http://www.ewi.info/system/files/reports/Modernizing%20Municipal%20Finance%20of%20the%20Kaliningrad%

gested volume of co-financing in monetary terms will be too big for municipalities with low budget revenues, and too small for municipalities with big budget revenues. It would be advisable not to link the share of co-financing rigidly to budget revenues, but to note that a decision on co-financing should take it into account.

Restrictions on the size of subsidies (5 million rubles), project implementation period (1 year), and overall size of the fund (50-70 million rubles), selected by the author, lead to a conclusion that while formally responding to the demand to create the fund, the author in fact applies the notion of the fund to the existing «hole patch-up» practice and support of municipalities’ local expenditures from the regional budget. The proposed mechanism of creating the fund (as a percentage of the projected local budget revenues or of corporate property tax revenues) is surprising because, if the size of the fund should be represented as a percentage of a certain sum, it would be more logical to determine the size of the fund as a percentage of the consolidated regional budget or the regional budget.

On the whole, the proposed terms of fund operation can hardly be conducive to setting and fulfilling municipal development goals in the oblast.

4. A proposal regarding a new development concept for a territory and the municipal development fund as a financing instrument Going back to the issue of what the development of a territory means, three development concepts can be formulated: 1) «patching up holes»; 2) budget investments in the development of the taxable base of a territory or budget cost cuts; and 3) increasing the qualitative effectiveness of budget expenditures by selecting, introducing and disseminating new standards for the delivery of budget services («the best practice»).

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