Experts named the cities of Russia most vulnerable to the pandemic crisis

Strelka KB experts rated Russian cities by the degree of budget resilience to the crisis caused by the pandemic. The more the city has its own income from personal income tax and income tax, the higher its risks in such a crisis,

The pandemic crisis has led to an increase in unemployment, a drop in incomes of the population and revenues of enterprises, which is inextricably linked with a reduction in the revenue base of Russian cities. As it turned out, the more autonomous the city's budget and the more it has its own sources of income, the greater the vulnerability to the crisis, according to experts from the Strelka KB Center for Urban Economics, who assessed the potential impact of the pandemic on city budgets in a study.

How pandemic vulnerability was calculated

Strelka KB experts took into account the risks of falling budget revenues of Russian cities, relying on the methodology of a similar study conducted by the Brookings Institution, a Washington-based analytical center. American experts calculated the potential impact of the covid crisis on municipal budgets in the United States based on two factors - the share of employment in the industries most affected by the crisis and the share of income tax and corporate income tax revenues in the budget.

To compile the vulnerability rating of Russian cities, experts from the Strelka KB Center for Urban Economics assessed what share of city budget revenues is occupied by tax revenues, which are most likely to be reduced due to the pandemic crisis. We are talking about reducing personal income tax revenues by reducing employment in industries recognized as the most affected by the pandemic, as well as corporate income tax by reducing the income of enterprises in the affected industries. When calculating the degree of vulnerability, analysts divided Russian cities into several groups according to the size of the urban population (from 250 thousand to 1 million people, from 100 thousand to 250 thousand, etc.) and the type of municipality.

Strelka KB analysts received the final assessment of the degree of budget vulnerability to the pandemic crisis in 976 out of 1117 Russian cities. Three federal cities were excluded from the calculation - Moscow, St. Petersburg and Sevastopol, which are not municipalities and have a fundamentally different budget structure.

Among the largest Russian cities (with a population of over 1 million people), Omsk, Krasnoyarsk and Volgograd were recognized as the most vulnerable to a pandemic crisis by Strelka. At the same time, from the point of view of analysts, Voronezh, Samara and Rostov-on-Don have become the most stable. Among the large cities of RUSSIA (population from 250 thousand to 1 million), Murmansk, Sochi and Yakutsk, first of all, are at risk of losing a significant part of their income due to the crisis, while Smolensk, Vologda and Tver, on the contrary, have, from the position of the authors of the study, low vulnerability. In the group of cities with a population of 100,000 to 250,000 people, the city budgets of Ussuriysk, Norilsk, and Severodvinsk became the main outsiders in terms of strength. The positions of such cities as Kaspiysk, Almetyevsk and Bataysk are the strongest.

Cities outside the ranking

In addition to cities of federal significance, the rating did not take into account three cities that received city status in 2019 and later: Beloozersky (Moscow Region), Kurchaloy (Chechnya) and Murino (Leningrad Region). This is due to the fact that the calculations use budget data for 2018. Another 135 cities (two large, 12 large, 24 medium and 97 small) were not included in the calculation and did not receive the final assessment of the degree of vulnerability of the municipal budget to the crisis, because in open sources there was not enough data on budget execution for them or the data contradicted each other (the sum of different types of income exceeds total income).