Outgoing President Oscar Arias signed a law Tuesday morning that would gradually funnel more of the government's $18.9 billion annual budget to local governments.

The law had been sitting in the legislative assembly for years, as local community leaders and mayors fought for more money to fix fading infrastructure, underfunded schools and unmet social needs.

Though Arias had expressed his support for decentralization in his campaign and government plan – viewing it as a way to stimulate citizen participation and develop rural communities – he encountered opposition from people who feared municipal leaders were too corrupt or too inexperienced to manage greater responsibilities.

Costa Rica has always acted as a centralized entity. In fact, fewer than 2 percent of public resources are managed by local governments, which is less than any other country in Central America.

“The centralized state was working,” said University of Costa Rica professor Mariela Castro, a specialist in local government, explaining Costa Rica's slow move to decentralize. “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” (TT, Nov. 13, 2009).

Under the new law, the central government has seven years to begin transferring at least 10 percent of public resources to local entities. It must also ensure that the infrastructure is in place for municipalities to use the funds productively.

“This is not an (unimportant) act,” said newly-appointed legislator Fabio Molina, who spoke moments before the law was signed. “This law will change the political system.”

Approved by the legislative assembly on March 4, the law is considered a milestone for municipalities since it's the first big step in a process of strengthening local governments.

Arias said on Tuesday, “The strengthening of local governments ultimately means that power will be brought closer to its rightful owners, that is, closer to all citizens. To understanding this taken a long time in Costa Rica. Despite our remarkable democratic development, we remain one of the most centralized countries in the Western Hemisphere.”

He added, “We are convinced that without a strong central government and without local governments that are also strong, the progress of a country will almost always be unequal.”

The Tico Times did an extensive report on decentralization in Costa Rica in November. The two articles can be found by clicking on the following links: Reinventing the Municipality and A Fix for Local Governments.