Abstract
Territorial sovereignty related to public power gives rise to the right to obtain the requisite funds for the execution of tasks and the payment of the attending costs. In the Czech Republic, the right of local communities to their own financial resources and the right to use them are ensured by the Constitution and other acts.
Other important documents include the European Charter of Local Self-Governance, which took effect in the Czech Republic on 1 September 1999. Various resources are available to local self-governance - designated taxes and charges as well as non-tax sources.
An important source is subsidies from the state budget that help address the situation of municipalities of varying financial strength. The principle of solidarity is applied in the granting of them, which is also embodied in the Charter.
Municipalities may also have other sources, related to their economic activity, or may use refundable sources. In the case of refundable income, recipients must take measures to enable the return of the funds obtained at some point in the future.
Expenditures related to the payment of refundable income have an impact not only on the expense side of the budget of a municipality in upcoming years, but will also have an impact on the indebtedness of the municipality. The indebtedness of a municipality is then reflected in the overall indebtedness of the state and is carefully monitored by EU authorities.
A harmonisation of approaches to the financing of local self-governing bodies is therefore very much needed in addressing the issues raised by the economic crisis. Of assistance in this regard could be, for example, the Congress of the Council of Europe, which monitors the financial management of regional self-governing bodies in individual countries.