In the first nine months of 2026, municipalities\u2019 own general fund revenues, excluding transfers, reached $7.4 billion, up 11.1% in US dollar terms and 17.7% in hryvnia compared with the same period last year. However, significant regional disparities persisted. Revenues declined by 24.1% in Donetsk Oblast and 4.2% in Zaporizhzhia Oblast, while most other regions recorded growth. Despite rising revenues, municipalities reduced capital spending and faced an increasing number of Russian attacks.<\/p>\n
These findings are presented in the Municipal Review for the first nine months of 2026, prepared by the Center for Public Finance and Governance Analysis at KSE Institute together with KSE University.<\/p>\n
Personal income tax (PIT) remained the largest source of municipalities\u2019 own revenues. It generated $4 billion, up 14.3% year-on-year, and accounted for 54.2% of total revenues. Unified tax receipts reached $1.1 billion (+5.3%), although the number of registered individual entrepreneurs exceeded 2.2 million. Land fee revenues amounted to $740.5 million (+6.8%), excise tax revenues to $608.6 million (+11.2%), and real estate tax revenues to $193.5 million (+7.6%). Revenue growth from several sources slowed compared with the first half of the year. The situation remained particularly difficult for municipalities losing residents, businesses and land due to the war.<\/p>\n
Transfers from the state budget increased by 34.1%, largely reflecting additional funding for responsibilities already assigned to municipalities. The education subvention rose by 31% following increases in teachers\u2019 salaries, while the basic equalisation grant grew by 14.4%. At the same time, the additional grant for municipalities most affected by the war declined by 22.5% year-on-year. In the draft 2027 State Budget, the Government also proposed reducing the municipal share of PIT from 64% to 60%. Following the first reading on 28 October, Parliament instructed the Government to consider retaining the 64% share and allowing municipalities to keep the reverse equalisation grant.<\/p>\n
Total municipal expenditures reached $10 billion, up 13% year-on-year. Education accounted for 48% of all spending, while housing and communal services represented 10.5%. Current expenditures increased by 16% to $8.9 billion, accounting for 88.4% of total spending. Capital expenditures fell by 5.9% to $1.1 billion, while transfers to development budgets declined by 57.4%. In September, municipalities also faced Treasury payment delays affecting utility services, repairs, civil protection measures and recovery projects. Under rules effective from October, when available funds are insufficient, the Treasury may prioritise payments for defence, salaries, pensions and other protected expenditures.<\/p>\n
In Q3, the Government updated regional development and public investment financing rules. A new classification of municipalities by territorial type is intended to guide differentiated state support from 2027. To access financing from the State Fund for Regional Development, municipalities must have approved investment plans and provide at least 10% co-financing. Under Ukraine Recovery Programme III, the Government allocated UAH 4.9 billion for water supply, social infrastructure and housing for internally displaced persons. Funding for the Ukraine Recovery Programme in 2026 was increased by UAH 1 billion to nearly UAH 2 billion, enabling support for 25 additional projects. Approximately $0.8 billion was also allocated to protecting critical infrastructure and improving its resilience.<\/p>\n
The security situation continued to deteriorate. Between January and September, municipalities in Ukrainian government-controlled territory recorded 29,829 attacks, up 44.4% year-on-year, and 7,524 incidents of civilian infrastructure damage, an increase of 159.8%. Q3 alone saw 11,869 attacks, the highest quarterly figure since the beginning of 2024. Air and drone strikes accounted for 86.8% of these attacks. Over the nine months, 415 municipalities experienced attacks. Housing accounted for the largest share of infrastructure damage in Q3, at 70.4%. Meanwhile, incidents of damage to energy infrastructure increased by 17.8%, educational facilities by 22.8%, and healthcare facilities by 20.2% compared with Q2. According to UN-verified figures, 2,570 civilians were killed across Ukraine in the first nine months of 2026, already exceeding the total for the whole of 2025 (2,549).<\/p>\n
Municipalities continued to cooperate to maintain public services and address shortages of specialised staff. A total of 115 intermunicipal cooperation agreements were registered during the first nine months of 2026, including 29 in Q3. Nearly half of the Q3 agreements (48.3%) involved delegating specific tasks along with the necessary financial resources. Other agreements covered urban planning, residents\u2019 access to public transport and joint water supply modernisation. International partnerships also helped municipalities attract funding.<\/p>\n","protected":false},"excerpt":{"rendered":"
In the first nine months of 2026, municipalities\u2019 own general fund revenues, excluding transfers, reached $7.4 billion, up 11.1% in US dollar terms and 17.7% in hryvnia compared with the same period last year. However, significant regional disparities persisted. Revenues declined by 24.1% in Donetsk Oblast and 4.2% in Zaporizhzhia Oblast, while most other regions […]<\/p>\n","protected":false},"featured_media":80890,"template":"","categories":[],"tags":[],"centre":[567],"department":[],"news_type":[230],"project":[],"region":[],"unit":[223],"class_list":["post-80893","news","type-news","status-publish","has-post-thumbnail","hentry","centre-public-finance-governance-en","news_type-analytical-product-en","unit-institute-en"],"acf":{"primary_unit":223,"news_intro":"","header_cta_mode":"research","header_event_cta_text":"","header_event_cta_url":"","header_research_cta_text":"Read the full material","header_research_pdf":null,"header_research_pdf_url":"https:\/\/institute.kse.ua\/wp-content\/uploads\/2026\/11\/municipality_monitoring_9m_eng_november_2026.pdf","author_person":null,"author_name":"","related_news":null,"related_events":null,"related_people":null,"related_links":null,"external_link":"","external_link_label":"","is_featured":false,"quote_text":"","quote_author":"","quote_author_role":"","program_title":"","program_items":null,"reference_title":"","reference_content":"","news_events_grid_position":"","source_system":"laravel","source_id":"3965","content_owner":"","last_reviewed":"20261109","visibility":"public","platform_id":"4a48c8a9-4882-4af3-8bcb-630dc98e8ee8","platform_version":4,"platform_managed":true},"yoast_head":"\n