COMPENDIUM CULTURAL POLICIES AND TRENDS IN EUROPE
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Ukraine/ 6.2 Public cultural expenditure  

6.2.1 Aggregated indicators

Table 10:   Public culture expenditure per capita in 2001 and 2013

Level

Per capita 2013

Per capita 2001

UAH

EUR

UAH

EUR

State budget

41

3.7

6.8

1.2

Regional budgets

31

2.8

5.3

0.9

Municipalities

39

3.6

9.5

1.7

Total

111

10.1

21.6

3.9

Source:     State Treasury of Ukraine, 2014.

During the last 10 years, public culture expenditure per capita increased on all levels. However, in comparison to other European countries, public culture expenditure per capita in Ukraine is very small (see also chapter 6.1).

Table 11:   Culture expenditure as a share of the GDP, consolidated and state budget, 2001, 2011, 2012 and 2013

Year

Share (%) of cultural expenditure

GDP

Consolidated budget

State budget

2001

0.5

2.0

0.9

2011

0.55

1.56

0.83

2012

0.57

1.62

0.75

2013

0.53

1.57

0.61

Source:     State Treasury of Ukraine, 2012, 2015.

The share of culture expenditure in GDP demonstrates that during the last 15 years public spending on culture did not really change. The nominal increase in expenditure of the Ministry of Culture (+4.57%) in 2014 is less than the increase in the nominal expenditure of the State Budget of Ukraine (+6.54%). It means that culture programmes were not a priority of the budget policy in 2014. At the same time, the actual value of the Ministry of Culture expenditure, taking into account consumer price index (+4.3%), remained at the 2013 level.

The expenditure for development constituted only 2.17% while consumption expenditure of the cultural sphere (salaries and communal payments) reached 97.83% in 2014 reflecting general tendency of last years.

Graph 2:   Correlation between consumer expenditure and development expenditure in culture in 2009-2014

Source: Parliament Committee on Culture, 2015 (author: V. Babenko)

The Budget Code of Ukraine introduced a new system of allocations of public cultural expenditure in 2002. Cultural expenditure coming from local budgets is determined on the basis of exact expenditures assigned between budget types and administrative levels. The total amount of funds allocated to culture is determined by the unified spending norm per capita. The Ministry of Finance estimates the projected spending for social and cultural services granted from the local budget on the basis of the available budget resources.

Analysing the situation for culture in Ukraine after the adoption of the Budget Code of Ukraine, the well-known economists Jorge Martinez-Vazquez and Wayne R. Thirsk, write in their book "Fiscal Decentralisation in Ukraine" (2011): "The uniform funding basis currently being applied implicitly assumes that all local governments should have equal opportunities to provide a broad array of cultural activities". One objection to this approach is that it does not make good sense for every city to have its own zoo, large library and museum and that to encourage this outcome weakens budgetary support for existing cultural institutions. If this objection is accepted, it has important implications for reforming this aspect of the formula.

There are two ways to accommodate this objection to the formula. One way would be to give special weighting to the number of local residents living in areas already well supplied with cultural amenities on the grounds that the formula should recognise the additional costs of maintaining and operating existing cultural institutions. (Of course budgetary transfers are not the only source of financial support for cultural activities as user fees and private sponsorship also have important roles to pay)... An alternative solution rests on the notion that the formula cannot realistically be asked to solve all expenditure policy issues and that some elements of budgetary support for culture should, therefore, lie outside the application of the formula. For example, a portion of overall support for culture could be set aside to fund a programme of special grants to communities with a higher than average endowment of cultural facilities”.

In 2012, the Ministry of Culture has prepared some proposals to revise the formula-based expenditure calculation for local budgets in culture. In particular, it is proposed to take into account peculiarities of different places as well as the number of students in art and culture colleges.

In 2015, the Law on the Budget envisages a formula-based expenditure calculation for local budgets on culture at intergovernmental transfers, without any compensatory funding possibilities (subventions) for local budgets in culture if they need it. Thus, local self-governments could now, according to amendments in the Law on Culture and other respective laws, decide on their own whether to reduce the existing cultural network (infrastructure) of culture establishments – libraries, clubs, museums, etc. (see also chapter 2.1).


Chapter published: 10-07-2015

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