San José, Costa Rica, since 1956

Reinventing the Municipality

First of a two-part series on Municipal Government in Costa Rica


Horacio Alvarado has no doubt that very pothole in his town is filled, that trash collection will be on time tomorrow and that he and his neighbors are drinking some of the cleanest water in the country.

He knows a broken traffic light will be fixed within hours, that his calls to the Legislative Assembly will be returned and that he’ll have enough money to meet his expenses – all things that make the two-year mayor of this little town in the Central Valley rest easier at night.

Among thick stacks of plans piling up in the corners of his office, he – along with other local leaders – has mapped the future of Belén, an urban suburb west of San José, planning for improved recycling services, free Internet service and more spaces for recreation.

In almost every sense, Belén has been a local-government success story. We’ve been able to construct a fire station, a clinic for senior citizens, a Red Cross station (and) we’ve been successful in providing social services,” Alvarado said, listing off the accomplishments of the cantón. “We’ve had very good relations with local businesses and with the state, which has allowed us to get things done … We plan to offer free Internet in the homes of our residents next year … and we are efficient at responding to infrastructure problems.”

But not every municipality has reached the same benchmarks.

As the country continues to experience a tug-of-war between local and national entities, some municipalities have been left with rotting infrastructure, broken tax collection systems and backward processes for development.

“Sufficient resources and talented people have led some municipalities to work well, but others – especially those in the north, along the borders and in the most rural zones – haven’t had the resources or the talent to be successful,” said University of Costa Rica professor Mariela Castro, a specialist in local government.

The divide has led to conflicting interpretations of how the country is managing the relationship between the municipality and the state, along with lingering questions over how to find the correct balance between centralization and decentralization.

Kevin Casas, former planning minister who works as a senior fellow in foreign policy at the Brookings Institute, a think-tank in Washington, D.C., in the United States, said the current state of affairs has the entire system in limbo.

“Local government is a mess. It’s an almighty mess,” said Casas, in a phone interview from Washington. “While it’s important to solve, it’s also very complicated. At the national level, you have people saying that local governments don’t have the capacity to spend money wisely, but local governments say they can’t develop the capacity without money. It’s a Catch-22.”

Luis Fernando Maykall, with the Institute for Municipal Development (IFAM), said municipalities just need time.

From the moment property tax collection was handed over to the 81 municipalities in 1995, local leaders have increased their tax bases 10-fold. Step by step, they re building the needed infrastructure and doing more on their own.

“This is a long-term project,” said Maykall. “It’s a slow process (but) municipalities are moving forward.”

Making It in the Mountains

Giovanny Arguedas returned from a lunch break on a Tuesday afternoon and stepped right into juggling phone calls, signing contracts and responding to the constant interruptions of staff members, all while being interviewed by a reporter.

As mayor of a Grecia, small city in the mountains at the western end of the Central Valley, he’s had to run to keep up with an ever-changing community.

“Grecia is constantly developing. If you ask me, ‘What is the challenge of today?’ Well, it will be something different tomorrow,” he said.

His 57,000-resident cantón, fewer that 50 kilometers west of San José, is pitching itself as a destination for foreign investment, for tourism and for residential development. As a result, a locality long-known for its coffee, sugar cane and produce is now attracting foreign investment and new types of economic activity.

The forward-thinking municipality has formulated plans for development, implemented mechanisms to facilitate opening new businesses and has maintained an efficient trash collection program. Grecia, which was named the cleanest city in Latin America in the 1970s, aims to remain one of the cleanest regions in the country.

According to a recent study by the University of Costa Rica, Grecia ranks 31st out of 81 municipalities in competitiveness, 17th in business friendliness and 16th in innovation. Yet, in some ways, Grecia still feels handcuffed by the state.

“We depend on the central government for many things,” Arguedas said. “Our ability to self-govern has been limited in the sense that the state is still the authority on the budget, on approval of projects…“It’s tough. Going forward, we need more self-sufficiency as a municipality.”

Moving Away From the Center

The concept of decentralization only recently became an agenda item in Costa Rica. While its neighbors on the isthmus began parsing out power to local governments in the 1980s, Costa Rica launched its movement away from a centralized state in the 1990s.

“The centralized state was working,” Castro said, explaining Costa Rica’s tardiness. “It was responsive to the people. So there was no need for strong local government.”But when the state became less responsive, people began to look for alternatives.

In 1995, property tax collection has turned over to the municipalities. Later, the central government introduced programs and educational forums to encourage municipalities to play a more significant role in the management of their cantóns and introduced digital systems to make bookkeeping and planning a little simpler. Legislators also passed a law allowing for direct elections of local mayors.

“We want to pay a debt that has long been pending in our democratic system,” wrote President Oscar Arias in a prologue to a 2008 decentralization plan. “This government does not plan on continuing along the path of centralization, which moves away from citizen participation and cultivates disillusionment with public issues.

“Therefore, in close consultation with local governments, we’ve drafted and submitted to the Legislative Assembly … a framework law for the transfer of responsibilities and allocation of resources to municipalities.”

Yet, the encouragement that top officials give to decentralization on paper often doesn’t translate to deeds, Castro said.

“In the last 10 years, we have seen discussion turn more toward decentralization,” she said. “But in reality, Costa Rica continues to be a centralized state.”

Less than 2 percent of public resources is managed by the towns, Castro said, which is less than in any other country in Central America. Promised government assistance to municipalities has yet to materialize.

A centralized state is not necessarily a bad thing, Castro continued.

“There are countries that are very decentralized – such as Germany – that function very well, and there are countries that are very centralized – like Japan – that also function well,” she said. “It just depends on how Costa Rica wants to manage itself. In recent years, more leaders have favored decentralization.”

Maykall said that not all municipalities have benefited from the decentralization effort, especially those in rural areas. But, he added that, given the right resources and instruments, even communities in the far reaches of the country would benefit.

“It’s very difficult for a central government to attend to all the demands of all the communities, of all of the country,” he said. “Giving self-sufficiency to the municipality opens up opportunities for the government to attend to more demands, and it gives space for citizen participation.”

A Better Belén

Alvarado said much of his success in Belén has to do with a professional staff, its central location and residents who pay their taxes.

The town, southeast of the airport, has a population of 24,000 and is at the top of the charts when compared to other towns for competitiveness (2nd), innovation (2nd), economy (3rd) and governability (1st), according to the study of local governments undertaken by the UCR (For the full report in Spanish, see this article online at

Yet, the town’s success isn’t exclusively due to preconditions such as its location and an educated citizenry. Alvarado said other municipalities can be just as prosperous if they foster a culture of paying taxes.

“If municipalities were more vigilant about collecting taxes, they could be far more developed than we are,” Alvarado said. “We are the way we are simply because we re efficient at collecting taxes. But (other towns) are certainly wealthier than we … especially those near the ocean and in tourist destinations … The money is in the street. They just don’t go and get it.”

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