Public accounts: with R$320 billion in cash, states increase works in election year

Electoral years are marked by the delivery of government works and gifts. But this time, while the federal government needs to block resources to pay for expenses that will cost more than budgeted, states and municipalities are experiencing a boom, with hundreds of billions of reais left over. These federation entities have never had as much cash on hand as in the last three years.

The surplus in the cash of the states also increases the greed of the federal government, which has been taking measures to relieve the consumer’s pocket by passing the other people’s hat, such as the articulation to reduce the ICMS, the main state tax. The assessment of a member of the Executive is that the governors have collected as never before and are not socially sensitive at the moment: they are circumventing Congress and refusing to lower the ICMS on products and services essential to the population.

A survey by economist Vilma Pinto, from the Independent Fiscal Institution (IFI), carried out at the request of GLOBO, shows that the states had, by the end of the first two months of this year, R$ 319.8 billion to spend. The municipalities had R$ 185.7 billion. This represents a total of R$505.5 billion gross available in cash.

Part of this amount is stamped, that is, it can only be used for specific expenditures, such as health and education, which limits the action of governments. But there are leftovers for works, readjustments and programs. This account already excludes funds that will be used to pay debts.

— We have a significant increase in the availability of cash in the states and municipalities, largely as a result of the increase in revenues — observes the economist.

gains in the pandemic

Local governments benefited from the transfer of resources during the pandemic and from high inflation, which boosts revenue. In addition, they do not need to comply with the spending ceiling limits imposed on the Union. Thus, in addition to salary increases, major works are being carried out in the country.

The other reason is the increase in the tax base of the states, also influenced by the acceleration of inflation. In 2021, states collected BRL 652.42 billion from ICMS, and 27.4% of this total — BRL 178.9 billion — came from energy and fuel taxation.

— In the case of the states, the main tax is the ICMS, and a good part is linked to energy and fuel, which are experiencing a very large price shock, and end up impacting, in proportional terms, in a greater way the collection — explains Vilma.

These items are in the crosshairs of the federal government and Congress. This week, the Executive will try to approve, in the Chamber, a project that limits the ICMS ceiling for fuels, water, electricity and telecommunications to 17%, which could bring down by R$ 70 billion to R$ 100 billion annually the collection of states, as shown by GLOBO.

In 2014, also an election year, the states closed the year with a gross cash position of R$130.3 billion, in inflation-adjusted values, according to a survey carried out by Vilma Pinto. This number reached the lowest level in the series in another election year, 2018, when the surplus was BRL 116 billion. As of the following year, the slack began to increase and reached R$ 269.5 billion, a reflection of more transfers and higher collections.

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With more cash in hand, more works are getting off the ground, which is even more interesting in an election year.

“States and municipalities had immense surplus cash in this pandemic period and hired a lot,” said the president of the Brazilian Chamber of Construction Industry, José Carlos Martins.

But Vilma warns: it is necessary to plan well where to spend, so that the investment does not become a headache later.

— Today’s investment becomes a current expense tomorrow. If you build a hospital, today it is an investment, but tomorrow it is spent on personnel and material. Investment decisions have to be thought through in a coordinated and planned manner, to know if they will generate a return for the population and if the cost will fit within the budget.

Works progress in the states

The state of São Paulo has the most money, with around R$ 78 billion in cash. Governor Rodrigo Garcia (PSDB) is going to seek re-election and there are many works in progress. In the subway lines alone, there are four projects scheduled to be delivered by 2026 at a cost of BRL 36.4 billion. By the end of this year, the state should deliver improvements to the Vicinal Roads and Asphalted Road programs, which cost R$ 8.2 billion. Another example is the Pérola Byington Hospital, which is almost finished and cost R$ 245 million.

In Rio de Janeiro, where governor Claudio Castro (PL) is also seeking reelection, there are long-term works, such as the light subway and others in the pipeline. as the new headquarters of the Museum of Image and Sound, on Copacabana Beach. The government has already invested R$ 79 million and is injecting another R$ 54 million in this phase. The Alemão cable car will also be recovered. Investments total R$ 166.9 million.

The governor of Paraná, Ratinho Junior (PSD), another candidate for reelection, has a planned investment of R$ 450 million in works for the implementation of new energy networks. The construction of the new Brazil-Paraguay Integration Bridge, the result of a partnership between state and federal governments and Itaipu Binacional, is also advanced, with an investment of R$ 323 million.

With Governor Ibaneis Rocha (MDB) seeking reelection, several works in the Federal District should be inaugurated this year. Of note are the construction of a tunnel in the satellite city of Taguatinga, worth R$275 million, and improvements in Vicente Pires (R$157 million). In Goiás, R$ 409 million are being invested in roads and almost R$ 600 million in sanitation, among a series of contracts. The governor of Goiás, Ronaldo Caiado (União Brasil), is also in the fight to be reelected.

Source: The Globe