Report on the Budgetary Performance of Municipalities, Voluntary Associations of Municipalities and Regions as at 31 August 2026
The budgets of municipalities, regions and voluntary associations of municipalities remained in surplus at the end of August 2026, although the surplus declined significantly year on year. Over the first eight months of the year, the surplus amounted to just under CZK 27 billion, almost CZK 8 billion less than in the same period last year. The aggregate result conceals substantial differences. Regions reported a surplus of CZK 2.5 billion, the second lowest in the past decade. Prague recorded a surplus of CZK 19.7 billion, accounting for almost three quarters of the surplus of all local government budgets and more than 80% of the municipal surplus. While Prague’s surplus increased by one fifth year on year, the surplus of other municipalities fell by almost 60% to CZK 4.6 billion. The overall favorable municipal result thus masks a marked divergence between Prague and other municipalities.
Local government revenues continued to grow, mainly due to higher receipts from shared taxes. A significant factor was the change in the allocation of tax revenues effective from 1 January 2026, which increased the share of municipalities and regions in shared taxes in connection with the transfer of responsibility for financing non-teaching staff. By the end of August, this change had generated an additional CZK 21.3 billion in tax revenues. At the same time, direct education grants declined. This therefore represents not only an increase in unrestricted resources but also a change in the method of financing education.
Local government expenditure grew faster than revenue. Higher investment, particularly in transport infrastructure and housing, also contributed to the lower surplus. Although municipalities and regions are investing more than last year, they still hold substantial financial reserves that can be used for further development of their territories.
How are grants from public budgets allocated? The Grant Register in the State Treasury MONITOR application provides the answer. It offers a single place to search information on grants awarded and funds lent. Alongside the State Grant Register, the Territorial Grant Register and the Grant Register for Non-Profit Organisations are also available. Citizens, journalists, analysts and public administration representatives can therefore easily find out who received public funds and for what purposes.
More detailed information on the financial management of local governments is available in the Analytical section of the MONITOR application under Territorial Organisations.
Management of Local Governments
Regions, municipalities and voluntary associations of municipalities recorded a surplus of CZK 26.7 billion in August 2026, down 22.7% (CZK 7.9 billion) year on year (see Chart 1). Excluding direct education expenditure and subsidies to private schools1, which regions and the City of Prague merely pass on and which do not reflect their own budget performance, the budget surplus amounted to CZK 26.5 billion. Compared with the first half of 2025, it thus declined by more than 20%. Expenditure growing faster than revenue indicates that local governments used some of their increasing resources during the year.
Local Government Budgets
Total consolidated revenue reached CZK 630.7 billion in August 2026, an increase of 6.5% (CZK 38.7 billion) year on year. Excluding direct education expenditure and grants to private schools1, total revenue amounted to CZK 498.1 billion.
Own-source revenuei reached CZK 417.4 billion, representing 84% of adjusted revenue2.Tax revenue increased by CZK 45.9 billion to CZK 359.3 billion. In addition to economic developments, it reflected the change in the allocation of tax revenues: the central government share of VAT and income taxes decreased by 2.55 percentage points in favor of municipalities and regions, increasing their tax receipts by CZK 21.3 billion by August.
Transfers received amounted to CZK 213.3 billion and declined year on year. This was mainly due to a 7.9% (CZK 16.1 billion) decrease in non-investment transfers, particularly following the shift in financing non-teaching staff from direct Ministry of Education, Youth and Sports grants to shared taxes. Conversely, investment transfers increased by 26.7% (CZK 5.6 billion), mainly thanks to funding under the Integrated Regional Operational Program (IROP) from the budget chapter of the Ministry for Regional Development (MRD).
Local Government Expenditure
Total consolidated expenditure reached CZK 604 billion by August 2026, up 8.4% (CZK 46.5 billion) year on year. Excluding direct education expenditure and grants to private schools1, total expenditure amounted to CZK 471.7 billion.
Current expenditure reached CZK 479.7 billion (a year-on-year increase of 6.7%, or CZK 30.2 billion), driven mainly by non-investment transfers. Most of these transfers consisted of funds transferred by regions and municipalities to contributory organizations, particularly primary schools.
Capital expenditure increased by 15.1% (CZK 16.3 billion) year on year in August, mainly due to investment in road construction and housing, reaching CZK 124.3 billion.
Regional Government Budget Performance
Regions recorded a budget surplus of CZK 2.5 billion in August 2026, the second lowest in the past decade (see Chart 2). Excluding direct education expenditure and grants to private schools1, the balance amounted to CZK 2.4 billion, a year-on-year decline of 55.3%.
Regional revenues
Total consolidated regional revenue reached CZK 251.4 billion at the end of August, increasing slightly by 1% (CZK 2.4 billion) year on year. Excluding direct education expenditure and grants to private schools1, regional revenue amounted to CZK 135.8 billion. Regional own-source revenue2 rose significantly to CZK 95.7 billion, representing 70.4% of total adjusted revenue2. This increase was mainly driven by tax revenue, which reached CZK 85.9 billion (up 16.3%, or CZK 12 billion, year on year), primarily because of the change in tax revenue allocation effective from 1 January 2026.
As shown in Chart 3, VAT receipts recorded the largest year-on-year increase, reaching CZK 42.7 billion, reflecting growth in nominal household spending. Personal income tax revenue rose to CZK 20.4 billion, mainly due to higher wages and salaries. Corporate income tax revenue increased to CZK 22.3 billion, reflecting final settlements for the 2025 tax period in August. Corporate income tax advance payments have also been affected by the increase in the tax rate since 2024. Other tax revenues, which account for only a small share of total regional tax revenue, declined slightly year on year.
Regions received transfers totaling CZK 155.7 billion by August 2026 (down 6.7%, or CZK 11.1 billion, year on year). Non-investment transfers amounted to CZK 148.1 billion, down 8.3% (CZK 13.4 billion). The largest decrease concerned direct education expenditure (CZK 12.8 billion), financed by the Ministry of Education, Youth and Sports budget chapter, following the transfer of financing for non-teaching staff to shared tax revenues. Chart 4 presents the most significant non-investment transfers received by regions by August 2026.
Investment transfers received by regions totaled CZK 7.6 billion (up 43.4%, or CZK 2.3 billion, year on year). This reflected, among other factors, an increase of CZK 0.7 billion in EU-funded transfers under the Integrated Regional Operational Program (IROP) 2021–2027 from the MRD budget chapter.
Regional expenditure
Total consolidated regional expenditure reached CZK 248.9 billion in August, up 2.5% (CZK 6 billion) year on year. Excluding direct education expenditure and grants to private schools1, expenditure amounted to CZK 133.5 billion. Current expenditure reached CZK 219.5 billion and was practically unchanged year on year (up 0.1%, or CZK 0.3 billion). Approximately three quarters of current expenditure consisted of non-investment transfers to contributory and similar organizations, particularly funds provided to secondary schools as direct education expenditure.
Capital expenditure, by contrast, rose by 24.5% (CZK 5.8 billion) year on year to CZK 29.4 billion. This growth was mainly associated with higher investment in road construction. Regions have long not fully utilised the funds notionally allocated for roads through the tax revenue allocation system: in 2025, regional expenditure from own resources on roads and other road transport matters was CZK 7.9 billion below the theoretical amount allocated for roads.
Regional Bank Account Balances and Debt
Regional bank account balances (excluding contributory organizations) totaled CZK 74.7 billion as at 31 August 2026. Debt data are available only for June 2026 from3: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 June 2026 | Ministry of Finance CR
Municipal Budget Performance
Municipalities ended August with a budget surplus of CZK 24.3 billion (see Chart 4). This result was strongly influenced by the capital city. Prague recorded a surplus of CZK 19.7 billion, up 20% year on year. Other municipalities together recorded a surplus of CZK 4.6 billion, down 59.7%.
Municipal revenues
Total consolidated municipal revenue reached CZK 387 billion in August, up 10.3% (CZK 36.2 billion) year on year. Excluding direct education expenditure and grants to private schools1, which for municipalities applies only to Prague, revenue amounted to CZK 370 billion. Municipal own-source revenuei reached CZK 320.5 billion and accounted for 87% of total adjusted revenue2 confirming the high degree of municipal financial self-sufficiency. Growth was mainly driven by tax revenue, which increased by 14.1% (CZK 33.9 billion) to CZK 273.4 billion. This was positively affected by the change in tax revenue allocation effective from 1 January 2026, which increased municipalities’ share of shared taxes.
As Chart 5 shows, VAT receipts recorded the largest year-on-year increase, reaching CZK 114.3 billion, reflecting growth in nominal household spending. Personal income tax revenue rose to CZK 57.1 billion, mainly due to higher wages and salaries. Corporate income tax revenue increased to CZK 68.3 billion, reflecting final settlements for the 2025 tax period in August. Corporate income tax advance payments have also been affected by the increase in the tax rate since 2024. Other tax revenues rose to CZK 33.7 billion, including CZK 16.5 billion from immovable property tax.
Municipalities received transfers totalling CZK 66.5 billion in August (up 1%, or CZK 0.7 billion, year on year). Non-investment transfers amounted to CZK 45.7 billion, down 7.2% (CZK 3.5 billion). The decrease was particularly pronounced for the Jan Amos Komenský Operational Program (CZK 2.4 billion) and direct education expenditure (CZK 1.5 billion), funded from the Ministry of Education, Youth and Sports budget chapter.
Investment transfers received by municipalities increased by 25.4% (CZK 4.2 billion) year on year to CZK 20.7 billion. The main contributor was an increase of CZK 2.8 billion in transfers under the National Recovery Plan from the Ministry of Labour and Social Affairs budget chapter.
Municipal expenditure
Total consolidated municipal expenditure reached CZK 362.6 billion in August, up 12.3% (CZK 39.8 billion) year on year. Excluding direct education expenditure and grants to private schools1, which for municipalities applies only to Prague, expenditure amounted to CZK 345.7 billion. The increase was mainly due to higher current expenditure, which rose by 12.1% (CZK 28.9 billion) to CZK 266.9 billion, particularly because of increased transfers to primary schools and kindergartens. Capital expenditure also increased, by 12.8% (CZK 10.9 billion) to CZK 95.7 billion, primarily due to greater investment in housing construction.
Debt and Bank Account Balances of Municipalities
Municipal bank account balances (excluding contributory organizations) totaled CZK 414.4 billion as at 31 August 2026. Debt data are available only for June 20263 from: Report on the development of budgetary management of municipalities, voluntary associations of municipalities and regions as at 30 June 2026 | Ministry of Finance CR
Voluntary Associations of Municipalities
Voluntary associations of municipalities recorded total revenue of CZK 4.1 billion and total expenditure of CZK 4.2 billion in August 2026. Their budget balance deteriorated year on year, resulting in a deficit of CZK 0.2 billion.
1 Direct education expenditures represent funds from the state budget (specifically from the chapter of the Ministry of Education, Youth and Sports), which the regions and the Capital City of Prague allocate directly to the respective schools and educational institutions. The regions and the Capital City of Prague have no discretion over how these funds are used. The same applies to subsidies for private schools. For this reason, the total revenues and expenditures of regions and the Capital City of Prague are adjusted to avoid distortions in their budgetary performance.
2 Adjusted revenues = total revenues excluding transfers earmarked for direct education expenditure and subsidies to private schools.
3 Bank account balances and debt are reported in quarterly financial statements submitted to the Central System of Accounting Information of the State (CSÚIS). Since 2026, the new FIN return also makes monthly bank account balances available (excluding contributory organizations).
i Own revenues = tax revenues + non-tax revenues + capital revenues