The Impact of Institutional and Political Factors on Timely Adoption of Local Community Budgets

When preparing a budget, local authorities are faced with a problem of implementing all statutory tasks while maintaining a balanced budget both from a financial point of view and from the aspect of satisfying common needs and interests of citizens. All these factors are reflected in the timely adoption of a budget. Our fundamental hypothesis is that in their efforts for timely adoption of a budget, local communities face institutional and political factors. If the budget of the local community is not adopted on time, local communities, in the case of Slovenia, are financed only on a temporary basis. An example of an institutional factor is the cooperation between a mayor and a finance manager in preparation of a budget (the first factor). An example of a political factor is the clarity of informing a municipal council (the second factor) which is the decision-taking body of a local community, since both the mayor and municipal council are elected politically. To this end, we have set two hypotheses. The first hypothesis is that the first mentioned factor is an important factor for timely adoption of a local community budget. We checked it with the discriminatory analysis. The second hypothesis is that the clarity of informing a municipal council by a mayor is an important factor for the timely adoption of a local community budget. We checked it by testing the difference between the arithmetic mean for two independent samples. The sample consisted of 122 local communities out of 212 population. Based on theoretical background and research, we have drawn recommendations to local communities for timely adoption of budget which consequently allows financing and performance of municipalities’ tasks.