The development of municipalities in the context of intergovernmental allocation at the meso-level

Subject. This article deals with the issues of fiscal relations arising from the interaction of regional and local authorities and the imbalances in inter-budget allocations at the meso-level, in particular.Objectives. The article aims to analyze the regional practices of allocation of tax powers and budget transfers, and justify changes in the legal documents aimed at fiscal equalization of municipalities.Methods. For the study, we used the methods of logical and comparative analyses.Results. The article identifies determinants of unsustainable development of municipalities, formulates and argues in favor of changes that should be made to the system of allocation and distribution of budget transfers and tax powers in order to improve the well-being of citizens.Conclusions. The uneven socio-economic development of municipalities and their heterogeneity are due to significant differentiation in the fiscal capacity and asymmetry in the distribution of fiscal powers between the levels of regional and municipal governments. The main condition for the sustainable development of municipalities is the redistribution of expenditure powers and income sources in the area of inter-budgetary relations in favor of municipal authorities.