2024-07-19 04:44:16
Neiva will have to ‘tighten its belt’ in 2025. With the downgrade, the municipal administration will have fewer freely available resources, which will affect the hiring of officials and the resources of the Comptroller’s Office, the Ombudsman’s Office and the Municipal Council. “The category is lost due to the irresponsibility of the previous administration,” said councilman Johan Steed Ortiz.
Gustavo Patino
Neiva, once considered a first-category municipality, has been downgraded to category two. This situation, reported by councilor Johan Steed Ortiz, is due to spending decisions made during the Gorky Muñoz administration. In 2023, spending on bureaucracy and operations of the Neiva Mayor’s Office exceeded the 65% established by Law 617 of 2000, reaching 68%. This will have serious repercussions for the municipality in 2025, including a reduction in the payment of fees to public officials and the decrease in transfers to decentralized entities such as the Comptroller’s Office, the Ombudsman’s Office and the Municipal Council.
Excess in operating expenses
Councillor Ortiz explained that both the Ministry of Finance and the Governor’s Office certified that Neiva exceeded the 65% limit of freely-destined current income, reaching 68% and 67.5% respectively. This excess has led to the loss of the municipality’s category, with significant implications for the administration and operation of decentralised entities.
“Spending on bureaucracy and operations has exceeded the permitted limit, which has negatively affected social investment that should benefit the vulnerable population,” said Ortiz. “The previous administration increased the hiring of staff and the provision of services, resulting in excessive spending that now falls on the shoulders of the current administration.”
You may be interested: Neiva Council warned that “The horseback riding must be regulated or it will end”
The downgrade to category two will imply a reduction in the resources allocated to the Comptroller’s Office, the Ombudsman’s Office and the Municipal Council, affecting their operational capacity. In addition, the fees of the new secretaries and hires will be reduced, limiting the efficiency and effectiveness of the local government. “The category is lost due to the irresponsibility of the previous administration, including the Secretary of Finance and the Head of Budget, who did not manage finances properly and allowed operating expenses to skyrocket,” Ortiz emphasized.
Recovery plan
In order to regain the category in 2026, the Casagua administration will have to implement a rigorous austerity plan. This plan includes several key actions such as administrative restructuring, an institutional redesign to optimize the administrative structure and reduce costs; as well as a fiscal sanitation plan, a comprehensive approach to improve the financial health of the municipality. The update of the Tax Statute is also proposed, which will seek to modernize the tax framework to increase municipal revenues. In addition, the renegotiation of debt interest is proposed, as well as adjustment of interest rates on existing loans to reduce payments.
The current finance secretary has proposed updating the tax code, which could generate a positive impact of 15 billion pesos annually on municipal revenues. In addition, there are plans to renegotiate debt interest with banks to reduce the municipality’s financial costs.
To meet this challenge, the administration has implemented several austerity measures that involve reducing operating expenses, including surveillance, lighting, travel expenses and contractors, as well as increasing the number of taxpayers by expanding the taxpayer database to ensure that everyone pays their taxes, especially the ICA; and modernizing the administrative structure, with savings of 8 billion pesos through a more efficient administrative structure. The goal is to recategorize the municipality in 2026, which will require strict financial management and a significant reduction in operating expenses.
Deficit and personnel expenses
One of the biggest challenges facing the administration is the 89 billion pesos deficit left by the previous administration. This deficit includes accounts payable and other financial commitments that must be carefully managed.
Regarding personnel expenses, the Secretary of Finance explained that there was a significant increase due to the liquidations and social benefits of dismissed employees. “As of June 2023, personnel expenses amounted to 32,641 million pesos, and as of June 2024, this expense increased to 36,737 million pesos due to the liquidations,” said the Secretary in the political control debate.
The downgrading will have a significant impact on the municipality’s social and economic programs. With fewer resources available, the administration will need to carefully prioritize its investments to maximize the benefit to the community. Councilman Ortiz cautioned that while the austerity plan is necessary, it is also crucial to maintain a balance between cost reduction and investment in social programs. “Governments are not there to save resources, but to be austere in spending and thus invest in the social programs that are needed,” said Ortiz.
‘The Comptroller’s Office did not act’
Councilman Ortiz also criticized the lack of action by the control entities during the previous administration. “The Municipal Comptroller and the Attorney General did not act in time to avoid this crisis. We held several control debates, but we did not see an adequate response from the authorities,” he said.
Ortiz mentioned that in the reports presented by the Secretary of Finance, loans were found without clear justification. “We were concerned about a loan of 25.5 billion pesos, of which 3.9 billion were not found. We asked the Secretary of Finance and it was not known what the money was used for,” he said.
The carousel of accounts
The previous administration’s poor financial management also led to abuse and exploitation. Ortiz said many contractors were forced to sell their accounts to lenders at exorbitant rates due to late payments by the municipality.
“The previous government did not report accounts payable, we have been called by people who had a contract for the provision of services and support in 2023, well it turns out what happened, well many people sold those accounts to loan sharks, they took advantage of their power because you needed to pay the store, the rent, the services, the transportation, the social security to pass the bill on the following month, that led you to sell your account and those people charged you 10 or 12%, that was a cartel that was reported by us, we reported it to the prosecutor’s office that it was an alleged carousel of accounts that was being presented with some allegedly officials of the administration who delayed the account so that you would sell it to children of officials,” said Johan Steed.
“So from 2023 of the previous government, these people had to sell 2,069 accounts, which meant 7,045 million pesos, these people profited from the pain and need of these contractors, we are not talking about prohibiting the transfer of their account, but here the issue is due to negligence and poor management and not going with the annualized cash plan, because if they did not have the resources to pay because they hired and exceeded the payroll they had,” Ortiz said.