This report examines the fiscalprospects of major units of sub-national government in thevoivodship (province) of Mazowieckie and proposes a seriesof reforms in recurrent spending and capital investmentplanning. Mazowieckie, the seat of Warsaw, is the heart ofthe Polish economy. While Poland is weathering the currentglobal economic downturn fairly well, the sub-nationalgovernments of Mazowieckie face considerable fiscaluncertainties. A long period of rising revenues has come toan end. At the same time, both the province and the City ofWarsaw are embarked upon major programs of capitalinvestment. While European Union (EU) funds could helpfinance some of these investments, there is evidence thatthe money from Brussels is not reaching the highest priorityprojects. The objective of this report is to examine how themajor units of sub-national government can respond - howthey can restrain the growth of deficits and allocate fundsmore wisely. The report is organized in four sections. Thefirst describes the regional, macroeconomic, andinstitutional context of the sub-national governments. Thefollowing three sections examine the fiscal situation ofWarsaw; the Voivodship, and three case study'cities.