San José, Costa Rica, since 1956

A Fix for Local Governments?

Second in a two-part series on Municipal Government


Tomás Poblador’s town was in pieces when he stepped into office just two years ago.

Trash lined the streets, property taxes often ended up in the pockets of the collectors rather than in the municipal coffers, and local leaders operated without a plan for development.

The little community of Alajuelita, which hugs the mountains south of San José, ranks among the most challenged communities when it comes to government planning, quality of life and economic opportunity, according to a recent report by the University of Costa Rica.

Poblador, who serves Alajuelita as mayor, said his hands are tied in responding to many of the far-reaching poverty issues in his canton. However, he said that, little-by little, he believes he’s been able to make a difference.

When he took office, Poblador introduced a seven-point development plan, raised salaries to help eliminate corruption and purchased two new trash trucks.

“We re-energized the administration, we confronted corruption … and we’ve been able to double the taxes collected,” said Poblador, from his makeshift office on the second floor of the municipal building.

“But when I inherited these responsibilities, citizens didn’t have much trust in the municipality … and there was no plan for the government.”

Cantons like the one Poblador inherited – ones steeped in corruption and without professional staffs to manage them – have caused the central government to wrap its fist tighter around the millions of dollars of aid that it’s supposed to give municipalities each year. Also, they have caused the national government to hesitate in granting greater autonomy to local governments.

“Municipalities have terrible corruption problems,” said Kevin Casas, former planning minister who works as a senior fellow in foreign policy at the Brookings Institution, a think-tank in Washington, D.C., in the United States. “As a result, the government has been very reluctant to put forward a constitutional amendment to strengthen municipalities financially.”

For poor or rural communities that lack the tax base of wealthy or industrial counterparts, the scarcity of state aid has nearly paralyzed them.

“The central government has not provided municipalities with the resources necessary to be self-sufficient or to address some of the problems of poverty,” said Poblador. “This needs to change.”

Tied Up in the Central Government

Planning Minister Roberto Gallardo said he recognizes full well that resources haven’t reached the municipalities.

“It’s a problem of conviction and consistency,” he said. “Right now, we are missing the political support in the Legislative Assembly … but the bill (which would bring more resources to the municipalities) is there.”

In the meantime, he said he has tried to reinforce communities with development plans (currently 40 have plans) and resources for better coordination.

He said support has been slow from the central government because political leaders lack consistency and conviction in the process. He added that, although people often talk about change and more decentralization, they’ve been reluctant to see it through in practice.

“The discussion always ends up in the same place. It’s a circular discussion,” he said. “Municipalities need resources, but how do we give them money when they aren’t prepared to manage it?”

Not Waiting on the State

Mayor Horacio Alvarado of Belén, a community just west of San José, said municipalities should take responsibility for raising money on their own.

Alvarado attributes much of Belén’s success as a canton to the culture of taxpaying that exists there.

He said Belén residents have taken responsibility for their town and they pay their taxes. He said this has resulted in paved streets, a new fire station and dozens of municipal-level social programs.

Taking this idea of shared responsibility one step further, legislator Luis Antonio Barrantes introduced a bill that would revamp the country’s tax collection system.

His proposal is to lower taxes in order to encourage more people to pay into the system. As it stands, many residents will undervalue their property to pay less or skip payments altogether.

More people paying into the system will “guarantee improved precision and homogeneity in determining the value of properties throughout the country and optimize the administration of the tax,” Barrantes wrote in the text of the proposal.

Robert Wells, a consultant who worked in municipal development in the 1970s, agreed that a greater contributing population would lead to the more success on the local level.

When Wells first began talking to local leaders about property taxes as a way to raise revenue for the communities, he remembers that many shook their heads.

“I wouldn’t be very popular among my neighbors if I did that,” Wells recalled them saying.

But many municipal leaders have since turned to property taxes as one of the only means of raising money for the projects they want to take on.

Today – with the push for a more decentralized system – municipalities would be better served if they had an organized tax base, Wells said.

“Make it an amount that anyone can pay,” said the Michigan native who came to work in Costa Rica on a Fulbright Scholarship 40 years ago. “But teach people to take a shared commitment in the development of their community.”

An Absent Tax Base

In towns such as Poblador’s, where a majority of the population lives in poverty, asking residents to pay anything seems like asking too much.

The municipality can’t just cut off water or trash collection when bills go unpaid, he said, because many of the people living in Alajuelita’s neighborhoods can’t afford to pay for the services on their own.

“We are obligated, under law, to provide them with services,” he said.

For Edgar Cambronero, mayor of the rural town of Siquirres on the Caribbean slope, the problem isn’t so much an issue of people not paying taxes but the exemption of large farms from tax obligations.

Many of the money-making operations in Siquirres remain locked behind the gates  of zonas francas (free trade zones), where businesses aren’t required to pay local taxes.

The banana plantations, which make up the regions’ greatest economic resources (and which occupy nearly 3,000 hectares in the canton), are in these tax-free zones.

And many of the large farms that operate outside of these zones do not fully report their holdings so that their tax bill is less.

While he is reworking the municipal registry and clamping down on corruption, the incoming taxes are still not enough to pay the bills.

“We don’t have factories. We don’t have economic aid. We don’t have professional staff members who are qualified to carry out the activities of the municipality,” said Cambronero. “It’s a disaster. We have problems with housing, with education, with infrastructure. We have water, but it’s not really potable.”

Back to the State

For Casas, who served as vice president and planning minister in the administration of President Oscar Arias, decentralization should begin at the regional level.

“I do believe in decentralization,” he said. “But with a footnote. We have far too many municipalities … and many of them are too small or ill-equipped to manage a trash collection program or large-scale infrastructure projects on their own. If we are really going to move more toward decentralization, we need to redraft the national map.”

He explained that a decentralization process focusing more on the regional level might be a compromise for those who are concerned about corruption or mismanagement within the 81 municipalities.

While the municipalities’ close proximity to the people it serves provides benefits, there is a higher potential for corruption, Casas said. Property owners know who can be bought off, and building projects often go to friends or family members.

“In Costa Rica (with its small size), political tentacles reach pretty deep,” said Wells, agreeing with Casas. “It seems like you can’t do anything without (encountering) some political factor or hidden agenda.”

But Wells said new technologies, such as digital mapping and the Internet, can transform local leadership and help eliminate some potential for corruption.

“We have tools that didn’t exist before,” he said.

Even with new technologies and renewed commitment from the state, the process will take time, said Gallardo, adding that he is attempting to set the pieces in place so that there can be a smooth transition to the next administration.

“In some way or another, we have been working on decentralization for 188 years,” he said. “We can’t pretend that tomorrow we’ll be able to achieve it … The key is to continue pushing in that direction.”



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