Cutting to the quick: regional budgets are being cut
Regional spending cuts have already begun: social programs, hospitals, and even funeral expenses are being slashed—even before the State Duma has considered the budget. Meanwhile, revenues are falling faster than the regions can save.
Author: Tatyana Rybakova
The promotion of Finance Minister Anton Siluanov to the rank of Deputy Prime Minister was clearly seen as a carte blanche to cut budget expenditures. The State Duma will consider next year's budget, which prioritizes military spending over social spending, in its first reading on October 29. But even before it's approved, regions have begun cutting their own budgets. The main victims of regional cuts are those same social spending items. But sometimes, "participants in the Second Military Defense" also suffer.
Even in the prosperous pre-war times, Siluanov was called “Mr. ‘No Money,’” and now, having become Deputy Prime Minister, in the context of a growing budget deficit due to rapidly increasing war costs and shrinking revenues, his desire to cut all non-core spending items receives the full support of the Kremlin. What exactly is considered core is also unclear. clear"Ensuring defense and security needs." "Fulfilling social obligations to citizens" and "achieving national development goals" are also present, but purely as embellishments—just as Brezhnev's speeches included assurances that the party and government were working for the good of the people ("And we all know this man," a joke from the era added wryly.) No, the budget could still finance some national project implemented in the interests of the Rotenbergs or Kovalchuks, for example. For the rest, everything will be after the war. And for citizens who don't have such advocates, even more so after the war. Someday.
First swallows
The fact that social spending in the budget will be cut is already evident in the regions, which are also currently struggling to balance the books. After all, their situation is much worse than the center's: regional budgets are not receiving export revenues, and they are missing out on the lion's share of the most lucrative taxes and other fees. In fact, the following are received exclusively by the regions: taxes: property tax on organizations and transport tax (there was also a tax on gambling, but it was eliminated effective January 1, 2026), a simplified tax system (STS) for small businesses, and a tax on the self-employed. There's also a unified agricultural tax, which is distributed between regional and local authorities. Local budgets receive fees for patents. Regions can also introduce their own regional taxes and fees, such as the tourism tax. The heaviest taxes—personal income tax, corporate profit tax, and mineral extraction tax—mostly go to the federal center. The mineral extraction tax on oil and gas, which constituted a significant portion of federal budget revenue before the war, remains entirely in the federal budget—the same as the VAT, the tax authorities' favorite (it's easy to administer and collects well). The same applies to the most profitable excise taxes—on alcohol and petroleum products: they all initially go to the federal budget, and then the Ministry of Finance distributes them among the regions.
We have already assumed and even provided the first examples that under these conditions the regions will have to cut spending, primarily on social programs. ExamplesNow it's already possible to understand what exactly will be put under the knife.
Firstly, these are all kinds of events aimed at "caring for the population" – children, pensioners, or veterans. For example, in the Samara region, the budget for free services was reduced. Christmas gifts for children—unless they reserve them for children from low-income families. Frankly, if I were the deputies, I'd think hard about how this would look: at the Christmas tree, modest gifts are given with pomp to children from poor families, after which the other children will call them nothing but paupers. However, the orphans and the weak are also deprived of support, as has already been mentioned. was written. Just like they skimp even on "coffin costs": a dead soldier is a useless soldier.
Secondly, “optimization”: healthcare facilities, education, and everything that makes up the quality of life. Thus, in a rich Tatarstan The basic compulsory medical insurance program completely excludes expenses for air ambulances and high-tech medical care. Clearly, this will increase the burden on federal medical centers—just as it's clear that not everyone in need will be able to receive care there, nor will everyone be able to access that care. This is already happening even in the Moscow region—the author is currently witnessing the suffering of a colleague who barely secured cancer treatment in Moscow and is now forced to raise donations for paid tests and procedures and ask for assistance with transportation to Moscow. And what about those who don't have such access?
It has already been proposed to close regional hospitals Those with low workloads—let them move to urban centers. De facto, says a source who worked in a regional government for a long time, this process has been going on for a long time, but now it's becoming truly brutal: "Maintaining social infrastructure in villages with, say, five elderly people has long been unprofitable. But now the question is different: if a community has no economic significance, let it die out."
Sometimes the threat of extinction has a very real, physical meaning—for example, in regions with northern imports. Thus, a real drama unfolded in Evenki, where the shallowing of the Nizhnyaya Tunguska River made it impossible to deliver food by river. And there was no money for air delivery. Food was eventually delivered as a humanitarian operation, but it was still far from sufficient, with strict quotas in place for each purchase.
Yakutia once found itself in a similar situation, but the situation improved thanks to the construction of a railway. However, the final stage—a railway bridge across the Lena River, connecting it with the city of Yakutsk—was never built. Its construction was delayed year after year until Vladimir Putin personally promised to open the bridge in 2028—and now a member of the Yakut parliament offers There's no money, people haven't received their wages for months, and the housing and utilities sector is falling apart. And without a bridge near Yakutsk and the towns further north, delivering food, medicine, and fuel during the off-season is impossible.
Read on our website: A Thing Convenient to Promise: The Complete History of the Non-Existent Bridge over the Lena River
The cuts to "unprofitable" facilities like hospitals, clinics, and schools will clearly continue. If anything does grow, it's the "rehabilitation centers for veterans of the Soviet Military District." However, given that there are no prospects for economic improvement in the regions, one suspects these centers will begin to die out very soon after the war ends and the wave of Victory mania subsides. "We didn't send you there"—those who fought in Afghanistan have already heard this phrase. Now it will be uttered with even greater confidence: after all, they're fighting "for money" now.
Sad arithmetic
However, no matter how much we cut expenses, the decline in revenue is still accelerating. Projects regional budgets Data show that next year, the deficit is expected to increase in the Yaroslavl, Nizhny Novgorod, Kirov, Omsk, Tomsk, Tyumen, and Kemerovo regions. It's likely that this list will continue as regional budgets are approved. Even commercial loans at 20% interest, which some regions are forced to take out of desperation, aren't helping. The Ministry of Finance, however, has made a generous gesture. forgiven The regions owed budget loans. But the joy didn't last long: the regions received most of this forgiven money. sent to warAnd this is understandable—the contract signing fee from the Ministry of Defense remains unchanged: 400 rubles. The remaining funds, up to several million, are paid by the regions, which receive contract soldier quotas from the center.
Now, apparently, many regions will pay more attention to those who are contract soldiers attracts: it requires less money, but the effect is significant. Judging by stories In regions where people are literally snatched off the streets and forced to sign contracts, entire criminal groups are formed from these "personnel officers," backed by the police and military recruitment offices. It has gotten to the point that in Penza region People began to unite to fight back against the bandit recruiters.
At the same time, regions are trying to increase revenues, but, as already mentioned, their opportunities here are limited. Nevertheless, such attempts will be made.
For example, in Novosibirsk The regions want to increase the transport tax.
Many regions are introducing a tourist tax. This tax appears particularly cynical in Rostov-on-Don, where it was introduced in 2025 and has increased within a year. twiceNo, the city hasn't become a new tourist mecca: the majority of "tourists" are the unfortunate relatives of those killed in the war. Rostov-on-Don is the main center where the war dead are brought, and relatives come there in the hope of finding and burying their loved ones. They come—and pay a fee.
Regions may be more proactive in developing regional taxes, but these options are quite limited. Businesses are already groaning under rising taxes, expensive loans, and falling demand. And this isn't just about small businesses or small enterprises—non-payment of wages has become a widespread phenomenon even at large, well-known companies. For example, Chelyabinsk Metallurgical Plant, which is part of the Mechel Group.
That's where the growth comes from. hidden unemploymentWhen officially employed people go unpaid for months or are sent on indefinite unpaid leave. According to calculations by the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) and the Institute of Problems of Social Sciences (IPS RAS), this level of unemployment was already 7% at the end of 2025. The situation has clearly worsened this year, and it's safe to say that the real unemployment figure isn't a modest 2,2%, but a full 10%. This is a decline in demand that outpaces unemployment itself: when people see their neighbors' situation deteriorating, they prefer to save rather than spend. Demand falls, business profits fall, and tax revenues fall. The cycle is complete.
Finally, if the proposals are accepted "Business Russia"The regions will likely lose their most important revenues—the simplified tax system and the self-employment tax—while municipalities will lose patent fees. And these proposals, judging by the fact that they became known after the meeting between Alexey Repik, head of Delovaya Rossiya, and Vladimir Putin, are quite likely to be adopted. How will the regions then make ends meet?
The federal budget proposal submitted to the State Duma is being called the most bleak one—both for next year and for the next three years. But regional budgets, as we can see, are in much worse shape. Meanwhile, discontent is growing in the regions, along with a growing belief that "Moscow is fleecing us." Once, having siphoned off most of the taxes for the federal budget, the government created a system of transfers, assuring the regions that this would help fairly equalize living standards across the country, given that some regions were incredibly rich in mineral resources, while others were not. Now people see that the regions are being asked to shoulder ever greater responsibilities—both in social expenditures and in their contributions to the war—while they are being given less and less, and more reluctantly. When the Ministry of Finance calls for more frugal living, many in the regions begin to calculate: who is actually being wasteful here? And these calculations rarely favor the center.
And the more often the cry "There's no money" is heard, the more likely it will be, especially in resource-producing and industrially developed regions, that it's not so much the lack of funds that's driving them, but rather that they're being misdirected and misallocated. This, of course, won't necessarily lead to demands to end the war, much less a desire to secede. But when the time comes for change, greater financial independence will likely be one of the regions' main demands. It's all too obvious that the current system of governance is unfair and ineffective.
