The overall budget deficit of mainland Portugal’s 278 municipalities increased exponentially in the first year of the pandemic (2020) compared to what was expected at the beginning of that year, according to an analysis by the Court of Auditors (TdC), published this Friday. The imbalance has grown more than 17 times and would have been greater without the significant transfers from the state to the chambers, according to a new report from the auditor chaired by José Tavares.
It should be remembered that since the start of the pandemic in March 2020, municipalities have been decisive actors in the fight against the pandemic, taking on direct and indirect responsibilities that entailed enormous costs (organization and implementation of the vaccination plan at local level, social support, healthcare, etc.).
At the same time, the restrictions on economic activity and population mobility had a serious impact on their own income, the judges note. All this contributed to an accelerated degradation of local accounts.
So overall, counting on the support of the central government during the pandemic situation, the deficit of the municipal sector, which was initially expected to reach €111.5 million in 2020, fell to €1.9 billion. by the demands of the pandemic. And this only in the first year of covid (2020, as stated).
These accounts come from Dinheiro Vivo and are based on new data revealed by the Court in this analysis of the period 2020. The years 2021 and 2022 will be analyzed in subsequent reports.
The TdC recalls that “in the pre-pandemic year (2019), of the 278 municipalities in mainland Portugal, most (241, 87%) were in balance and even more (258 or 93% of the total) complied with the debt limits, with relatively few (11 or 4%) receiving financial support from the Municipal Support Fund”.
According to the judges, “the budgetary and financial performance of the municipalities has been affected by the health, social and economic crisis”.
In more detail, the downward revisions of the initially estimated revenues occurred “in about half of the municipalities (141 or 51% of the total), more pronounced in Lisbon (-161.5 million euros or -17%), Porto ( -122.5 million euros or -17%), million euros or -39%) and Vila Nova de Gaia (-25.9 million euros or -13%)”, explains the analysis.
In terms of expenditure, (increasing) deviations occurred in 193 municipalities (69% of the total), with an emphasis on Lisbon (+209.4 million euros or +22%), Cascais (+84.1 million euros or +37%) , Albufeira (+70.2 million euros or +88%) and Oeiras (+65.2 million euros or +38%)”, the audit report sums up.
“The activation of local resources and the withdrawal of economic activity put pressure on municipal budgets, which recorded overall and from a cash point of view a decrease in revenues (-1%) and an increase in expenditures (+3%),” effect scissors” that caused a balance sheet erosion compared to previous years,” says the “Impact of covid-19 on the 2020 accounts of mainland municipalities”.
On the revenue side, the pandemic caused a decrease in own revenues, especially those related to the municipal operational dimension, which is quite evident in the collection of fees and tariffs related to goods and services provided by municipalities (-240.1 million euros) and other current income (-17 million euros)” and “it was also clear that the cyclical conditions contributed to the decrease in the collection of local taxes, namely the IMT (-35.8 million euros)”.
On the other hand, “the significant decrease in own revenues was largely offset by the increase in transfers received from the state budget and the European Union, a factor unrelated to the pandemic that left most municipalities (193 or about 69 % of all municipalities) will face 2020 with more income than before the health crisis”.
“On the expenditure side, the impact was the result of the response actions that mobilized goods, services or financial resources to support the general population and that the municipalities estimate in total at about 240 million euros, mostly classified in operating costs such as the acquisition of goods and services and transfers and grants awarded,” the TdC said.
For example, still with regard to expenditure, the Court notes that “the softened operational outlook (due to movement restrictions and social contacts, municipal services, facilities and equipment were closed, as well as activities suspended) had a budgetary impact that is reflected in the decrease in the purchase of current goods and services (-132.3 million euros), as well as in other ongoing charges (-50.6 million euros), and also in other components of personnel costs (-18.3 million euros).
In any case, the Court also notes that “despite the budgetary pressure exerted by the response measures, the suspension of ongoing activities by the municipalities reduced the need for other major expenditures, so that the pandemic in 2020, overall, does not seem to have led to to an increase in municipal expenditures, which will find more justification in factors outside the pandemic, such as the growth of fixed and fixed salaries of staff (+90.3 million euros) and, above all, in the purchase of capital goods (+185,000,000 euros). 8 million euros).
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
Source: DN
