In conditions of centralization of the budget system of the Russian Federation, inter-budget transfers play a special role in municipal budgets' formation. Given the significant socio-economic differences of territories, the fiscal capacity leveling seems to be mandatory at the regional and municipal levels. It is particularly relevant to use the mechanisms of inter-budget control that are aimed at local budgets' balance. The objective of the article is to develop the methods of subsidies allocation to ensure the balance of budgets of settlements, which are based on improving the efficiency of budgetary funds utilization. The article bases on scientific principles of the system-structural and structural-functional analysis. While studying the specific features of inter-budget relations at the regional and municipal levels, the author applied comparative benchmarking and dialectical methods, which, when applied in combination, enable to emphasize general and specific features of distribution of transfers that serve to ensure the balance of local budgets. The article analyzes the existing approaches to local budgets' balance regulation with the help of inter-budget transfers. The author developed a unique technique of subsidies allocation to ensure the balance of budgets of settlements, which is focused on improving the efficiency of respective budget expenditures. The technique provides for reducing costs of managing the balance of local budgets on a long-term horizon due to changes in the mechanism of subsidy distribution to local budgets. This technique also enables to diversify the distribution of subsidies to ensure the balance of local budgets, taking into account the causes of their imbalance. This is aimed to improve the efficiency of using budget funds in a municipality.
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