Of the 645 municipalities in São Paulo, 185 demonstrate total dependence on transfers made by the state and federal governments to maintain the public machine, according to data from the Court of Auditors of the State of São Paulo (TCE-SP) based on the 2023 budget numbers. Of the entire sum available in the public coffers of these municipalities, more than 90% corresponds to the Municipal Participation Fund (FPM) and the Tax on the Circulation of Goods and Provision of Services (ICMS).
The municipality with the lowest own budget compared to what it receives from other entities is Santa Cruz da Esperança, in the Ribeirão Preto region. According to the TCE-SP, the city of just over two thousand inhabitants collected R$ 662,076.17 in 2023. Last year’s total budget, however, was R$ 26,485,184.98. Its own revenue is therefore equivalent to 2.5% of what that municipality received last year.
The TCE survey shows the amount of own resources, such as the service tax (ISS), the goods transfer tax (ITBI) and the urban and territorial property tax (IPTU), taxes and contributions for improvements. The state is responsible for the transfer of 25% of the ICMS and 50% of the motor vehicle property tax (IPVA). The federal government distributes the FPM and the industrialized products tax (IPI) to the municipalities.
A specialist in administrative and tax law, José Arnaldo da Fonseca Filho said he has no hope that the tax reform, as it stands, will solve the dependence on municipalities. “The real tax reform, which existed in the past, was to solve this type of problem, to avoid this dependence. I understand that today municipalities, not only in São Paulo, but in Brazil, depend on the Union,” he said. According to Fonseca Filho, the situation leaves municipal leaders under pressure to align with those in charge of the state government and the Presidency.
Federal pact
A specialist in public law, Frederico Meyer advocates a revision of the Federal Pact, in an attempt to reorganize the resources and obligations of the entities. “The Constitution has created a design in which the great collection force is the Union. The taxes that the Union collects are those that have a gigantic weight in terms of volume of resources. Municipalities, for example, have less tax revenue. This is already a point that gives relevance to the disarray of our Federation. Basically, what has been discussed in recent years are ways and attempts for us to make new provisions”, he said.
Meyer also underlined that, in the federative disorder, it is the municipality closest to the citizen and that provides basic services, for example, for health and education. “They have an enormous cost to provide public services and for this reason there has been criticism of the Law, since the promulgation of the Constitution. Those who have contact with the citizen are the Municipality and the State. The State also with the police, including education “, he said.
In Pontalinda, in the region of São José do Rio Preto, municipal revenues in 2023 were R$ 1,326,166.57. However, R$ 46,440,823.21 entered the public coffers. The city is the second most dependent. Own revenues represent 2.86% of public funds. Pontalinda has just over four thousand inhabitants.
The third city on the list is Borá, known for being the smallest city in São Paulo, with about 800 inhabitants. According to TCE-SP data, the Boraenses’ own income amounted to R$658,307.24, which represents 3.33% of the total of R$19,753,609.44.
Number of cities
The TCE data also highlights another issue: the need to review the number of municipalities, according to experts. Of the 185 cities analyzed by the report, only 23 have more than 10,000 inhabitants, such as Teodoro Sampaio (22,173 residents), Cunha (22,110) and Potim (20,392).
In 2019, then-Economy Minister Paulo Guedes made public statements about a Constitutional Amendment Proposal (PEC) that sought to extinguish cities of up to 5,000 inhabitants that failed to demonstrate self-sufficiency.
The proposal mentioned by Guedes did not proceed. “And this generated a great controversy due to lobbying. Councilors, mayors, in short, political parties capitalized by small municipalities, criticized him. I knew that this would not happen. But within the framework of the law and outside of any situation of the political discussion, I was enthusiastic about the provision, because small municipalities with up to 5 thousand inhabitants would be extinguished by the PEC precisely because they did not demonstrate financial sustainability”, said Meyer.
The idea of abolishing cities – and annexing them to the nearest municipality – would reduce the costs of councils and municipalities. In most small administrations, the salaries of councilors, secretaries, mayors and civil servants consume almost the entire public budget. As a result, cities would see an increase in revenue.
“We have an absurd volume of municipalities in Brazil,” said Fonseca Filho. «There are cases in which municipalities that were already small were divided into two or three. This is also the result of political interest, because you create another municipality, you create another chamber. And then you put someone there and it becomes a campaign, you earn money and so on. It would be much more interesting to have large municipalities, which could also be transformed into administrative regions in the same municipality, with a local administrator if necessary.”
Source: Terra
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