INSTITUTIONAL CHANGES OF INTERGOVERNMENTAL RELATIONS IN A FEDERAL STATE

The acute problem of the budget system of the Russian Federation is the horizontal and vertical disbalance. The world experience and Russian practice prove the necessity of further institutional transformation on the way of building federal, democratic, social and economically effective state. The economic justification of the necessity of a decentralized state system can be given as a result of the comparative analysis of costs and benefits of various forms of a state system. Thus, to prove the necessity of existence of independently operating regional and local authorities, it is necessary to show that granting of certain public goods and services at their level is more favourable, than at the level of the central government. Federalism is a form of division of power in the state when maximum attraction of citizens to management is provided. Budgetary federalism, in turn, represents a search of balance of interests of power at all levels, economic subjects and the population in the course of budget formation and execution. According to the theory of budgetary federalism execution of problems of collective importance has basic value for local authorities. In particular, the presence of a certain spectrum of problems, which can be most effectively executed at the local level of government, is a decision argument for substantiation of the necessity of existence of this level of power. In the opinion of inhabitants of the municipality local authorities are associated first of all with the given public blessings. From this point of view incomes of the municipal budget do not matter. In the theory of budgetary federalism they directly result from the volume of the problems the local authorities face. The system of intergovernmental relations is to provide redistribution of revenue of the state between different subjects considering tasks to be done and powers and expenditures connected with them. The sum of compensation payments is ranged taking into account the rate of income at the territory and coefficients of taxes and compensation assignments. The system of intergovernmental relations depends on the federal state order. One can state that each type of federalism corresponds to a definite type of financial constitution. In the system of equalizing one can single out four elements: 1. Total amount of redistributed financial resourses. 2. Estimation of finlancial needs. 3. Evaluation of tax potencial. 4. Defining the equalizing range. So, to build a democratic, federal state with social-oriented market economy is the most important institutional condition to form a balanced and effective system of intergovernmental relations.