Portimão council has joined the three other worst run councils in the country in emergency talks with the government.
Portimão, Aveiro, Nazaré and Vila Nova de Poiares are desperate to access money held in the Municipal Support Fund, money that currently they are denied as they are unable to run at least at break even.
Those above are the four councils in the poorest fiscal position in Portugal but there are many more that technically are bankrupt and in need of funds to enable a full financial restructuring to be undertaken and thus given a shot at redemption.
Without the additional money and certain legal powers that comes with acceptance by the Municipal Support Fund's management, these councils are doomed to fail as currently interest payments swallow up much of their income.
The Municipal Support Fund will total €650 million when complete, 50% chipped in by the taxpayer and 50% from well run councils in a decision that has angered many including Rui Andre's Monchique council which objects to bailing out its basket case neighbour Portimão.
The Union of Civil Servants has appealed to these councils to move heavan and earth to gain access to the Municipal Support Fund, but only to safeguard jobs and workers' rights, "The financial rebalancing of municipalities and the use of the Municipal Support Fund must not be an excuse to lower wages or to reduce the number of workers. Some councils that want to access the fund already are struggling with staff shortages due to government constraints on the admission of new workers."
Council's in the rescue scheme will be obliged to cut overtime payments to staff, accelerate staff redundancy schemes and raise local property rates, Imposto Municipal sobre Imóveis (IMI), to the maximum permissible level.
Manuel Machado, president of the National Association of Municipalities, said that there are six municipalities in severe financial difficulties which need an emergency loan from the Government while their applications to the Municipal Support Fund are being written and submitted before the November deadline.
If Passos Coelho, through the Secretary of State for Local Government, António Leitão, continues to deny these bankrupt councils access to the support fund set up to help them out, the black list councils will have little option but to cease paying suppliers and wages thus compounding the many problems they face.
Many councils are under new management since last year’s local elections and their situation is too dire for Coelho to deny them at least a chance by using money already set aside to help them out.
