The local perspective in global crises
After almost a decade of economic growth and relative stability, Central European countries face cumulative crises in recent years. The first cases of the Covid-19 virus appeared in the region in March 2020. While the examined countries managed to avoid heavy tolls during the first wave of the pandemic, they were hit hard by the second and third waves with Czechia and Hungary being among the worst impacted in the world in terms of per capita death rates. In early 2022 the Russian invasion of Ukraine was another external shock that had severe implications for the countries in the region. Both the lockdowns initiated in response to the pandemic around the world and the war disrupted supply chains and contributed to inflation, primarily through rising energy prices.
The cumulative effects of these crises on municipalities are disproportionate to their capacity and competences to respond to such global challenges. The pandemic required municipalities to address the spread of the virus at their local institutions: crisis procedures were developed, medical supplies, such as masks, thermometers, Covid tests, disinfectants were procured and distributed, often IT investments were needed to support the digitalisation of local administration or to facilitate distance learning in schools. Local governments were the first in line to understand and respond to the needs of the socially deprived or elderly and adapted their social services and municipal catering to reduce the risks of infection. The principle of subsidiarity could be observed in action as local measures were often more targeted, were introduced faster than national ones and also included community-led solutions. Overall, municipalities in the examined countries demonstrated significant resilience and flexibility in responding to the health crisis as well as tangible responsibility for their citizens’ well-being.
Crisis management activities required additional funding at the local level, while at the same time revenues shrank due to decreasing economic activity and the subsequent reduction of tax incomes. Especially Polish and Czech municipalities, more exposed to the volatility of tax base, were expected to see a significant contraction of their income. This meant that the operational challenges facing local governments were exacerbated by a financial situation that required them to either adjust their budgets (e.g. by postponing investments) or lobby for additional resources.