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EXECUTIVE SUMMARY 54
United Cities and Local Governments
Latin America Regional Policy Recommendations Prepared by the technical team of the Federación Latinoamericana de Ciudades, Municipios y Asociaciones (FLACMA), March 2010
Signs of recentralization in Latin America In various countries a backward trend has been observed with regard to decisions taken on the handover of responsibilities to local governments, affecting both local autonomy and financing.
National transfers to local governments must be stable and regular Financial transfers to local government are a mechanism to effectively integrate municipal participation into the national budget and constitute a right for citizens of territories. Universal services such as education and health are nationally designed and financed to ensure equality between territories and, when managed by local governments, merit regular and stable national transfers.
Strengthen collection and take into account the fiscal effort of local governments with regard to local poverty levels It is often argued that local governments are “fiscally lazy” and invest little in tax collection. These observations do not consider the low yield of economic activity and level of poverty in the majority of Latin American municipalities. As a result, levels of collection in poor areas are often confused with the efforts made to achieve them. To complement these fiscal efforts, systems of income compensation should be favored, such as unconditional transfers from central to local governments that permit a redistribution of resources in favor of more vulnerable, lower income territories.
Increase the participation of local governments in public spending and their autonomy in the management of resources It is a recurrent theme in Latin America to measure the level of decentralization of diverse countries with indicators such as local expenditure as a part of general government spending or local expenditure as a part of GDP. Such fiscal observations must be balanced against real levels of local government autonomy in deciding how financial resources will be used, be they collected directly by the local government or transferred from the central level. In addition, access to information on municipal finance must be improved as well as the methodologies for collecting and recording this information.
Promote association and cooperation between municipalities to strengthen municipal capacities In Latin America and the Caribbean there are more than 16 million local governments. Analyzing, by country, the total number of Latin American municipalities this is not