The Ministry of Communities is prepared to provide each Neighbourhood Democratic Council (NDC) with a $4 million subvention to assist in the execution of their capital works initiatives provided that they are able to submit an appropriate work programme, Minister Ronald Bulkan says.
Speaking with Stabroek News on Friday, Bulkan said his ministry, guided by the Fiscal Transfers Act which sets out criteria through which central government allocates resources to local authorities, has made provisions for each local government authority.
In this year’s budget, $401 million has been approved for subventions to municipalities and NDCs. During the budget debate, Bulkan had told the House that $146 million will be for the nine municipalities while the remaining $248 million will support the 62 NDCs.
On Friday, the Ministry’s Permanent Secretary Emile McGarrell related that of the lump sum, $24 million has been budgeted for Georgetown, $16 million for the municipalities of New Amsterdam and Linden, $15 million for the other six municipalities and $4 million for each NDC. He explained that while the ministry has budgeted to provide each local authority area with the same sum, only 50% of the budgeted sum will be automatically provided upon submission of approved work programmes while the other 50% will be provided based on the past year’s performance of the council.
According to Clause 6 (1) of the Fiscal Transfers Act: “The annual subvention or fiscal transfers, from central government to local authorities shall be based primarily on a set of conditions and stipulated performance indicators so as to form an aggregate sum referred to in the Schedule.”
The Act defines “sets of conditions” as “the criteria used to determine the sum of money appropriated by Parliament annually to local authorities and of which fifty percent is allocated equally among those local authorities with the remaining fifty percent being allocated to the local authorities in accordance to variables, such as population size, geographical area or stipulated performance indicators which may be changed by the Minister by regulations.”
It defines “stipulated performance indicators” as “the rate of collection of taxes by each local authority.”
According to Guyana Elections Commission (Gecom) commissioner Vincent Alexander, who was one of the individuals responsible for drafting the Act, the legislation does not stipulate a work programme as necessary for the receipt of allocations.
“The Act is designed to prevent arbitrary or capricious allocations, it is based on objective criteria so that no government can decide to favour or disfavour a council. The formula has to work with information, it uses geographical data, population and previous year rate of collection. It is informed by prior year data. It speaks about previous year collection of taxes, not what you are entitled to collect but what you are actually able to collect. It is being used as an incentive so those whose rate of collection is high are rewarded for their efforts,” Alexander explained. He added that government goes to parliament to have a lump sum voted for local authorities, which is then divided based on the formula.
While geographical size and population size remain for the most part constant, the rate of collection can vary greatly and with most local authority areas’ rate of collection languishing below 50%, the sum they are able to access based on the formula is less than they need, according to McGarrell,. He said that the local authority areas have simply not been able to collect a large enough percentage of the taxes owed to them to qualify for the sum they need to implement the necessary programmes to improve the quality of life of those in their communities.
“It’s kind of like the chicken and egg. The local government areas are not collecting revenue so they can’t access funds. If they can’t access funds then they can’t provide services to the citizens and if the citizens are not provided with services, then they don’t want to pay rates and taxes which starts the cycle all over again,” McGarrell said.
“While the previous councils had submitted work programmes, these new councils have been asked to review these work programmes and re-submit after which the ministry will review these programmes and make a submission to the Ministry of Finance to have the sums released,” McGarrell said.
He said that while there is still work to be done to ensure complete adherence to its provisions, the ministry has begun using the Act to compute the government subvention to be provided to each of the local authority areas.
“Presently the NDC have each been allocated $4 million, the municipalities a bit more and Georgetown a bit more than that,” McGarrell said. Asked when the sums would be available for those areas to utilise, McGarrell said that it depends on when the work programmes were submitted though he added that the local authority areas have not been given a submission deadline.
“While the central government is prepared to provide the councils with these sums, we must encourage some sort of financial responsibility. Therefore, we ask for work programmes which will be monitored by the ministry,” he said. He added that the ministry recognises that the sums allocated are not enough for the councils to do all the work that they are mandated to do.
“We know the sums are not adequate. It’s a provision that central government makes to assist them in executing their programme. These councils have the capacity to raise their own revenue and must be encouraged to do so,” McGarrell emphasised.
