Do you know where your tax dollars are “going” and why the street has new asphalt while the school gym is still waiting to be repaired? The answer lies in the one document that affects you more than you think: the municipal and county budget. It’s not just a spreadsheet of numbers – it’s a story of priorities, trade-offs and decisions that determine the quality of life in your home.
In this article, we will look at what a municipal and regional budget is, who decides on it, how it is created and approved, what it is based on and what the legal limits are. We will also guide you through practical examples and highlight common questions.
The municipal/county budget is the basic document of financial management. It is a plan of income and expenditure drawn up for one calendar year. The basic framework is laid down in the Act on Budgetary Rules for Local Government Budgets. It regulates the creation, status, content and functions of municipal and regional budgets, including management rules and a number of obligations (publication, budget amendments, management review, etc.).
The budget is prepared and discussed in a classification according to the budget composition, which is a uniform “language” for the breakdown of revenues and expenditures of public budgets. Since 2021, it is regulated by the Decree on Budget Composition.
The fiscal responsibility rule is also important: the debt of a municipality/county should not exceed 60% of the average of its revenues over the last 4 years; if it exceeds this, the municipality must reduce its debt by at least 5% of the difference between the amount of its debt and 60% of the average of its revenues over the last 4 fiscal years.
We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
The municipal council has the statutory power to approve the municipal budget, the medium-term budget outlook and the final accounts. Similarly, the regional council approves the medium-term outlook, the budget and the final accounts of the region. These are decisions that cannot be delegated to another body (e.g. the council).
The financial year is identical to the calendar year. The municipality/county bases its budget on the medium-term outlook (2-5 years ahead) and before approving the budget, it must publish the draft budget at least 15 days before the council deliberation – on the official board and in full on the website. Citizens can submit comments in writing or orally at the meeting.
In addition to traditional budget deliberation, many cities are introducing participatory budgeting – setting aside a portion of money and letting citizens propose and vote on projects that are then implemented.
If the budget is not approved by January 1, the municipality/county operates according to the provisional budget rules approved by the council. Generally, spending in the provisional budget is supposed to be controlled (usually based on one-twelfth of last year’s spending).
The life of a municipality/county changes, and therefore the law provides for budget measures – changes to the approved budget. Approved measures must be published within 30 days of approval.
You can get involved not only in budget planning, but also in amending the municipal master plan. Find out how in our article.
The largest part of municipal and regional revenues is made up of shared taxes – i.e. taxes whose revenue is determined by the state and divided between the state budget, municipalities and regions according to the rules. The rules of apportionment are defined in the Budgetary Determination of Taxes Act. The most up-to-date overview is published by the Financial Administration.
The RUD also regulates other taxes and allocation details (e.g., criteria for allocation among municipalities – population, area, etc.). The allocation of shared taxes includes a contribution based on the number of children and pupils in kindergartens and primary schools established by the municipality. For the year 2025, the MoF has provisionally calculated approx. CZK 20.20 per pupil.
In addition to shared taxes, municipalities and regions have their own non-tax revenues (rent, sale of property, fees, etc.) and subsidies/transfers (from the state budget, state funds, regions, EU).
Imagine a municipality of 3,000 inhabitants with a kindergarten and a primary school. The municipality receives a share of the corporate and personal income tax, plus 100% of the real estate tax (depending on the location of the property). For personal income tax on employment, the municipality receives a basic municipal share and a 1.5% incentive component, which is linked to the location of employment and is intended to motivate municipalities to cooperate with local employers. In addition, for each pupil of a municipally-established kindergarten/school in 2025 , an extra 20.58 thousand is provisionally paid. Together, these shared taxes can form the core of the budget; other revenues will be fees, rents, property sales and possible subsidies.
Municipalities typically finance pre-school and primary education, local roads, public spaces and greenery, waste management, culture, sport, social services, housing support or security (municipal police), infrastructure investments and the operation of contributory organisations (kindergartens, primary schools, libraries, cultural facilities, etc.).
The regions mainly provide secondary education, health, social services, transport services and class II and III roads. All this is broken down in the budget (by sector and by type) to make it clear and comparable.
The budget can be balanced, in surplus or in deficit. In practice, the deficit must be covered – e.g. by previous years’ surpluses, a loan, the issue of municipal bonds, etc., and always within the limits of the rules of budgetary responsibility.
At the end of the year, the municipality/county prepares the final accounts – a summary evaluation of the management. The draft final accounts must be published at least 15 days before they are discussed and subsequently approved by the council (with unqualified or qualified consent and corrective measures). At the same time, a review of the municipality’s/county’s accounts is carried out by the regional authority or auditor.
The county budgets are subject to the same principles – the Law on Budgetary Rules for Territorial Budgets, budget composition, disclosure, budgetary responsibility – but expenditure is mainly directed towards secondary schools, hospitals, social facilities, regional transport and roads II/III. Classes.
The budget and final accounts are approved by the County Council – these are reserved powers. Counties also have a share of shared taxes, distributed according to RUD rules.
For councillors and officials: budget conservatively, cover current expenditures with current revenues, and plan investments with debt limits in mind. Keep documents timely and fully disclosed – it is a legal obligation and a reputation of the municipality/county.
For the public: keep an eye on the official notice board and the municipality/county website – the draft budget, outlook and final accounts must be posted at least 15 days before the discussion. Come to the meeting, ask questions, make suggestions. If you want more influence, take an interest in participatory budgeting in your municipality.
The budget of municipalities and regions is an annual plan of revenues and expenditures given by the Law on Budgetary Rules of Territorial Budgets and classified according to budget composition. It is approved exclusively by the council; the draft must be published at least 15 days in advance and citizens can comment on it (often as part of a participatory budget). If the budget is not approved by 1 January, it is managed on a provisional basis; changes are made by budgetary measures. Fiscal responsibility rules apply: local government debt is not to exceed 60% of the average revenue over the last 4 years; if it exceeds this, it must be reduced by at least 5% of the difference.
Revenues consist mainly of shared taxes according to the RUD (e.g. in 2025 for VAT: 66.39% state, 24.16% municipalities, 9.45% regions); real estate tax goes 100% to the municipality, for the DPFO from employment municipalities have an additional 1.5% incentive share, and for a pupil of a municipally established kindergarten/school there is a preliminary amount of approx. CZK. The municipalities’ expenditures are mainly directed to kindergartens/schools, local roads, waste, public spaces, culture, sports and social services; the regions finance secondary schools, health care, social areas, regional transport and class II/III roads. The budget can be balanced, surplus or deficit (the deficit must be covered within limits); the year is followed by a final account and review.
The State operates the open portal MONITOR of the State Treasury, where you can find budgets, performance, financial statements and clear graphs for all municipalities and regions in the country. The data is regularly updated by the Ministry of Finance.
Provisional rules are approved by the council; the standard is to spend no more than one-twelfth of the previous year’s expenditure per month and to cover necessary commitments from previous years, salaries, utilities, etc. Once the budget has been approved, the provisional expenditure becomes part of it.
During the publication period (at least 15 days before the hearing), municipalities normally accept written comments via the mailroom/email and you can also speak at the council meeting.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
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