What does a bit more granular look at regional deficits from preliminary electronic budget data tell us about fiscal risks in 2026? What can we glean from the first year of the regional equivalents of the “Time of Heroes” training program for returning war participants? More on these and on an assortment of other recent regional news below.

More on regional budgets

[UPDATE: this post was revised on February 27 using the Treasury’s more granular data]

Regional spending and income figures were released for 2025 in February by Russia’s Treasury (figures are slightly different from the ones in the Electronic Budget due to the Treasury’s more precise breakdown). The Finance Ministry also released aggregate figures for consolidated regional budgets (these include municipal finances and extrabudgetary funds). On both counts, the situation looks much worse than it was originally expected. Consolidated regional budgets accumulated a total deficit of 1.5 trillion rubles, five times as much as in 2024. 2025 was also notable because consolidated regional finances were already in the red in the first half of the year – usually this is not the case. Janis Kluge, an analyst focusing on Russia’s budgetary framework (whose Substack is a great follow), noted that even correcting for gross regional product, regions had not had deficits this size since 2013.

The negative trajectory of the past years, as regional expenditures grew as federal transfers stalled and corporate taxes dwindled, is clear. The war is an obvious source of pressure. In 2025 social expenditures, which represent the highest proportion of region’s war-related spending, rose by almost 20% in regional budgets, while regions’ own incomes rose by less than 5%, well below inflation. Rising recruitment bonuses and hidden war-related expenditures (such as employment support for war participants or reconstruction contributions) are more difficult to quantify precisely, but these also continue weigh down regional budgets.

In August regions outside of Moscow had accumulated 1.9 trillion rubles on unused funds on their accounts, but these funds were unevenly distributed. Many regions that did have liquidity reserves opted instead to finance their deficits through market loans, or deferred investment-related expenditures in the expectation that the federal government’s debt forgiveness program would free up funds in their budget. Several regions were already struggling with growing expenditures in the second half of 2024 and had to make cuts to core budget items. The Kemerovo Region, an extreme example because of the ongoing crisis of the coal industry, recently started cutting aid to war participants. Public sector workers in the region have also complained of salary arrears (as did public employees in some other Siberian and Far Eastern regions struggling with liquidity issues, e.g. firefighters in the Transbaikal Territory and medical workers in Khakassia).

Looking at just the regional budgets, for which there is a breakdown, the worst indicators belong to regions whose key industries have been in protracted crises, among them the Vologda, Kemerovo, Arkhangelsk and Murmansk Regions, but also some of Russia’s oil and gas producing regions (e.g. the Komi Republic or the Yamal-Nenets Autonomous District) which had been doing relatively well so far.

Poorer regions that are normally heavily subsidized by the federal government and whose main source of income is, on the whole, stable, will find the turbulence of economic slowdown easier to weather than regions that face a sudden collapse of their own revenues (e.g. due to industrial decline) and have very little accumulated reserves (e.g. Kemerovo, Vologda, Irkutsk, Murmansk or Arkhangelsk). Those with a large proportion of poor citizens and soldiers relative to their population, and high associated social expenditures are also in the danger zone.

To an extent, the Kremlin is relying on governors to manage the resulting political risks from as little money as possible (while acting as political shields) and on quasi-state actors such as big corporations and civil society to pitch in and complement the effort. This approach has more or less worked so far, but as the Kremlin is reluctant to provide more substantial aid to crisis-ridden industries and regional budgets, some may feel incentivized to co-opt and use, rather than suppress, dissatisfaction over liquidity issues.

Spreading the costs of the “new elite”

Since early 2024 when Putin announced that war participants would be turned into Russia’s new elite, the main vehicles at the federal level have been the “Time of Heroes” training program, which has provided training in public administration for a small number of handpicked war participants, and the United Russia party, which was tasked with fielding former war participants as electoral candidates, which the party has done in increasing (though still low) numbers, in spite of resistance from the established elites in its regional branches. An interesting innovation in this latter field is a bill that would make it possible for war participants to file their candidacy documentation via representatives, perhaps in the hope that regions would hit quotas without actually needing to integrate soldiers into the local elite.

Last year, instructed by the federal government, regions have also started their equivalent of “Time of Heroes” to prepare, typically, 30-60 war participants for managerial positions, depending on their population size. These programs share several similarities with the federal program. Most of them offer standardized courses in partnership with the regional branches of the Presidential Academy of National Economy and Public Administration (RANEPA), albeit some regions (e.g. Arkhangelsk, Nizhny Novgorod and Ulyanovsk) partner with local universities, which might offer better prices than RANEPA’s that can come out to double-digit millions in a mid-sized region, based on the university’s price list. The selection process, consisting of written tests, face-to-face interviews and extensive vetting for character traits and war trauma, is similar. The modules, both in the federal and the regional programs, are reminiscent to earlier cadre training programs such as the “School of Governors” and the “School of Mayors”, and include a lot of corporate-style team building; lastly, the declared goal of the regional programs, like that of the original federal one, is to prepare returning war participants for civilian jobs.

The regional programs themselves represent a very limited track of advancement. In their first year, out of some 46,000 applications (this is the official total, which is very close to my count), based on publicly available data some 3,500 people were accepted in Russia’s regions and the occupied Crimea, with at least a further 900-1,000 (and likely more) in reserve, but with several people sent back to the frontline after being accepted for training. As of February 2026, only a couple of dozens of graduates have been appointed to various positions in a handful of regions, with many training programs still ongoing. Those who do not get jobs immediately are added to a “cadre reserve” for later appointments.

But looking at these programs is important not because they are going to soak up most returning war participants, but because they provide an insight into what networks regions are going to rely on to handle returning veterans. Regions already use a combination of measures including social support, employment quotas, business incubators and other measures, and are actively trying to involve funds outside of their own budgets.   

Appointment patterns are similar to the ones observed in the case of the federal program. Positions are scarce, often have to do with the war or veteran care itself, and are created specifically for program alumni to fill, e.g. deputy officials responsible for security, public associations, “Special Military Operation” support or patriotic education. These positions, of course, create a small, but additional strain on regional and municipal budgets that need to finance them. Other types of appointments do exist, but are rarer, e.g. war participants appointed to head districts in the Vologda Region, whose governor, Georgy Filimonov, is one of the most visible full-throated domestic supporters of the war.  

Even with numbers this limited, the regional programs cast a significantly wider net than the federal program, which, though with notable exceptions, has mostly elevated career public servants and soldiers. This is deliberate: as of 2026, an increasing number of regional training programs are accepting people with secondary vocational education, without a university degree. But, apart from some exceptions, it also seems much likelier that the alumni graduating from these programs will be channeled into private enterprises and municipal positions with little power rather than the regional elite.

From scattered regional press releases we know that regions accept people from outside of their territory into their training programs, thus they could in theory draw people to wealthier and more industrialized regions. This appears to have happened in some cases (the Moscow Region and the Krasnodar Territory), but typically the vast majority of applicants are regions’ own residents. Indeed, the correlation between a region’s confirmed losses (as per latest numbers published by BBC and Mediazona) and the number of applicants is almost as strong as it is between the regional population and the number of applicants (all while population is not a strong explainer of war losses – as a recently published study in The Bell showed, soldiers are disproportionately recruited from regions where the percentage of residents living under the poverty threshold is high).

The “mentorship” element of regional training programs is one way, in which extrabudgetary organizations are involved. In several regions, major industrial firms participate in the programs as the goal is to integrate war participants into the regions’ leading industries. For example, the general director of the Magnitogorsk Iron and Steel Works (MMK) serves as a mentor in Chelyabinsk’s “Heroes of the Southern Urals”; local industrial directors act as mentors in the programs of the Novosibirsk and Sverdlovsk Regions. The “Heroes of Tuva” program partners with firms in the mining, energy and utilities sectors to hire alumni; Tatarstan offers a 100,000-ruble bonus for the successful employment of a program graduate at one of the regional enterprises where participants study corporate processes (including in the Alabuga defense industry center and the tech incubator Innopolis) etc. Regions such as Vologda, Penza, and the Moscow Region announced hiring quotas. Companies with a specific number of employees are required to reserve at least 1% of their staff positions for veterans. Larger state-owned corporations have their own training programs, which they coordinate with regional authorities.

Companies are thus asked to provide training and jobs, and are sometimes, to some extent, compensated, but the extent of this is unclear, and with it, so are the cost-benefit calculations. There surely are non-pecuniary benefits. Employing one or two decorated veterans could be a badge of honor that helps relations with the government. But this might look like a worse deal if the implication is that the regional authorities, responsible for veterans’ employment and satisfaction, expect firms to maintain that hiring pipeline when tens of thousands more return from the frontline.

Also-happeneds

• High-profile arrests continued in the regions, affecting mid-to-high-level regional officials. In Chukotka, deputy governor Pavel Koshcheyev was arrested for bribe-taking in his previous job in the Kurgan Region; in the Chelyabinsk Oblast, deputy governor Andrey Faleychik was arrested for allegedly accepting annual kickbacks from the director of a municipal children’s camp, once again, in his previous position; in the Krasnodar Territory, former deputy governor Anna Minkova was detained on suspicion of fraud; in North Ossetia, former regional agriculture minister Alan Kusrayev and the head of the ministry’s capital construction department were arrested on suspicion of embezzlement; in Bashkortostan, minister of culture Amina Shafikova was detained on suspicion of exceeding her official authority; a similar arrest took place in the Rostov Region where a district head is accused of overstepping his authority. This list is non-exhaustive. The current corruption crackdown in the regional bureaucracy started in the summer of 2025 (following a similar wave of arrests in 2024), and has seen dozens of regional ministers, deputy governors and district-level officials arrested, as the Federal Security Service is tightening its grip on regional institutions and low-level corruption affecting tight regional and municipal budgets is less tolerated. In many, though not all, cases, officials are arrested for wrongdoings in a previously held position, allowing their superiors to distance themselves from the crimes.
• Tula vs Dzyuba: On February 17, Viktor Dzyuba, a Duma deputy from the Tula Region, submitted his resignation, citing disagreements with the current “political elite” in his region, under governor Dmitry Milyaev. Notably, Dzyuba submitted the resignation letter to Alexey Dyumin, the secretary of the State Council, who was Milyaev’s predecessor in the region. Three other regional and municipal deputies resigned together with Dzyuba. All of them are linked to the “Mekhmash” corporation, a local firm specializing in producing pipeline fitting. This would suggest that the conflict is actually between the governor and a regional elite group, with both sides appealing to Dyumin as higher authority. Dyumin, Putin’s former bodyguard and confidant was governor until 2024 as a “Varangian” or outsider technocrat; Milyaev, who was appointed by Putin to follow him, is a local official, however one who has worked in close cooperation with Dyumin.
• Tourism tax with caveats: Russia’s new tourism tax, introduced in 2025 to replace a locally-set resort fee, collected 5.5 billion rubles over the first three quarters of 2025 — marginally exceeding the Federal Tax Service’s initial forecast of 5 billion rubles, which officials presented as a success. The aggregate figure, however, as Vedomosti spotted, masks a sharp revenue decline in two regions where tourism is a significant source of income: the Stavropol Territory collected only 316 million rubles from the new tax vs 687 million from the old resort fee in all of 2024, while the Krasnodar Territory took in just 286 million compared to 819 million in the (whole) year prior. The Krasnodar Territory authorities blamed the shortfall on the Black Sea oil spill near Anapa, a popular resort, which could have played a role, but industry experts highlighted that in Stavropol the new tax actually narrowed the tax base. Both regions are also relatively close to Ukraine and have thus been subject to drone attacks against industrial and energy facilities. The tax was presented as a new revenue source for increasingly cash-starved regional budgets to tap a rise in domestic tourism (a byproduct of the war), but it appears that this is not a given for all regions.
• More to spend on elections: The Sverdlovsk Region’s legislative assembly, ahead of the September 2026 regional and federal legislative elections, put forward a proposal to roughly quadruple the permitted expenditure limits for candidates’ election funds. Supporters of the proposal say that this is required because of high inflation over the past years, although these limits were rarely observed in the past. Yet, the main problem that the Kremlin’s political engineers have faced over the past years in regional and local elections, as Golos pointed out several times over the past years, is an increasing reluctance of locals to stand as candidates due to the risk-benefit ratio getting significantly worse. The raising of official spending limits may change this calculus a bit by reducing some of the risks associated with running and increasing opportunities.
• Regional sport ministers are going to be appointed and dismissed in coordination with the federal Ministry of Sport, according to a bill introduced by the government in early February. This would add sport to a growing list of policy fields where regional governments need to get the approval of the federal authorities before appointing or dismissing ministers, a practice enshrined in the 2021 public administration reform, thus the bill fits into the general trend of eroding regional political self-governance. Ostensibly, the change is needed to ensure “uniform national standards”, however sports and physical education is also one of the fields where former war participants are appointed in increasing numbers.
• Anti-migrant violence in Ufa: in early February a neo-nazi teenager in Ufa, the capital of Bashkortostan wounded four Indian nationals in a dormitory for foreign medical students who then appealed to Indian prime minister Narendra Modi for help. The attacker was described in the Russian press simply as “nationalist”. While recent weeks have seen a series of violent attacks in educational institutions in several regions, the Ufa attack deserves to be highlighted because, as Stefaniya Kulayeva from Memorial stressed, it underlines a broader anti-migrant sentiment in the country; this happens at a time when Russia is actively looking to import labor force and know-how from Asian countries. Such attacks, if they receive broad publicity, if they create the impression that the Russian authorities do not have the willingness or the resources to protect migrant workers and students from atrocities, may hamper that effort.