A TOTAL of 30 municipal câmaras may have to face cuts in the cash they receive from the government next year because they have broken new government laws on the amounts câmaras can overspend and get into debt.
According to the Secretary of State for Local Government Administration, local government accounts show that 59 câmaras overspent on their budgets in 2007 and are, therefore, liable to stiff penalties.
Many of them went over their current limits on existing debts (medium and long-term loans and other cash debts).
Of these 35 câmaras, which were not named by the government, not one had managed to reduce its outstanding accumulated debt by more than 10 per cent, which, according to the government, broke local government finance capping rules under the terms of the State Budget for 2007 resulting in a corresponding ‘penalty’ reduction in transfer payments made from central government.
The various municipal authorities have been notified by the government and will be given time to appeal against the decision.
Last year was the first year in which new Local Government Finance Laws came into force which were designed to limit municipal authority spending, debts and borrowing.
Penalties
However, despite excessive debts being run up in the past 10 years, the financial situation with many local authorities has shown a marked improvement in the past two years with the number of câmaras nationwide overspending on their legal limits falling from 71 to 59.
Even so, from September 2007, 19 câmaras saw central government handouts cut by 10 per cent as a penalty for overspending on their accumulated borrowing limits, including Lisbon, Vila Nova de Gaia, Guarda and Santarém.
Of these 19 câmaras which were penalised, 12 registered significantly better results for 2007 as a whole compared with 2006, which meant that in some cases the transfer deductions were reimbursed or even suspended.
Seven câmaras within this group have, however, seen their budgets slashed by 10 per cent with some complaining that the government had “made a mistake”.
Fernando Ruas, the President of the National Association for Municipal Câmaras, said that many câmaras had been forced to overspend or increase their debts because “the state itself owed them money”.
In the case of Lisbon and Santarém, excesses in debt were completely paid off in 2007/8 which meant that both câmaras were able to receive their central government grants in full.
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