In the first quarter of 2026, Municipalities’ own-source revenues amounted to $2.2 billion, which is 11.8% higher than in the same period last year. In the western and central regions, revenues increased by 15–25%, while in Kherson and Donetsk regions they declined by 46% and 29%, respectively, due to temporary occupation, population outflow, and business shutdowns.

Personal income tax remains the largest source of revenue, accounting for more than half of communities’ own-source revenues. Its proceeds increased due to higher nominal wages, with the average monthly wage rising from $534 to $650. Excise tax revenues grew by 24.6%, in particular because of increased demand for fuel for generators. At the same time, revenues from the single tax paid by small businesses increased by only 2.8%, although the number of entrepreneurs exceeded 2.1 million. Land fee revenues remained almost unchanged due to the temporary occupation of part of the territory and limited updates to the normative monetary valuation of land.

Transfers from the state budget increased by 29.5%. The main reasons were a 30% increase in teachers’ salaries from the beginning of 2026 and an increase in the basic equalization grant. At the same time, the subvention for the most affected communities decreased by 28.6%.

Communities are increasingly spending funds on current needs rather than development. Total expenditures amounted to $2.96 billion, of which 93.4% were current expenditures. Over the year, these increased by 17.3%. The largest share of funding was allocated to education, which accounted for more than 51% of all expenditures. It was followed by social protection, healthcare, and culture. Meanwhile, capital investment decreased by 19.2% to $194.9 million, and the amount of funds allocated to development from the current budget fell by 71%.

In the first quarter, the number of attacks increased by 46%, while the scale of destruction was three times greater than in the first quarter of 2025. Airstrikes and drone attacks accounted for 81% of all attacks, compared with 27% in 2024. This means that the threat is no longer limited to frontline areas. Housing was affected the most, accounting for 72% of all damage. It was followed by energy infrastructure facilities at 19%, as well as schools and healthcare facilities.

Urban communities suffered the greatest material damage. Although they accounted for less than half of all attacks, they sustained around 70% of all infrastructure damage. At the same time, drones and airstrikes are increasingly reaching rural and remote settlements. Among non-frontline cities, Kyiv, Kryvyi Rih, Dnipro, Konotop, Chernihiv, and Poltava were most frequently targeted.

In the first quarter, 56 new cooperation agreements were concluded, mainly in the areas of joint financing of institutions, education, and social services. Large urban communities are increasingly acting as support hubs for smaller neighboring communities. In the area of planning, 877 communities approved medium-term investment plans, while 722 approved unified project lists. At the same time, the problem of inconsistency between planning and financing remains: some communities received funds without approved plans and could not use them, while others had approved plans but did not receive funding.