Public managers intensify efforts to approve municipal budget within the deadline

With the end of the year approaching, local public managers begin to intensify their efforts to approve the municipal budget for 2025. In this case, the council chambers deliberate on the so-called Annual Budget Law (LOA), which represents planning for the entire the year to indicate the allocation of public resources, taking into account the total amount collected through taxes.

In Anápolis (GO), for example, the City Council has already approved, in the first round, complementary bill 150/2024, which deals with the Annual Budget Law. The LOA estimates revenue of R$2.3 billion in 2025. The budget amount for next year is 6.9% higher than the current one. The text will be analyzed once again before being sanctioned by the mayor.

The Natal City Council also approved, in the first round, the LOA for next year’s financial year. The proposal estimates revenue and expenditure of approximately R$5.3 billion, that is, a jump of 9.37% compared to the 2024 budget. The project is expected to be approved in a second discussion by the 15th of December.

In Piracicaba (SP), the City Council approved, in a second discussion, the bill that deals with updating the Multi-Year Plan (PPA) for the period 2022-2025. With a forecast of R$3.3 billion for next year, the PPA is the first instrument in the budget to be voted on by councilors. On the 25th and 28th of November, the local legislature will analyze the changes to the Budget Guidelines Law (LDO), while the project that establishes the LOA 2025 will be deliberated on the 2nd and 5th of December.

Municipalities: entities allege underfunding in main areas of interest to the population

Public budget specialist, Cesar Lima, recalls that the Federal Constitution itself provides that budget laws are mandatory, and that managers need to comply with what has been established.

“If he doesn’t execute the entire budget law, he has to justify why he didn’t comply. But – this is another situation – if the manager incurs an expense that is not foreseen in the LOA, this is subject to a criminal offense, which could cause him to lose his position and become ineligible”, he highlights.

What is the Annual Budget Law?

The Annual Budget Law (LOA) can be understood as the legal document that establishes all revenues and fixes all expenses of the municipal government. The LOA is valid annually. This law needs to be presented by the Executive Branch and consider what is foreseen in the Multi-Year Plan (PPA) and the Budget Guidelines Law (LDO).

The LOA must contain a spending plan, defining the works and services that are priorities for the municipality, taking into account the available resources. It is worth highlighting that personnel expenses and social charges cannot exceed 60% of current net revenues, with 54% for the Executive branch and 6% for the Legislative branch.

Deadlines

According to the Transitional Provisions Act (ADCT), the deadlines for budget laws are as follows:

• the draft multi-annual plan (PPA), to be in force until the end of the first financial year of the subsequent presidential term, will be forwarded up to four months before the end of the first financial year and returned for sanction by the end of the legislative session;
• the budget guidelines bill (LDO) will be forwarded up to eight and a half months before the end of the financial year and returned for sanction by the end of the first period of the legislative session;
• the budget bill (LOA) will be forwarded up to four months before the end of the financial year and returned for sanction by the end of the legislative session.”

Given this, it can be concluded that the PPA must be sent to the Legislature by August 31st of the first year of the mandate and returned by December 22nd of the same year. The LDO is forwarded by the Executive by April 15th and must be returned by the Legislature by July 17th of the same year. The LOA, in turn, must be sent to the Legislature by August 31st and returned by December 22nd of the same year.

Loss of almost R$15 billion in municipal accounts

At the beginning of 2024, Brazilian municipalities had a financial hole of R$14.7 billion over 12 months. The data was released by the Central Bank.

As it is an election year, the city hall deficit grows every month which, according to Cesar Lima, makes life difficult for managers who will take office in January next year.

For the expert, the fight against the pandemic also contributed to this scenario. “It was something really out of the ordinary. One case or another could be due to bad management, but the majority were fortuitous events, so to speak”, he assesses.

In January 2021 — when the current managers began their terms — the municipalities were in the black. There was R$871 million in primary surplus. In other words, a positive difference between income and expenses. Since then, city hall accounts have melted.