"Money for the People First": An Interview with Sadovyi on Blocked Payments and Utility Workers' Salaries

Lviv Mayor Andriy Sadovyi explained on Channel 24 why local governments are unable to pay employees and contractors on time. Read the in-depth interview to learn about the disagreements over the order of payments, the government’s proposals, and the search for a way out of the crisis.

The salaries of street cleaners and drivers have been placed in the second queue

Parliament’s delay in voting creates the risk of losing nearly $30 billion in tranches. Sadovyi attributes the communities’ problems to the delayed passage of important laws: he believes this has halted the flow of funds into the state budget and triggered a chain reaction. In Lviv, a large number of public utility workers are already unable to receive their earned wages on time.

The Treasury has classified payments to utility workers as non-critical and halted the processing of those payments. At the same time, the salaries of high-ranking officials are classified as protected expenditures and are paid automatically, while city sanitation and transportation services are classified as second queue expenditures. The wages of street cleaners, tram drivers, and trolleybus drivers depend on the funding of these services.

This cannot wait, because these are people who have no other source of income, and they must be paid so they can do their jobs well,
– Sadovyi emphasized.

The mayor calls on everyone in positions of responsibility to recognize their personal responsibility during wartime, when people are dying.

As mayor, I have no moral right to receive a salary as long as street cleaners aren’t being paid, and as long as tram and trolleybus drivers aren’t being paid. I would like members of the Verkhovna Rada and the government to show solidarity. First, we’ll pay the people, and then we’ll take our own salaries. That would be the honest thing to do,
– said the mayor of Lviv.

He attributes the crisis to systemic errors that have been made over the course of many weeks. Those in power who are responsible for making decisions must correct them.

Over 500 million hryvnias are awaiting disbursement

The total amount of unpaid payments in Lviv has exceeded 500 million hryvnias. Sadovyi estimated that the portion of this amount earmarked for salaries is no more than 10 million hryvnias. At the same time, payments will need to be made again next month, and the day-to-day operations of city services require other expenses as well.

“You can’t work without fuel; you can’t work without materials, because right now we’re building a lot of facilities to protect our infrastructure. We can’t buy materials; we can’t pay contractors for work they’ve done,”
” Sadovyi explained.

The city is also unable to pay Naftogaz on time for gas it has already received. The delays have also affected tax payments that are due to the state.

If you don’t pay salaries, the prosecutor will come and open a criminal case. The company’s director already has to hire a lawyer – he’s got his hands full. If we don’t pay taxes on time, the tax authorities will come and say, “You have to pay a fine,”
– the mayor noted.

He asks where the funds to pay any potential fines will come from. The money – whose transfer has been blocked – has already been contributed to the city budget by Lviv residents through their taxes; specifically, these are funds from teachers, medical professionals, and business owners.

The payment issue has also affected other cities

The state needs significant funds for defense and security, and Lviv supports allocating them to these needs. Sadovyi estimates that approximately 70% of the funds generated in the city go to the state budget. He considers this distribution normal.

“But even with this small portion that remains, we have to plan our lives. We cannot find ourselves in such dire straits where we’ve been standing at the treasury for nearly a month, asking, begging, and yet nothing is happening,”
– Sadovyi emphasized.

He calls the prolonged blocking of payments a destabilization of the management system, which is especially dangerous during attacks on Ukrainian cities. Kharkiv, Zaporizhzhia, Mykolaiv, Kyiv, and other communities face similar difficulties. At the same time, some mayors speak openly about the problem, while others remain silent.

No one warned anyone. We were simply presented with a fait accompli. And today it’s unclear when the situation will be resolved,
said the mayor of Lviv.

He identifies the communities’ top priorities as funding their operations, constructing protective structures, and paying those who provide municipal services. He attributes the low salaries of public utility workers to an unbalanced rate policy.

Sadovyi proposes changing the order of payments

Sadovyi discussed the situation with the prime minister along with colleagues from other cities. The head of government promised to find a way out of the crisis; in particular, they discussed the possibility of manually processing payments.

The editorial staff of Channel 24 reached out to the Ministry of Finance and the Prime Minister of Ukraine for comment.

Ukraine's Ministry of Finance explained to Channel 24 why some budget payments have been delayed, how this is linked to international financial assistance, and when the situation may improve. Read more about the ministry's response and the risks to municipal workers' salaries in a separate Channel 24 report.

The meeting with the Prime Minister took place two days before the interview with Channel 24. At the time of the interview, Sadovyi suggested that more clarity regarding the practical operation of the mechanism and the amounts that could be released first might become available starting Monday. At the same time, he raised the question of who would decide which payments to make and according to what priorities.

“I am opposed to any manual process, because this approach will lead to nothing good: some receive funds, while others do not. There simply needs to be an understanding of first priority and second priority. And the system that has been set up now needs to be changed,”
– Sadovyi stated.

He proposes changing the order of payments at the legislative level: salaries for employees at all levels should become a protected first-priority item. He urges that the decision be made without delay so that communities can focus on the urgent problems that arise daily during the war.

Put the salaries of ministers and lawmakers in the third priority category. Then it will be fair. And please put mayors there too,
– the mayor suggested.

He rejects the possible argument that, following such a decision, the state would be unable to function without leadership. If officials are incapable of solving problems, he suggests replacing them with people who will do so. He cites a reluctance to act or incompetence as obstacles.

Political will and a willingness to act are needed to overcome the crisis. He believes that lawmakers’ willingness to forgo their own salaries until utility workers are paid could serve as an incentive to make decisions more quickly. If government officials lack an understanding of communities’ needs, he suggests they call mayors, who can offer practical advice.

Sadovyi promises to find funds for utility workers

When asked about the risk of public transportation or city cleaning services coming to a halt, the mayor pointed out that Lviv has already faced treasury issues dozens of times. However, the political situation was different back then, and he considers the current delays unacceptable during wartime.

“I’ll bang my head against a wall, but I’ll find a way out of this situation and find a way to pay people even if I’m told ‘I can’t,’”
” Sadovyi emphasized.

Payments for the military’s needs also remain blocked. Lviv allocates a significant portion of its budget to support the defenders, in particular by purchasing various equipment for them. Even if the city finds another way to finance payments to employees, he insists that the state must ensure the release of funds that remain inaccessible.

“Even if I go to the bank and take out a loan on behalf of the city, I’ll have to pay interest on it later, right? And what will the prosecutor say then? ‘Why are you paying interest? You have money in your account,’”
the mayor explained.

He asked who would provide the city with a document confirming the legality of the Treasury’s blocking of payments. He calls the decision to allow or block payments “manual control” and considers the situation – in which municipalities are forced to find a solution despite having their own funds in their accounts – absurd.

Sadovyi promises to find money for utility workers: watch the video