In August 2026, general fund revenues of local budgets excluding inter-budgetary transfers reached UAH 55.8 billion, up 19% compared with August 2025. This was 2.3 times the annual inflation rate of 8.1%. Revenue growth in 12 oblasts exceeded the national average, showing that municipalities’ own revenue base continued to expand despite the continuing security pressure.

These findings are presented in the Municipal Review for August 2026, prepared by KSE Institute together with KSE University.

Personal income tax (PIT) remained the largest source of local budget revenues, accounting for 52.3% of general fund revenues excluding transfers. PIT revenues reached UAH 29.2 billion, up 20.8% year-on-year. The single tax brought in UAH 8.2 billion, up 14.9%, while land payments reached UAH 4.7 billion, up 10.1%. Excise duty revenues amounted to UAH 3.5 billion, 11.6% more than a year earlier. Property tax revenues rose the fastest — by 54.6% to UAH 1.4 billion — partly due to the expiry of payment deadlines for individuals and a higher tax base.

State support also increased sharply. In August, transfers to local budgets were 3.6 times higher than a year earlier. Nearly UAH 2.3 billion in additional grants was distributed among 179 municipal budgets and five oblast budgets in territories negatively affected by the war. The education subvention increased by 36%, reflecting the 30% increase in teacher salaries from the beginning of 2026, while the basic equalization grant rose by 20.5%. At the same time, 999 local budgets received UAH 2.6 billion in basic grants, while 207 local budgets transferred UAH 1.6 billion in reverse grants to the state budget, 23.9% more than in August 2025.

Regional policy is gradually shifting toward more differentiated support for territories and closer alignment with EU cohesion principles. The Government Action Programme for 2026-2027 provides for a priority support package for frontline territories, followed by separate packages for other functional types of territories, improved horizontal equalization of local budgets in 2026, and a three-year planning cycle for the State Fund for Regional Development. Financing for recovery is also expanding: more than UAH 4.9 billion is provided under the Ukraine Recovery Programme III, while the 2026 allocation for the Ukraine Recovery Programme was increased by UAH 1 billion to almost UAH 2 billion. The number of EIB-approved projects under the latter programme increased from 138 to 163.

Security pressure intensified further. In August, 4,096 aerial, drone, artillery, mortar and missile attacks were recorded — 5.9% more than in July and 80.5% more than in August 2025. Compared with August 2024, the number of attacks increased 2.7-fold. Aerial and drone strikes accounted for 87.2% of all recorded attacks, or 3,572 cases, while artillery, mortar and missile shelling decreased by 2.8% from July to 524. The ten most attacked municipalities accounted for 1,408 attacks, or 34.4% of all attacks on municipalities under Ukrainian government control; Darivska municipality recorded the highest number, with 279 attacks.

At the same time, the number of incidents of damage to civilian infrastructure declined from July but remained far above last year’s level. Municipalities recorded 858 incidents in August — 10.4% fewer than in July but 137.7% more than in August 2025. Housing accounted for 622 cases, or 72.5% of the total; energy infrastructure for 145, education for 57 and healthcare for 34. Almost 70% of all incidents occurred in Kharkiv, Sumy, Donetsk and Dnipropetrovsk oblasts, while frontline municipalities accounted for 693 cases, or 80.8% of the total.

Municipalities continued to use cooperation to share resources, organise services and attract external support. Fourteen inter-municipal cooperation agreements were added to the register in August: nine covered joint projects, three involved delegating tasks together with resources, and two concerned joint maintenance of municipal institutions. International cooperation also expanded: 16 Ukrainian municipalities signed a memorandum with the European Association for Local Democracy, while Boryslavska municipality and Poland’s Sanok gmina secured financing for the EUR 84.4 thousand RoboBridge education project, 90% of which is funded by the EU.