt of regions are only available for June 20253 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 June 2025.
Voluntary associations of municipalities
In August 2025, voluntary associations of municipalities managed total revenues of CZK 5 billion and total expenditures of CZK 4.7 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 Total revenue net of revenue from transfers for direct expenditure on education and from subsidies to private schools.
3 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