Almost half of Brazilian municipalities ended 2023 in the red, points out CNM
The director of Institutional and Political Relations at the Association of Municipalities of Paraná (AMP), Roberto Justus, confirms that the scenario is not very promising for the state’s municipalities. “We participate in meetings with mayors and representatives of micro-regions, and the complaint is general. It is clear that expenses have increased. There was a reorganization of the FPM, but the financial situation of the municipalities has really worsened”, he assesses.
For Vladimir Maciel, professor of Economic Sciences at Universidade Presbiteriana Mackenzie, the worsening of the fiscal situation in Brazilian cities can be explained, firstly, by the effects of the Covid-19 pandemic.
He explains that ISS collections decreased — the city halls’ main tax — due to the reduction in economic activity during the pandemic period — and that, afterwards, the pace of recovery was not sufficient. “Over these years, from 2022 onwards there was a poor recovery on the revenue side. The economy was recovering with a lot of informal activity. This informal activity does not pay taxes. This will impact tax collection”, he analyzes.
According to the analysis, this was added to the increase in spending to combat the disease, in areas such as health, social assistance and even public transport, thanks to subsidies granted to companies in the sector in the midst of the crisis. “These are expenses that the municipality directly affects. On the one hand, you had revenue that fell and will be more difficult to recover — and an increase in spending that has not yet subsided”, he emphasizes.
The entity claims that between 2022 and 2023 expenses grew by 14.8%, while revenues rose by just 6.8%. On the expenditure side, expenses with service providers, labor rental and distribution of free material, such as textbooks and medicines, contributed most.
Personnel expenses, such as salary adjustments and the admission of new employees, as well as the resumption of public works, in the post-pandemic period, complete the list of the main reasons behind the loss, which, at the end of last year, totaled R$16 .2 billion.
The report points out that the deficit does not see size. Small, medium or large municipalities suffer from fiscal liabilities, which will be a challenge for implementing public policies this year, in addition to representing an additional challenge for managers who will be elected in October and take office in January 2025.
“It’s something that will take a few years before future managers can undo the damage caused by this halt in economic activity”, says public budget specialist Cesar Lima.
According to the CNM survey, Alagoas is the state with the most municipalities in the red: 77%. Amapá comes next, with 75% of city halls in this situation. São Paulo is third, with 73% of cities in deficit.
On the other hand, Roraima has only 11% of municipalities with negative accounts; followed by Paraíba, with 24%; and by Paraná, with 25%.
City halls share almost R$7.8 billion from the FPM this Friday (10)
By Brasil 61
