In the Kherson region, the occupation has altered the operations of local communities and their budgets

Twenty territorial communities in the Donetsk, Luhansk, Zaporizhzhia, and Kherson regions, which are under temporary occupation, continue to perform certain administrative functions and manage budget funds. At the same time, the ongoing occupation has significantly altered their financial model, network of institutions, and approach to working with residents.

This was revealed by the study “Budgets in Exile 3.0,” in which experts analyzed budgetary and administrative processes in 20 communities for the year 2025 and compared them with figures from 2021–2024.

After the occupation, the communities did not cease to exist: they retained some of their institutions and programs, the budget process, registries, and communication with residents. At the same time, funds are increasingly being directed toward supporting the work of government bodies, remote services, assistance to residents and IDPs, and preparations for recovery.

The financial situation has changed dramatically. In 2021, tax revenues were the primary source of income for 16 of the 20 communities. By 2025, none of these communities remained, and total tax revenues had fallen by 91.6% compared to 2021. At the same time, official transfers accounted for 85.5% of the total amount of tax revenues and transfers.

Budget transparency also remains an issue. Over five fiscal years, 68 out of 100 possible budget approval resolutions and 59 out of 100 annual reports on budget execution were found on community websites. Public discussion of the 2026 budget was recorded in only one community. At the same time, communities responded to 59 out of 60 information requests on time.

The number of institutions and employees in the sectors studied decreased by 44–77% compared to the beginning of 2022. Experts note that the reduction itself does not automatically indicate a loss of capacity, as it is first necessary to define the community’s functions and the services it is required to provide.

The Center for Public Policy also analyzed the budget forecast for the Kherson City Territorial Community for 2027–2029.  The budget forecast includes a sharp reduction in state transfers—in particular, two war subsidies, which provided a significant portion of funding in 2025–2026, are now listed at zero. 

Анна Літман