The budgets of temporarily occupied communities remain an important element of Ukraine's state policy in wartime. Despite the loss of control over part of the territories, these communities continue to function as administrative-territorial units, form their own budgets and plan for recovery after de-occupation. This approach preserves their legal status and demonstrates the invariability of Ukraine's sovereign claims to these territories.
The availability of budgets allows military administrations to perform minimal administrative functions, support internally displaced persons, and maintain contact with residents of communities that were forced to leave. A significant portion of the funds is directed to education, social housing, the operation of humanitarian centers, health and other activities for displaced persons. For many people, this is actually the only form of support from the community from which they come.
At the same time, the budget model of relocated communities has significant limitations. More than 84% of their revenues are generated through state transfers, which makes such budgets dependent on the central government. The loss of property, land, and communal infrastructure complicates the generation of own revenues and turns the budget process into a largely formal one. Despite this, such communities are subject to a general mechanism of horizontal equalization and additional subsidies from the state budget.
In recent years, the expenditures of individual occupied communities have increased significantly. In the largest urban communities, they are measured in hundreds of millions of hryvnias and in some cases approach a billion. For comparison, the budgets of some communities that are under full control have comparable indicators. This indicates a significant scale of financial resources that are administered even under occupation.
The structure of expenditures in different communities differs. Some military administrations direct the majority of funds to inter-budgetary transfers, in particular subventions to support the Armed Forces of Ukraine or for the needs of other communities. In some cases, this item makes up the majority of the budget. Such a mechanism raises discussions about the efficiency, priority and speed of use of funds in the context of the needs of the front.
At the same time, significant amounts are spent on the maintenance of local authorities. In a number of communities, expenditures on the administrative apparatus remain comparable to those of communities that were not occupied. This raises the question of the possibility of optimizing administrative costs, in particular by improving the structure of military administrations. However, any changes should take into account the needs of internally displaced persons, since in many communities a significant part of the budget is directed specifically to social programs for them.
A separate problem is the uneven access of IDPs to services. The share of spending on social security, education, or IDP support varies significantly across communities. This creates differences in the amount of assistance and opportunities to receive services depending on which community a person belongs to.
Transparency also remains an issue. Residents of temporarily occupied communities are effectively limited in their ability to influence budget decisions, and public consultation mechanisms are often not used. The completeness of disclosure of revenue and expenditure data is sometimes insufficient, which complicates public oversight and accountability.
Addressing these problems requires a comprehensive approach: reviewing the ratio of administrative costs and social programs, ensuring equal access to services for IDPs, increasing transparency of the budget process, and implementing effective instruments for citizen participation. Optimizing management structures can have an economic effect, but it must be accompanied by guarantees of adequate social protection for IDPs and preserving the capacity of communities to recover after de-occupation.
