Historical budget result of local governments. "The effect of the reform"

• The budget surplus for Q1 2025 is historically the highest budget result of local government units after Q1 (for comparison, after Q1 2024, the budget surplus amounted to PLN 23.6 billion).
• For the first quarter of 2025, local government units achieved total revenues of PLN 140,046 million (i.e. 30.5% of the annual plan).
• Total revenues realized for Q1 2025 were higher by 23.6% compared to the realization after Q1 2024.

The total amount of expenditures of local government units amounted to PLN 98,732 million, which constituted 19.8 percent of the amount of planned expenditures. The amount of total expenditures implemented after Q1 2025 was higher by 10.1 percent compared to the same period of the previous year.

According to data for the first quarter of 2025, realized current revenues were higher than realized current expenditures by PLN 44,590 million , with the planned annual current surplus in the amount of PLN 17,614 million.

Such a good current result achieved through high surpluses of current revenues over current expenditures after the end of the first quarter has not been recorded by local governments for many years. Despite the fact that 404 local governments plan a current deficit in their budgets for the year in the total amount of PLN 1,700 million , all units achieved a current surplus after the first quarter of 2025

- we read in the press release of the Ministry of Finance.

The debt of local government units after Q1 2025 amounted to PLN 108,892 million and remained at a stable level. The debt of local governments in relation to planned total revenues for Q1 2025 amounted to 23.7% (for comparison, the analogous ratio after Q1 2024 amounted to 23.9%).

The above results of the implementation of local government budgets after the first quarter of 2025 are a good symptom of the improving financial situation of local government resulting primarily from the effects of the reform introduced by the new act on the income of local government units

- emphasizes the Ministry of Finance.

The Act on the Revenues of Local Government Units, in force since 1 January 2025, introduced a new approach to financing local governments . However, this is not the target model, as clearly stated in the Act. The evaluation of its provisions is to be carried out in the middle of next year, but local governments are already pushing for changes.

The most important source of income for local governments, namely revenues from PIT and CIT taxes, is based on shares in the income obtained by taxpayers living or operating in their area, and is therefore closely linked to the socio-economic situation of the commune, city, county or voivodeship and - which is extremely important - independent of the government's decisions on the amount of taxes and reliefs applied to taxpayers.

At the same time, the shares of individual types of local government units in taxpayers' income were redefined, distinguishing cities with county rights.

Thanks to this, the system has become resistant to changes in income taxes and the revenues of local government units have increased. As reported by the Minister of Finance Andrzej Domański - by almost PLN 25 billion in the year compared to what local governments would have under the old act, and over the next 10 years they are to increase by PLN 345 ​​billion.

But - as the saying goes - there's a trade-off.

Local governments gained more money and greater freedom in spending it, but at the same time gained full financial responsibility for the tasks they carried out. Parts of the general subsidy disappeared, replaced by equalization, educational, development, ecological and supplementary needs, calculated in accordance with algorithms established in the act. Only if the funds calculated in this way to cover the above needs prove insufficient, the local government will receive a general subsidy from the state budget.

However, according to the arrangements between the government and local governments, educational needs, or rather the education financing system, are to be developed during the discussions at the end of the year, and the functioning of the entire system, including the definition of individual needs and determinants used to calculate them, weights and other indicators, are to be established after the system evaluation, which is to be carried out in mid-2026.