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Achievements and unfinished agenda of the fiscal equalization system in Croatia
Marko Primorac
Marko Primorac
Affiliation: CESifo Research Network, Munich, Germany University of Zagreb, Faculty of Economics & Business, Zagreb, Croatia
 0000-0003-1629-3170
Jorge Martínez-Vázquez 
Jorge Martínez-Vázquez
Affiliation: International Center for Public Policy (Georgia State University), Atlanta, GA 3030 Governance and Economics Research Network (GEN), Campus Universitario As Lagoas s/n, Ourense, Spain Georgia State University, Atlanta, Georgia, USA
0000-0003-2230-9204
Correspondence
jorgemartinez@gsu.edu
Article | Year: 2022 | Pages: 533 - 567 | Volume: 46 | Issue: 4 Received: March 16, 2022 | Accepted: May 31, 2022 | Published online: December 7, 2022
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
Source: Authors’ calculation, based on the data from the Report on revenues and expenditures,
receipts and expenses (Form PR-RAS) for the years 2000-2020.
Source: Authors’ calculation, based on the data from the Report on revenues and expenditures,
receipts and expenses (Form PR-RAS) for the years 2000-2020.
|
Period
(d/m/yyy)
|
Central government
|
County
|
City/
municipality
|
Decentralized functions
|
Equalization fund for decentralized
functions
|
EU projects
|
|
1/1/1994-1/4/2000
|
70
|
5
|
25
|
|
|
|
|
1/4/2000-1/7/2001
|
60
|
8
|
32
|
|
|
|
|
1/7/2001-1/1/2002
|
29.2
|
8
|
32
|
9.8
|
21
|
|
|
1/1/2002-1/1/2003
|
29.6
|
8
|
32
|
9.4
|
21
|
|
|
1/1/2003-1/1/2007
|
25.6
|
10
|
34
|
9.4
|
21
|
|
|
1/1/2007-1/7/2008
|
|
15
|
52
|
12
|
21
|
|
|
1/7/2008-1/3/2012
|
|
15.5
|
55
|
12
|
17.5
|
|
|
1/3/2012-1/1/2015
|
|
16.0
|
56.5
|
12
|
15.5
|
|
|
1/1/2015-1/1/2018
|
|
16.5
|
60
|
6
|
16
|
1.5*
|
|
1/1/2018-1/1/2021
|
|
17
|
60
|
6
|
17**
|
|
|
1/1/2021-
|
|
20
|
74
|
6
|
|
|
Source: Law on Financing of Local and Regional Self-Government Units (OG 117/93, 33/00, 59/01, 107/01, 117/01, 150/02, 147/03, 132/06, 73/08, 25/12, 147/14, 100/15, 115/16 and 127/17, 138/20).
Source: Authors’ calculation based on the data from the Report on revenues and expenditures,
receipts and expenses (Form PR-RAS) for the years 2017 and 2018.
|
|
Own revenues
|
(1) +
Shared revenues
|
(2) +
Equalization transfers
|
(3) +
Other transfers
|
Expenditures
|
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|
Counties
|
|
Min, HRK
|
156.8
|
352.5
|
503.5
|
999.8
|
1,049.4
|
|
Max, HRK
|
489.2
|
956.2
|
956.2
|
2,941.7
|
2,757.0
|
|
Range (max-min), HRK
|
332.4
|
603.7
|
452.7
|
1,941.8
|
1,707.6
|
|
Average, HRK
|
323.4
|
595.6
|
660.2
|
1,392.8
|
1,382.2
|
|
Median, HRK
|
329.2
|
569.5
|
628.2
|
1,275.6
|
1,288.2
|
|
Standard deviation, HRK
|
83.8
|
156.9
|
113.3
|
421.4
|
376.9
|
|
Coefficient of variation (%)
|
25.9
|
26.3
|
17.2
|
30.3
|
27.3
|
|
Gini coefficient
|
0.142
|
0.138
|
0.088
|
0.126
|
0.114
|
|
Cities
|
|
Min, HRK
|
469.5
|
972.0
|
2,364.8
|
2,405.4
|
2,029.9
|
|
Max, HRK
|
9,538.8
|
10,912.2
|
11,042.2
|
12,031.3
|
14,053.9
|
|
Range (max-min), HRK
|
9,069.3
|
9,940.2
|
8,677.4
|
9,625.9
|
12,023.9
|
|
Average, HRK
|
2,440.0
|
3,803.1
|
4,571.0
|
5,401.4
|
5,316.2
|
|
Median, HRK
|
1,584.4
|
2,887.4
|
3,817.9
|
4,821.5
|
4,695.0
|
|
Standard deviation, HRK
|
2,096.6
|
2,469.5
|
2,115.6
|
2,213.5
|
2,502.8
|
|
Coefficient of variation (%)
|
85.9
|
64.9
|
46.3
|
41.0
|
47.1
|
|
Gini coefficient
|
0.429
|
0.336
|
0.233
|
0.218
|
0.247
|
|
Municipalities
|
|
Min, HRK
|
104.5
|
464.5
|
1,543.7
|
1,726.0
|
1,495.4
|
|
Max, HRK
|
13,934.2
|
15,855.1
|
15,855.1
|
26,749.9
|
29,477.4
|
|
Range (max-min), HRK
|
13,829.7
|
15,390.6
|
14,311.4
|
25,023.9
|
27,981.9
|
|
Average, HRK
|
1,955.0
|
2,815.3
|
3,738.7
|
4,839.9
|
4,741.0
|
|
Median, HRK
|
991.5
|
1,792.0
|
2,872.4
|
3,847.6
|
3,758.1
|
|
Standard deviation, HRK
|
2,313.3
|
2,616.7
|
2,310.6
|
2,995.4
|
3,167.8
|
|
Coefficient of variation (%)
|
118.3
|
92.9
|
61.8
|
61.9
|
66.8
|
|
Gini coefficient
|
0.523
|
0.425
|
0.277
|
0.281
|
0.303
|
Note: GPS: general public services, DEF: defense, POS: public order and safety, EA: economic
affairs, ENV: environment, HC: housing and community, HLT: health, RCR: recreation, culture,
and religion, EDU: education, SP: social protection. Source: Authors’ calculation, based on the data from the Report on revenues and expenditures,
receipts and expenses (Form PR-RAS) for the years 2000-2020.
|
Max
|
Min
|
Average
|
Median
|
St. dev.
|
Coefficient of variation (%)
|
|
Local Government
Units (cities and municipalities)
|
|
GPS
|
15,242.7
|
0.0
|
1,180.8
|
935.8
|
1,066.2
|
90.3
|
|
DEF
|
211.5
|
0.0
|
2.5
|
0.0
|
12.9
|
507.9
|
|
POS
|
2,056.4
|
0.0
|
125.6
|
90.5
|
140.7
|
112.0
|
|
EA
|
28,563.0
|
0.0
|
936.0
|
615.1
|
1,551.9
|
165.8
|
|
ENV
|
4,575.0
|
0.0
|
234.1
|
85.1
|
447.5
|
191.2
|
|
HC
|
9,449.6
|
0.0
|
1,184.4
|
885.2
|
1,172.9
|
99.0
|
|
HLT
|
408.4
|
0.0
|
18.4
|
2.5
|
36.0
|
195.0
|
|
RCR
|
6,007.4
|
0.0
|
381.3
|
246.3
|
529.4
|
138.8
|
|
EDU
|
6,431.5
|
0.0
|
281.4
|
184.8
|
425.0
|
151.0
|
|
SP
|
10,840.2
|
0.0
|
221.1
|
134.8
|
500.0
|
226.1
|
|
Total
|
29,477.4
|
1,465.9
|
4,565.6
|
3,699.2
|
2,944.1
|
64.5
|
|
Regional
Government Units (counties)
|
|
GPS
|
353.7
|
125.7
|
207.9
|
186.4
|
65.6
|
31.6
|
|
DEF
|
1.0
|
0.0
|
0.1
|
0.0
|
0.3
|
261.9
|
|
POS
|
147.0
|
3.5
|
17.5
|
9.4
|
30.9
|
176.1
|
|
EA
|
1,503.5
|
61.4
|
238.7
|
127.8
|
339.9
|
142.4
|
|
ENV
|
41.5
|
0.0
|
13.5
|
12.4
|
11.4
|
84.4
|
|
HC
|
105.7
|
0.0
|
22.9
|
13.1
|
29.0
|
126.7
|
|
HLT
|
145.1
|
5.5
|
39.9
|
30.8
|
36.3
|
90.9
|
|
RCR
|
122.5
|
8.7
|
47.0
|
38.3
|
30.3
|
64.4
|
|
EDU
|
397.9
|
32.6
|
197.6
|
204.2
|
99.7
|
50.4
|
|
SP
|
74.5
|
29.2
|
47.5
|
43.7
|
13.9
|
29.3
|
|
Total
|
2,061.2
|
511.1
|
832.6
|
793.3
|
337.4
|
40.5
|
Note: GPS: general public services, DEF: defense, POS: public order and safety, EA: economic affairs, ENV: environment, HC: housing and community, HLT: health, RCR: recreation, culture and religion, EDU: education, and SP: social protection. Source: Authors’ calculation, based on the data from the Report on Revenues and Expenditures, Receipts and Expenses (Form PR-RAS) for 2018.
|
General public services
|
Health
|
Primary education
|
Secondary education
|
Social
protection
|
|
Share in total
|
26.1
|
4.1
|
8.0
|
8.5
|
6.1
|
|
Cumulative share
|
26.1
|
30.2
|
38.2
|
46.7
|
52.8
|
Source: Authors’ calculation, based on the data from the Report on expenditure according to functional classification (Form RAS-functional) for 2018.
|
General public services
|
Health
|
Primary
education
|
Secondary education
|
Social
protection
|
|
Max
|
353.7
|
145.1
|
143.9
|
220.5
|
74.5
|
|
Min
|
125.7
|
5.5
|
0.0
|
0.0
|
29.2
|
|
Average
|
207.9
|
39.9
|
49.5
|
71.8
|
47.5
|
|
Median
|
186.4
|
30.8
|
38.2
|
68.7
|
43.7
|
|
Standard deviation
|
65.6
|
36.3
|
45.2
|
69.2
|
13.9
|
|
Coefficient of variation (%)
|
31.6
|
90.9
|
91.2
|
96.3
|
29.3
|
|
Gini coefficient
|
0.168
|
0.431
|
0.497
|
0.521
|
0.158
|
|
Cities
|
Municipalities
|
|
Share in total
|
Cumulative share
|
Share in total
|
Cumulative share
|
|
General public services
|
23.6
|
23.6
|
25.1
|
25.1
|
|
Firefighting
|
1.5
|
25.1
|
2.7
|
27.9
|
|
Road traffic
|
6.9
|
31.9
|
9.2
|
37.1
|
|
Waste management
|
2.7
|
34.7
|
2.1
|
39.2
|
|
Community development
|
10.6
|
45.2
|
11.8
|
51.0
|
|
Street lights
|
2.3
|
47.6
|
3.7
|
54.6
|
|
Health
|
1.3
|
48.9
|
0.5
|
55.1
|
|
Recreation and sport
|
6.4
|
55.3
|
2.7
|
57.8
|
|
Culture
|
3.3
|
58.6
|
2.6
|
60.3
|
|
Preschool education
|
2.1
|
60.7
|
4.1
|
64.4
|
|
Primary education
|
4.9
|
65.6
|
1.4
|
65.9
|
|
Secondary education
|
2.1
|
67.7
|
0.4
|
66.2
|
|
Social protection
|
5.6
|
73.3
|
5.0
|
71.2
|
|
Max
|
Min
|
Average
|
Median
|
Standard deviation
|
Coefficient of variation
|
Gini
coefficient
|
|
GPS
|
10,370.13
|
186.41
|
1,082.54
|
863.68
|
1,000.31
|
0.92
|
0.32
|
|
FF
|
418.61
|
0.00
|
95.07
|
62.15
|
92.42
|
0.97
|
0.48
|
|
RT
|
2,393.84
|
0.00
|
401.28
|
322.04
|
454.64
|
1.13
|
0.56
|
|
WM
|
2,089.36
|
0.00
|
143.20
|
42.02
|
307.99
|
2.15
|
0.74
|
|
CD
|
4,480.03
|
0.00
|
519.55
|
234.97
|
693.88
|
1.34
|
0.63
|
|
SL
|
1,592.96
|
0.00
|
154.64
|
128.14
|
168.39
|
1.09
|
0.44
|
|
HLT
|
204.83
|
0.00
|
24.95
|
8.10
|
36.80
|
1.48
|
0.68
|
|
RS
|
1,353.31
|
0.00
|
236.25
|
162.10
|
242.09
|
1.02
|
0.45
|
|
CL
|
2,996.58
|
0.00
|
154.27
|
80.68
|
294.79
|
1.91
|
0.63
|
|
PREE
|
1,065.91
|
0.00
|
84.52
|
50.38
|
122.88
|
1.45
|
0.62
|
|
PRIE
|
3,059.82
|
0.00
|
109.67
|
32.60
|
321.14
|
2.93
|
0.77
|
|
SECE
|
506.40
|
0.00
|
11.96
|
0.00
|
47.76
|
3.99
|
0.85
|
|
SP
|
866.56
|
0.00
|
199.61
|
154.68
|
145.30
|
0.73
|
0.36
|
Source: Authors’ calculation, based on the data from the Report on expenditure according to functional classification (Form RAS-functional) for 2018.
|
Max
|
Min
|
Average
|
Median
|
Standard deviation
|
Coefficient of variation
|
Gini
coefficient
|
|
GPS
|
15,242.75
|
0.00
|
1,210.30
|
978.76
|
1,085.52
|
0.90
|
0.36
|
|
FF
|
2,038.27
|
0.00
|
124.80
|
91.22
|
143.52
|
1.15
|
0.47
|
|
RT
|
9,148.88
|
0.00
|
476.06
|
226.20
|
821.28
|
1.73
|
0.67
|
|
WM
|
2,013.74
|
0.00
|
89.65
|
5.07
|
248.62
|
2.77
|
0.85
|
|
CD
|
8,889.66
|
0.00
|
533.39
|
152.55
|
995.92
|
1.87
|
0.73
|
|
SL
|
3,061.17
|
0.00
|
174.92
|
107.95
|
240.40
|
1.37
|
0.57
|
|
HLT
|
408.36
|
0.00
|
16.21
|
0.00
|
35.00
|
2.16
|
0.77
|
|
RS
|
1,645.77
|
0.00
|
109.01
|
62.58
|
165.75
|
1.52
|
0.59
|
|
CL
|
5,968.96
|
0.00
|
124.16
|
36.00
|
439.87
|
3.54
|
0.77
|
|
PREE
|
3,199.89
|
0.00
|
172.37
|
81.84
|
264.46
|
1.53
|
0.64
|
|
PRIE
|
1,366.24
|
0.00
|
48.63
|
24.35
|
98.95
|
2.03
|
0.67
|
|
SECE
|
314.24
|
0.00
|
15.57
|
0.00
|
33.66
|
2.16
|
0.81
|
|
SP
|
10,840.23
|
0.00
|
226.21
|
126.43
|
563.77
|
2.49
|
0.54
|
Source: Authors’ calculation, based on the data from the Report on expenditure according to functional classification (Form RAS-functional) for 2018.
Note: Dec +: LGUs that took over the decentralized functions, Dec –: LGUs that did not take
over the decentralized functions. Source: Authors’ calculation, based on the data from the Report on expenditure according to
functional classification (Form RAS-functional) for 2018.
|
Function
|
Decentralized to
|
|
Primary
education
|
20 counties and the City of Zagreb, as well as 35 other cities with
stronger fiscal capacities
|
|
Secondary
education
|
20 counties and the City of Zagreb
|
|
Social
care–social welfare centers
|
20 counties and the City of Zagreb
|
|
Homes for the elderly and infirm
|
17 counties and the City of Zagreb*
|
|
Health
care
|
20 counties and the City of Zagreb
|
|
Firefighting–public
fire departments
|
76 public fire departments co-owned by LGUs
|
Note: * In three counties (Virovitičko-podravska, Zagrebačka and Krapinsko-zagorska) there are no homes for the elderly and infirm founded by the state nor the LRGUs. Source: Decisions on minimum financial standards for individual public functions (OG 128/19).
Source: Annual regulations on the financing of decentralized functions and the calculation of the
amount of equalization grants for decentralized functions of LRGUs from 2014 to 2020.
Source: Ministry of Finance – Analytical report of the Budget from 2017 to 2020.
|
Decentralized function
|
Tier of government
|
Gini coefficient
before equalization
|
Gini coefficient
after equalization
|
|
Firefighting
|
Local
|
0.284
|
0.454
|
|
Primary education
|
Local
|
0.186
|
0.185
|
|
Primary education
|
Regional
|
0.329
|
0.148
|
|
Secondary education
|
Regional
|
0.230
|
0.097
|
|
Social welfare centers
|
Regional
|
0.233
|
0.202
|
|
Nursing homes
|
Regional
|
0.219
|
0.262
|
|
Health care
|
Regional
|
0.230
|
0.184
|
|
Decentralized function
|
Tier of
government
|
Minimum
standard
|
Collected from
the PIT
|
Equalization grant for dec. functions
|
|
Firefighting
|
Local
|
314.9
|
97.2
|
223.8
|
|
Primary education
|
Local
|
353.3
|
162.8
|
190.5
|
|
Primary education
|
Regional
|
649.8
|
158.9
|
491.0
|
|
Secondary education
|
Regional
|
438.1
|
161.4
|
276.6
|
|
Social welfare centers
|
Regional
|
96.1
|
30.4
|
65.8
|
|
Nursing homes
|
Regional
|
164.5
|
67.1
|
111.3
|
|
Health care
|
Regional
|
387.9
|
125.7
|
267.0
|
|
Total
|
2,404.6
|
803.5
|
1,626.0
|
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|
December, 2022
IV/2022
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