Are municipalities all the same? Decisions on spending, budget and public policy in local governments

ABSTRACT

Introduction:

Dominant interpretation in studies on intergovernmental relations in Brazil emphasizes the reduced effective autonomy of municipalities to make decisions on budget spending and execution. This paper intends to demonstrate the existence of variations in the budgetary preferences found among the 5.5 thousand municipal governments, as well as to test different explanatory proposals to account for the variations observed between municipalities.

Materials and methods:

In order to test this proposal, bases such as Brazilian Institute of Geography and Statistics, National Treasury Secretariat and electoral information from the Superior Electoral Court were used. The time frame was a complete government cycle (2013-2016). Budgetary execution was used as a proxy for local government preferences on public spending, considering functions of conditional allocation (education, health), and discretionary (security, social assistance, culture, urbanism, sanitation and transportation). Variance measures were considered, as well as the distribution of municipalities by quartiles. Subsequently, to test different explanations for the discrepancy found, political, administrative and demographic variables were mobilized.

Results:

The main finding concerns a strong variation in budgetary spending between brazilian municipalities, especially in regulated functions (health and education) and urbanism, measured both by standard deviation and by interquartile intervals. In parallel, demographic, political and state capacity variables showed low explanatory power to account for these variations. Subsequently, variables associated with previous budgetary expenditures were tested, seeking to identify a path dependency pattern in budgetary decisions. The results showed that the explanatory power of this model was high, indicating that the previous trajectory of spending has a strong influence on budgetary choices.

Discussion:

The work sheds light on a theme hitherto “given up”, contradicting the interpretation that municipalities would have reduced autonomy for budgetary decisions, and offers clues to explain the variations found.

Keywords
Municipal governments; federalism; budget; public policies; path dependence