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Government rejects municipalities' request. Says re-centralization of health and education funding would be a setback

ChilNet extract from El Mercurio
13 May 1997

Finance Minister Eduardo Aninat refused Monday last week's demand from municipal government leaders that the national government provide nearly US$169 million in funding for deficits in local health and educational services or face their re-centralization.

Chilean Municipalities Association (AC) President Gonzalo Duarte charged at the body's third annual meeting this past weekend in La Serena that federal government neglect last year forced municipalities to pay an additional US$140 million out of their own funds to prevent these services from collapsing. Municipalities on average spent 30 percent of their budgets on education and 35 percent on health to cover the deficit, Duarte said.

Should the situation recur this year, he said, municipalities will rebel and return health and education to the government.

Chilean public education was passed on to the municipalities in 1982, and they now operate some 6,000 schools throughout the country. Most health clinics were localized in 1988.

The association held its third annual congress last week, attended by some 1,500 mayors and city council members from around the country.

Duarte, who is also the mayor of La Florida, said in his closing speech that the municipalities are in a grave situation because decentralization has proceeded without sufficient funding. Their total deficits were around US$530 million in 1996, he said.

The association president said he would call on the government to create a work group to deal with 10 issues key to complete financing of decentralized services, an effective decentralization of political power and full municipal autonomy to restructure local governments. He said the government should use funds collected from sales tax to fund local services.

Minister Aninat responded that re-centralizing health, education and other services would run counter to worldwide trends toward decentralization and under no circumstances would the government accept this setback. In any case, such a change would not be possible without passage of a law.

Government sources say that Duarte's comments were "off the cuff," and do not accurately reflect the agreements reached by the association during the congress. Undersecretary of Education Jaime Perez de Arce said he found the request to re-centralize services strange as it has no support in the meeting's official documentation.

The government also questions Duarte's math. Undersecretary Perez de Arce said Duarte's deficit figures fail to take into account over US$72 million received by municipalities in the last quarter of 1996. Also, the minister said, the association's own figures show that municipal contributions to education have decreased from 13 percent several years ago, to 8.7 percent in 1995, contrasting with Duarte's 30 percent figure.

The 1997 national budget allots almost US$940 million to local education. *