*4.4. Realized Expenditures*

The total expenditure under the existing local plans by the end of 2019 amounted to PLN 26.7 billion, and thus they accounted for 23.3% of the forecasted expenditure. The outlays were distributed in the following proportions (Figure 1): construction of communal roads—PLN 13.5 billion (50.6%), construction of technical infrastructure—PLN 8.8 billion (32.8%), purchase of land for road construction communes—PLN 2.1 billion (8.0%), and other expenses—PLN 2.3 billion (8.6%).

The largest expenditure was spent on investments in communes belonging to the functional areas of voivodeship centers (PLN 6.9 billion), then in sub-regional cities (PLN 4.5 billion), then in voivodeship cities (PLN 3.7 billion) and other communes (PLN 3.4 billion), and at last, which may be somewhat surprising, in intensively agricultural communes (PLN 0.7 billion), which are particularly numerous in western and northern Poland. The analysis of the structure of expenditures by administrative categories of communes shows that in rural communes the highest costs are related to the construction of technical infrastructure (apart from roads)—they accounted for 47.2% of the total expenditures in these units. Nevertheless, the total costs of building communal roads and purchasing land for roads were almost the same amount. In urban communes, communal roads' construction was the most absorbed in the expenditure structure—47.7% of the total. Its share is even more pronounced in cities with poviat status, where it amounted to 60.9%. Land purchase costs for communal roads were relatively the highest as a category of expenditure in poviat cities (12.6%).

The realized costs related to the enactment of local plans differed significantly in individual regions. In the light of the data obtained, the highest costs were incurred in the following voivodeships: Małopolskie (PLN 3.8 billion), Mazowieckie (PLN 3.6 billion), and Pomorskie (PLN 3.1 billion). Expenses exceeding PLN 2 billion were recorded in three more voivodships. The lowest amounts were recorded in Lubuskie (PLN 0.39 billion), then in Podkarpackie (PLN 0.46 billion) and Swi ˛ ´ etokrzyskie (PLN 0.61 billion). Among all the communes that replied to the budgetary costs incurred, the largest expenditure was made in Gda ´nsk (PLN 910 million), Jelenia Góra (PLN 857 million), Cracow (PLN 642 million), Piaseczno (PLN 495 million), Tarnów (PLN 491 million), and Białystok (PLN 471 million). The costs incurred in some communes influenced significantly the total

balance of expenditures for a given region (e.g., Jelenia Góra in Dolno´sl ˛askie voivodship— 32%). In the whole country's scale, the first ten communes generated over 19% of all expenses. It means a very high concentration, which hinders the unequivocal interpretation of the results and causes that conclusions regarding the situation on a national scale should be cautious.

#### *4.5. Forecasted vs. Realized Revenues and Expenditures*

The balance of economic effects of adopting local plans is negative, both when we consider the forecasted revenues relating to the forecasted expenditure and the realized results, which can also be observed when converting the amounts to the number of inhabitants of communes (Figure 2). The comparison of income (receipts) and expenses (costs) shows several important regularities. First, neither the expected nor the realized income so far outweighs the expenses. On a national scale, revenues constitute approximately 60% of the reported costs.

**Figure 2.** Structure of forecasted and realized revenues and expenditures of communes per capita by types of communes as a result of local plans enacted, for the year 2019. Source: based on unpublished data of the Ministry of Development and Statistical Office of Poland.

The most favorable balance was recorded for the realized income relating to the expenditure by the end of the year in the type D of communes, i.e., in the external zones of functional areas of sub-regional cities. It was slightly positive there, amounting to PLN 59 million. In the remaining categories of communes there are lower balances for financial turnover. In absolute numbers, the most negative balance concerns the ratio of projected revenues to costs in voivodeship cities (PLN −22.1 billion, thus it was assumed that 50% of revenues would offset expenditure). Simultaneously, the percentage ratio of revenues to costs was also the least favorable in voivodeship cities, but only in terms of their implementation (only 20% of revenues offset expenditure). It means that in larger urban centers, the implementation of the economic effects of adopting local plans takes longer. On the other hand, this balance percentage was also very low in the most intensively developed communes, including forest communes (type J), where the income balanced the expenditure by 32%.

On the country scale, there is almost the same rate of obtaining (realizing) revenues to those forecasted (23.1%) compared to incurred and forecasted expenses (23.3%). It can be concluded that both obtaining funds and incurring expenses resulting from adopting local plans are considerably stretched in time.

The most balanced financial situation related to the implementation of the provisions of local plans was found (apart from the already mentioned functional zones of sub-regional cities, where the balance was minimally positive) in the sub-regional cities themselves, i.e., mainly poviat cities. The negative balance there accounted for 9% of all expenditure, while in voivodship cities the amount of negative balance accounted for almost 80% of realized expenses, in smaller towns (type E) it was 53%, and in the most intensively developed communes (type J)—68% of the costs incurred.

The maps show the spatial mosaic nature of the anticipated and realized balances of incomes to expenditures per capita throughout Poland. However, the forecasted balances show clear regional differentiation (Figure 3). More favorable balances of forecasts are observed in the Western and North Territories, including Lower Silesia and northern Poland (Pomerania, Masuria, Warmia) than in the south-eastern part of the country (Lesser Poland, Subcarpathian region), characterized by a greater fragmentation of the agrarian structure and land properties, but also by significant coverage with local plans (the case of the Lublin region). Despite this, many communes from the Lublin region did not provide any data (they did not provide the completed forms during the survey). The balances for implementing local plans (Figure 4) show spatially full mosaic character, where communes with a negative balance dominate throughout the country, but communes with a positive balance are also scattered throughout Poland. The ratio of the expected balances to the communes' incomes (Figure 5) again shows a more favorable situation in the northern, western, and south-western parts of the country than in central, eastern, and north-eastern Poland.

**Figure 3.** Forecast balance of revenues and expenditures per capita by communes, for the year 2019. Source: based on unpublished data of the Ministry of Development and Statistical Office of Poland.

**Figure 4.** Realized balance of revenues and expenditures per capita by communes, for the year 2019. Source: based on unpublished data of the Ministry of Development and Statistical Office of Poland.

**Figure 5.** The ratio of forecasted balances to the communes' own revenues, for the year 2019. Source: based on unpublished data of the Ministry of Development and Statistical Office of Poland.

#### *4.6. Examples of Municipalities with Unsustainable Financial Management*

The analysis presented in the previous subsections would not be complete if it was not illustrated with examples from specific municipalities. Such a comparison is contained in Table 2, in which information about five municipalities located in different types of municipalities and regions of Poland is collected. They were selected from among 126 communes in Poland, for which, at the same time, there were full financial data available (on the forecasted and realized revenues and expenditures), and the area of these communes is nearly completely covered by the binding local plan (more than 95% of the municipality area). In all of these communes, there were high values of areas for which land use was changed from agricultural to non-agricultural.

All the analyzed municipalities were rather moderately prosperous, as for Polish conditions (municipalities' budgets in the range of 922–1021 EUR per capita, average in Poland-1208 EUR, median 1045 EUR in 2019), including the share of own income (mainly from local taxes and fees) which fluctuated between 31% and 51%. All the municipalities had a negative balance of projected revenues and expenditures due to the adoption of local plans (the highest number in the Michałowice in Cracow Metropolitan Area-106 million EUR) (Table 3). In three of them, revenues were projected mainly from fees and taxes (92–100%), while in the remaining ones the sale of building plots was most likely to be the source of profits. Interestingly, the latter mechanism did not apply to places where the land was most expensive, i.e., Michałowice and the Udanin (commune located by the A4 motorway). One can be almost certain that the tool in the form of "land bank" was not used in those communes. While in Michałowice there may have been a problem with the land ownership structure (most or all of the real estate being in private hands for a long time), the A4 motorway route has been known for a long time and it seems "puzzling" that the commune did not buy land along the motorway when plans to modernize the A4 route in 2002–2006 were known (in the commune there are two exits from the motorway: "Udanin" and "Jarosław").

As far as expenditures are concerned, according to the forecasts, they are to be spent mainly on the construction of infrastructure (together with the purchase of land). The amounts for these purposes account for 83–100% of the expected expenditures in the five municipalities.

In total, all the municipalities are forecast to have a negative balance of forecasted revenues and expenditures, with the largest number of them in the municipality of Michałowice near Cracow ( −91 million EUR). Interestingly, this commune has a positive balance. This is, however, quite a peculiarity, as the commune invests little compared to the needs resulting from the rapid population growth due to suburbanization processes (in the years 2003–2019, the balance of recorded inflows and outflows was positive and amounted to 2.7 thousand people, i.e., 37% of the population in 2003). It is also worth noting that the commune has an exceptionally unbalanced budget: the planned expenses are as much as 19 times more than its own annual income (1902%). In the remaining communes this indicator is also high, ranging from 75% (Kiernozia) to 370% (Janów Lubelski).

The examples given show quite clearly how serious the problem of the lack of mechanisms is to ensure the financing of investments related to spatial planning in communes. It concerns both the situation in which the commune is an area of new population inflow (Chełm, Michałowice) and a typical depopulation commune (Kiernozia, Udanin). It is particularly unfavorable that despite the latter premise, related to the decrease in population, the communes do not look for savings in better spatial organization and concentration of buildings (in order to, for example, achieve better consistency ("fit") for services), but allow for a strong supply of new investment areas (in the suburban and depopulated communes of Michałowice and Kiernozia it was about 1.5 thousand sq. m of land per capita).

**Table 3.** Data on the forecasted and realized revenues and expenditures in the 5 selected communes in Poland. As of 31 December 2019.


Source: based on unpublished data of the Ministry of Development and the Central Statistical Office of Poland.
