The draft of a new law to bail out insolvent, no-hope councils using the Municipal Support Fund (FAM) has been approved by the Council of Ministers and now will be forwarded to the National Assembly for a vote on June 18th.
The fund may win MPs' support but it lacks the support of the National Association of Portuguese Municipalities (ANMP) with which the Government is 'still in negotiation.'
The main problem is that the government wants the fund largely to be financed by the country’s municipalities, the well-run ones having to fund those so hopeless that in the cold light of dawn, ratepayers now despair for ever voting such financially incompetent buffoons into positions of power, let alone allowing them the keys to the safe.
The government wants to use the support fund to shovel €650 million into those 29 councils identified as being in desperate need, including the Algarve’s Portimão council which will be unable to pay its staff in two months’ time unless someone lends it more money.
The government plans that 70% of the fund will come from councils, money that will be clawed back over five years from 2015, with the remaining 30% guaranteed by the State i.e. the general taxpayer.
The National Association of Portuguese Municipalities, chaired by the Mayor of Coimbra, wants just 30% of the fund to be supplied by the country’s councils, and that the government transfers the €350 million sitting in the Support Programme for the Local Economy to the new support fund.
The Council of Ministers, adept at delaying these things, says that first it wants to see “a permanent structural mechanism for resolving situations of severe financial distress of municipalities.”
Despite more waffle, such as 'The system of municipal financial recovery provides legal and financial mechanisms for the adoption of measures to enable a municipality to achieve and observe the total debt limit prescribed by law," the Council of Ministers is clear that it councils to share the burden from those of their number that ran riot with money they did not have, such as Manuel da Luz in Portimão, and talks of "solidarity between the state and councils, all of us together."
For new mayor of Portimão, Isilda Gomes, the solution is a loan from the Municipal Support Fund, and soon.
Meanwhile police continue their investigations into her council’s finances under former mayor Manuel da Luz and the finances of its fully owned trading subsidiary, Portimão Urbis which appears to have been used a a dumping ground for €45 million of council debt.