The year 2024 begins with the prospect of municipal elections raising questions about the political movements that will shape Brazilian cities in the coming years. As alliances are formed and the public awaits the official launch of candidacies, certain doubts inevitably reappear, necessitating a clear understanding of the electoral and state administration rules during this exciting period. Among the questions arising, perhaps the main one is: Will the municipal manager have room to implement innovations and make investments in 2024?
It is important to clarify that there are various legal and electoral restrictions on public management in the period leading up to the election. These restrictions aim to prevent abuse of the public machine and level the competition to avoid unfair advantage among candidates.
For instance, the Electoral Code stipulates that, in the three months preceding elections, public agents, whether civil servants or not, are prohibited from making new voluntary transfers of resources between different federative entities. Additionally, in the first semester of the election year, expenditures on advertising are restricted if they exceed six times the average monthly amounts committed and not canceled over the last three years of the term.
In the contractual realm, attention must be paid to the Fiscal Responsibility Law, which prohibits the executive branch from incurring obligations in the last two quadrimesters of its term that cannot be fully met within that term. It also prohibits incurring expenses with installments to be paid in the subsequent fiscal year without sufficient cash availability.
This rule aims to prevent over-contracting by the state apparatus, avoiding leaving unpaid obligations that could burden the incoming manager, who would face both increased exposure of their rival during the election and debts from the previous administration. It is a clear limit on “government” actions, ensuring equality and financial sustainability for successive administrations.
However, this does not mean that the municipal manager will cease making contracts after April.
The legal restrictions and cautions are intended to maintain fairness in elections, managing “government” transitions while preventing abuse of state resources. Nonetheless, these limits should not paralyze the operation of public institutions. Extending electoral restrictions excessively could severely hinder Brazilian administration and deprive citizens of potentially more significant public policies, reflecting a misalignment with our legal framework.
Contracts for “State” policies, such as long-term contracts or those aimed at reducing public costs, are not restricted.
This includes Public-Private Partnerships (PPPs), which are generally long-term agreements (with a minimum of five years), involving expenditures in a multi-year plan and payments typically made only after services are provided. ddd PPPs focus on developing “State” policies by delegating material activities originally managed by the public sector in exchange for remuneration over the contract period, incorporating services, investments, and resource mobilization.
This is also the case with so-called common concession contracts, since this type of contract mainly involves remunerating the private party by charging tariffs. In other words, for these contracts there is no payment by the administration to the private party as there is in other PPPs, but there is a provision of a public service with long-term remuneration fixed in the collection of a tariff from users.
Finally, a similar situation seems to be found in the so-called “efficiency contracts”, which currently have a strong foothold in the New Bidding Law. This type of contract is used to reduce public authority costs or increase the operational efficiency of certain assets. These contracts allow the private party to be compensated based on the efficiency generated from services and/or investments. with durations ranging from 10 to 35 years. And in these cases, not only would it be a long-term contract, reflecting a “state” policy to save the treasury, but there would also be a situation in which the contract itself would not increase any expenditure. On the contrary, the purpose of the contract was to reduce state spending, freeing up cash for the coming years and administrations, whether they are equivalent to or different from the one that tendered the project.
In summary, the municipal manager will indeed be able to make many contracts in 2024. Important agreements can be made to reduce costs and attract sustainable resources, as well as to enhance—and perhaps innovate—in the management of public services and assets. Adequate state planning, with attention to navigating public management rules, will ensure the successful continuation of projects and the electoral process. So let there be more projects, and let the elections come!
The article was produced by SouzaOkawa Advogados and published by Conjur. To access the full version, click the link below.