Finances are still not good. Counties miss the times before the Polish Deal

• Representatives of the counties point out that it is necessary to consider the efficiency of other sources of county income, such as the management of State Treasury real estate.
• The new act on the income of local government units has failed to meet the long-standing expectations of local government communities.
• However, the difficulties in balancing the budget are influenced not only by factors resulting directly from the new act on the income of local government units - assesses the Union of Entrepreneurs and Employers.

Self-government without an adequate level of income remains only a façade. For this very reason, local government units must be equipped with income that is stable, adequate and sufficient to independently conduct development policy - write local government officials from the Association of Polish Counties, adding that the new act on the income of local government units adopted on October 1, 2024 does not provide income with such characteristics.

It has some advantages, but its general structure means that the current situation of counties and cities with county rights is only slightly better than in the years following the tax reforms of the Polish Deal. However, it is far from the situation from the times when the shares in personal income taxes and corporate income taxes retained their original efficiency. In this respect, the new solutions have failed to meet the long-standing expectations of local government circles.

- we read in the position adopted at the XXXII General Assembly of the Union of Polish Counties, signed by Andrzej Płonka, head of the Union of Polish Counties and starosta of Bielsk.

Local government officials note that in practice, it is not the income potential - linked to the income of individual taxpayers - that determines the total level of income received . As they write - it is the calculation of financial needs that determines this, which in its current form is more aimed at protecting the interests of the state budget than ensuring that the actual needs of individual local government communities are met. This element must change before the comprehensive review of the effects of the functioning of the act scheduled for 2026.

This primarily concerns educational needs, which should reflect, if not the actual level of current expenditure, then the funds needed to run schools and facilities at the minimum standard. Instead, the amount of needs for 2025 was adopted, corresponding to the amount of the current educational part of the general subsidy - underestimated by at least PLN 40 billion compared to the actual needs - which automatically translates into tensions in the budgets of individual local government units.

- we read in the document.

As the authors of the position paper point out, the difficulties in balancing the budget are not only influenced by factors resulting directly from the new act on the income of local government units. The most important here are:

• permanent underestimation of the amount of subsidies for tasks assigned from the scope of government administration . It is often calculated according to the historical method, completely divorced from the actual costs of implementing the tasks. As a result, counties and cities with county rights are forced - in the interests of their residents - to allocate their own revenues for what should be covered by the state budget;
• total inadequacy of fees for administrative services to the costs of their provision, associated with the irrational way of their distribution . The stamp duty - of a symbolic nature today - constitutes the own income of the communes, which means that the services provided by the district administration and subject to the stamp duty cannot be used, for example, for employee salaries, but go to the budget of the district city. Administrative fees established years ago in the regulations of individual ministers are not being increased in the name of reluctance to expose themselves to citizens. As a result, we reach a threshold at which the districts will have to pay extra for each service provided to citizens.

As ZPP emphasizes, both of these issues should be resolved immediately.

Representatives of the counties also point out that it is necessary to consider the efficiency of other sources of county income, such as the management of State Treasury real estate.

We expect the proportions of the division of revenues from the management of State Treasury property to be reversed - 75 percent for county governments and 25 percent for the State Treasury. It is the starosts who organize, process, prepare and bear full responsibility for decisions regarding the management of this property.

- they write.

The Association of Polish Counties adds that it expects fair treatment and the provision of an appropriate level of income.