The Impact of the COVID-19 Pandemic on Subnational Finance: Polish Experience

Abstract

Abstract In the face of the COVID-19 pandemic, governments worldwide established various mechanisms to facilitate the pandemic response and ensure the state’s functioning. As a consequence, the economic impact of the COVID-19 crisis varies in countries, depending on the region. We are looking for answers to research questions: how the COVID-19 pandemic influenced the finances of local government institutions in 2020–2021; Is it possible to distinguish the types of units where this impact was greater or smaller, and whether and how the pandemic-related legislation influenced the fiscal relations between the state and local government, especially in the context of the local government institutions’ financial independence. We have noticed that financial solutions dedicated to local government units, as well as making local government fiscal rules more flexible, allowed to maintain the potential of the local economic base. They also had a diversified impact on the Polish local government institutions’ income level.