Determinants of choice in the form of conducting municipal economy by local government units
Determinants of choice in the form of conducting municipal economy by local government units

Summary/Abstract: Objectives: This paper aims to address a problem that includes the managing of the municipal economy by localgovernment units (LGUs). The research issue raised regarded, in particular, the rules and organisational-legal norms formanaging a municipal economy. Its expression is the posed hypothesis according to which what matters significantlyfor LGUs in the choice of form for conducting a municipal economy is both the character of the task as well as whetherthis form is recognised as a subject of the public finances sector, and, what follows, whether its indebtedness is subjectto statutory restrictions and influences the financial situation of LGUs.Research Design & Methods: To verify a hypothesis formulated in such a way, firstly theoretical and legal aspectsof managing a municipal economy by LGUs have been put forward. Next a comparative analysis for forms of managinga municipal economy by LGUs was conducted, i.e. a local self-government budgetary establishment and a municipalcompany, and the most significant characteristics of the discussed forms, as well as their effects being a result of theirchoice by LGUs, were indicated. Comparative and descriptive analysis has been used in this paper; it included analysisof financial data regarding the management of a municipal economy by LGUs, but in strict correlation with institutionaland legal conditions for the realisation of public tasks and their conditioning.Findings: As a result of the research conducted, it has been concluded that changes taking place in the scope of formsof managing a municipal economy point towards more and more common tasks realised by LGUs both in the fieldof public utility as well as outside of the public utility zone in the form of commercial law companies.Contribution: Basic kinds of risks associated with the realisation of tasks by the budgetary establishment and municipalcompany have also been defined. Moreover, research results show that possibilities for such a wide operation resultfirst and foremost from imprecise legal regulations, which are at the same time the only source of risk associated withthe operation of such companies.Keywords: municipal economy, economic activity of LGUs, local self-government budgetary establishments, municipalcompany, risk.Article Classification: Research articleJEL classification: H41, H44.

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