Trans-Scaling through Finance in Poland. Interlocal Linkages Measured by Financial Transfers

The paper presents an analysis of the financial flows among local governments in Poland. In the last 25 years in Poland there has not been any threat of amalgamation nor extensive territorial reform coerced by central level. However, there can be found diverse trans-scaling processes and one of the example is externalisation of service provision to other local government. It can be a result of voluntary political decisions but also mandatory payments between local governments coerced by central government to equalise effects of citizens’ movements. We argue that the significance of horizontal financial transfers is an issue neglected in a debate on territorial reform, while it has the potential for softening the negative effects of territorial fragmentation. At the same time it does not influence the stability of local democracy to the same extent as border changes. It can also be seen as an element of a sustainable territorial reform process. We present the scale, the dynamics (2001-2015) and the sectoral scope of financial transfers among Polish local governments and results of Heckman two step regression model made to describe relations between transfers scale and capacity of local government. The paper discusses how local authorities use these financial transfers as an element of mixed modes of control in their external relations. As well as, an usefulness of inter-local financial transfers, which can be considered within the framework of debate in local studies that is structured around the amalgamation versus collaboration dilemma (AvC). This dilemma, which is presented in conferences and workshops, is not well framed in the literature yet. The general discourse is focused either on amalgamation or on collaboration, while they can be seen as elements of one continuum in which the gradually changing capacity of direct interactions (including financial transfers) between local governments can be seen as intermediate stages. We ask two questions: 1. What is the usefulness of interlocal financial transfers for territorial reform analysis? 2. What is the quantitative share of different types of coordination models in Polish local government relations measured using interlocal financial transfers? 3. What are the relations between scale of public service provision externalisation and the local government capacity? (Co-author: Julita Łukomska)