How much do states spend on civil service

Salary readjustments and lower growth in collections have increased the proportion of public expenditures by state governments with the payroll of civil servants. According to data consolidated by the National Treasury Secretariat, 21 of the 27 federative units had an increase in expenditure on Executive Branch personnel in relation to revenue in the first four months of 2023 compared to the same period of 2022.

Between January and April, the 26 states and the Federal District spent BRL 423.9 billion of their budgets on salary payments, an increase of 12.7% compared to the same expenditure in the same period of 2022.

Net current revenue (RCL), which marks the limit on personnel expenses, rose 9.53% in nominal terms (inflation included). In 2022, the increase had been 20% compared to the first quarter of 2021.

An important part of this slowdown results from the change in the collection model of the Tax on Circulation of Goods and Services (ICMS) on fuels and the establishment of a ceiling for the tax on fuels, electricity and communications, both measures approved last year.

In absolute values, the federative units that spent the most on salaries of Executive servants were:

• São Paulo (BRL 82.3 billion)
• Minas Gerais (BRL 45.2 billion)
• Rio de Janeiro (BRL 43.6 billion)
• Rio Grande do Sul (BRL 24.8 billion)
• Paraná (BRL 23.2 billion)

They are the states that, in the same order, also have the largest budgets.

Compared to revenue, Rio Grande do Norte spent the most on personnel between January and April this year: the equivalent of 56.7% of its net current revenue (RCL) so far. Next come Rio de Janeiro (49.47%), Minas Gerais (49.32%), Rio Grande do Sul (48.81%) and Acre (47.9%).

The Fiscal Responsibility Law (LRF) requires state governments to comply with the limit of 49% of the RCL in expenses with the Executive payroll, 6% for the Judiciary, 3% for the Legislative and 2% for the Public Ministry (MP). Exceptionally for Bahia, Pará and Goiás, the Executive and Legislative limits are 48.6% and 3.4%, respectively.

According to article 23 of the LRF, when exceeded, this limit must be reestablished in the following two quarters, with at least one third of the adjustment in the first period. Three states, therefore, are in this situation: Rio Grande do Norte, Rio de Janeiro and Minas Gerais.

There are also two other reference parameters for payroll expenses: the prudential limit, equivalent to 46.55% of revenue (95% of the maximum limit), and the alert limit, which corresponds to 44.1% (90% of the maximum limit).

If the manager disrespects the prudential limit, he is unable to grant a real increase in the salaries of civil servants, in addition to creating new positions or functions, among other sanctions. The objective is to avoid reaching the maximum limit.

In addition to Rio Grande do Norte, Rio Grande do Sul, Rio Grande do Sul and Minas Gerais, Rio Grande do Sul, Acre and Roraima surpassed this benchmark in the first four months.

The alert limit does not impose prohibitions when it is reached, but it is up to the Legislative Power, with the help of the Court of Auditors, to alert the Powers and bodies when the threshold is exceeded. In this situation, in addition to the states already mentioned, are Paraíba, Pernambuco, Sergipe, Santa Catarina and Amapá.

Expenditures with public servants of the Executive (1st quarter of 2023)

Source: National Treasury Secretariat/Ministry of Finance

Executive personnel expenses in relation to net current revenue (RCL)

Source: National Treasury Secretariat/Ministry of Finance