Analysis: Congress releases funds to municipalities before the election

The National Congress overturned four vetoes to the Budget Guidelines Law (LDO) and decided to release the transfer of funds and donations to municipalities during the electoral period. The decision was taken in a joint session called during the March of Mayors, which took place throughout the week in Brasília.

One of the vetoes overturned makes a section of the Elections Law more flexible, which limits transfers of resources to states and municipalities in the three months before the first round. With the rejection of the veto, donations of goods, values or benefits by the public administration are permitted, as long as there is a charge for the donee.

An example would be the donation of land belonging to a state to a municipality, with the condition that the city hall builds a daycare center on the site. This was the only veto for which the government leadership in Congress guided the vote for maintenance.

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Defaulting municipalities will be able to receive resources from the Union
Among the vetoes overturned with the support of the government, center and opposition, there is one that allows municipalities with up to 65 thousand inhabitants and with pending registration and tax issues in the Treasury system to receive resources from the Union, in addition to the transfers already established by the Constitution and other laws. The funds would include part of the parliamentary amendments.

Of the approximately 5,000 municipalities with up to 65,000 inhabitants, it is estimated that 3,100 have irregularities in the Treasury systems, with problems ranging from pending issues with social security contributions to non-compliance with minimum standards for health and education.

Now unlocked, the resources should reach works in these municipalities by the beginning of July, when the ban on allocations due to the elections comes into effect.

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Analysts warn of risk of "vote buying" and fiscal deterioration
For the executive director of Eurasia Group, Christopher Garman, the phenomenon is part of a broader process of congressional empowerment over the federal budget. "Congress has taken control over the federal budget, through mandatory amendments, and now also allows transfers and donations to municipalities that are not mandatory amendments", he stated.

He highlighted that this occurs in a context in which mandatory spending already reduces the space for discretionary investments. "Ultimately, what we're seeing is Congress giving itself resources to increase its incumbency advantage," said Garman, adding that the re-election rate for lawmakers is likely to reach its highest level in the last two decades.

In the opinion of the director of Journalism at CNN in Brasília, Daniel, the current movement represents a clear symptom of the change in the axis of power between the Executive and Legislative branches. "The biggest sign that there has been a change in the axis of power is that today, Congress overturning a presidential veto is a banality," he stated.

He recalled that, in the past, an overturning of a presidential veto made headlines and generated crises in relations between the two powers. The analyst also warned of the risk of expanding other fiscal impact measures, such as the expansion of the MEI and special pensions for specific categories.

National public policy is compromised, according to analysts
CNN anchor Thais Herédia assessed the consequences of the scenario. "Public policy like this is not possible. If there is no national agenda, there will be no national public policy", he declared.

She pointed out that most of the strangulation of municipalities' accounts is being caused by the National Congress itself, which creates health, security agent, social agent and education floors, the bill for which falls mainly on the municipalities. "It's not just public policy that's falling apart, it's the quality of public management that's entering a distortion mode never seen before," he said.

Daniel Rittner highlighted that the current mechanism favors the perpetuation of regional oligarchies, with parliamentarians transferring increasing volumes of resources to their electoral strongholds.

According to him, the political beneficiaries - mayors and state deputies - work to guarantee the reappointment of federal parliamentarians. "This cycle is feeding on itself because we don't see an end", he said.

The executive director of Eurasia Group, in turn, made an important analytical distinction: the transfer of power from the Executive to the Legislative is not, in itself, necessarily negative, but the way in which it is being done - corrupting the federal budget space in an already precarious fiscal context - is "much more harmful for public finances and management capacity".

The texts generated by artificial intelligence on CNN Brasil are made based on video cuts from the newspapers in its programming. All information is investigated and checked by journalists. The final text is also reviewed by the CNN journalism team. Click here to find out more.

Source: CNN