Mayors protest and say government measures affect municipalities

The National Confederation of Municipalities (CMN) released a manifesto this Wednesday (30) asking the government and Congress to approve relief projects for Brazilian municipalities, which have more than half of them in financial crisis. According to the entity, municipal management has reached a level where “there are no more conditions for governance”.

According to the entity, municipal managers from 16 states will mobilize throughout the day so that effective measures are taken to help city halls with public accounts. The mayors were in Brasilia, two weeks ago, asking for solutions to the crisis.

“The future is pessimistic. Every day, Brasilia creates new attributions without the source for funding”, said Paulo Ziulkoski, president of the entity.

Among the requests made by the mayors to the government and Congress are the approval of measures that increase the Municipality Participation Fund (FPM) — approval of 1.5% in the March transfer, which would represent R$ 783.4 million — , reduction of the INSS employer rate to 8% in municipalities with up to 156,000 inhabitants, recomposition of ICMS with R$ 458.7 million and updating of outdated federal programs. The entity emphasizes that these measures do not definitively solve the problem, but they would alleviate the current scenario.

A study by the entity points out that 51% of the country’s municipalities are in a deficit situation, a marked contrast in relation to the previous year, when only 7% faced primary deficits. The CMN claims that the scenario is getting worse every day, as more responsibilities are delegated to city halls without the proper source of funding, making governance an almost impossible task.

FPM drop directly affects city hall accounts

The National Confederation of Municipalities says that the FPM, the main source of revenue for almost 70% of city halls, showed significant drops in 2023 compared to previous years. Revenue is crucial for maintaining public services and paying payroll. The Tax on the Circulation of Goods and Services (ICMS), another important source of revenue for city halls, was also impacted by legislative changes.

On July 10 of this year, he says, there was a sharp drop of 34.49% in transfers. In August, the drop was 23.56%. Another important revenue, the ICMS quota, affected by Complementary Law 194/2022, decreased by 4.5%.

“The municipalities also face delays in the payment of parliamentary amendments. The drop in costing amendments in the first half of 2023 compared to 2022 was almost 73%, from R$ 10.43 billion to R$ 2.80 billion”, said Ziulkoski.

One of the prefectures facing difficulties due to the drop in the FPM is that of Carnaúba dos Dantas (RN), which started the week with only R$ 7.95 in the fund’s account.

“That is not fake newsit is a fact, it is reality, it is what the city halls of Rio Grande do Norte and all over Brazil have been facing with this drop in the FPM”, said Mayor Gilson Dantas de Oliveira (MDB).

The Union of Municipalities of Bahia (UPB) disclosed on Tuesday (29) that six out of 10 city halls in the state do not have their own revenue and depend on constitutional transfers to cover public expenses.

Lag of federal programs and own investments

In addition, the municipalities claim that there was an increase in expenses with personnel, funding and investments. The difficulties extend to areas such as health and infrastructure, with works paralyzed due to lack of resources.

According to Ziulkoski, there are 200 federal programs with lags that reach 100%, growth of 21.2% in funding expenses, 1.1 billion outpatient procedures and 4.3 million hospital procedures dammed during the pandemic.

“With R$ 17.2 billion needed to equate the demand, more than 5.4 thousand works stopped and abandoned due to lack of Union resources, and R$ 7.4 billion invested with own resources to finish works without transfer from the Union” , completed.

The president of the CMN stated that the scenario is critical and should get worse with recent government decisions, such as the new criterion for updating the minimum wage, and the decision of the Federal Supreme Court that makes it mandatory to offer vacancies in day care centers, with an impact of more than R$ 100 billion to municipalities.

“We also see the possibility of including expenses with personnel of Social Organizations in the limits of personnel expenses, which will cause extrapolation of what is established in the Fiscal Responsibility Law, with rejection of bills, fines and non-enforceability of mayors; new floors advancing in Congress without defining how they will be financed; and hundreds of measures that are defined without listening to the Municipalities, but that directly affect them and violate the municipal autonomy provided for in the Constitution”, he said.

Ziulkoski says that a broader debate is needed on federalism and adequate funding for city halls, in order to guarantee the provision of essential services to the population and the stability of municipal finances.