Varna's 2009 budget, envisioning a spending cut of seven per cent to 200.9 million leva, was approved by the Varna city council, weekly Stroitelstvo Gradut reported. The city hall's own revenue accounts for 42 per cent of the total, with 36 per cent allocated by the Cabinet and 22 per cent from loans, the newspaper said.

The drop in city hall revenue has been blamed on the economic crunch and the financial crisis. The sharpest decline has come from the stagnating real estate sector and the subsequent fall in revenue generated from sale of municipal property. Additionally, tax revenue has also declined to 10 million leva or about a third less than 2008.

Real estate tax revenue projections were 21 per cent higher after the 50 per cent increase in the tax evaluation of properties.

Registered reduction in demand for "municipal and administrative services connected with construction, the potential bankruptcy of certain companies and the possible pull out of international companies from the investment market" are also factors contributing to the smaller budget.

The main priorities for Varna's 2009 budget are the construction of new play schools, infrastructure projects, the accession of possibilities for public and private partnership in supervising and executing the designated contracts concerning the already approved projects, financed by operative programmes, which in turn will guarantee the timely return of the invested resources, the city hall said in a report.

Varna city hall has earmarked 72 million leva for investment, an 18 per cent reduction from 2008. However, the total capital spending programme of the municipality, at 40 million leva, shows a 46 per cent increase thanks to European Union operational programmes funding, which totals 31.7 million leva.