Municipalities in a state of financial distress, panic or in the case of Portimão, insolvency will have to reduce their workforce by 3% to save money, or the state will reduce central grants by an equivalent amount.
The number of lay-offs will be based on the headcount as at December 31, 2014 and is one of a raft of measure in the 2015 State Budget designed by the government to reign in errant councils which happily run up debt and expect the general taxpayer to fund their excesses.
The preliminary draft of the State Budget for 2015 is being discussed by the Council of Ministers and then must be discussed in parliament before the end of the week.
The draft document states that in the event of a failure to reduce staff by 3%, a facility will be used to reduce money from central government destined for the municipality equivalent to the amount that would have been saved if the lay-offs had been carried out.
Councils such as Portimão have tried, but have not knocked themselves out, to access the Support Programme for the Local Economy to borrow government money on a long term basis to pay off short term debts.
In the Algarve, Portimão is the worst off council where years of fiscal dysentery under mayor Manuel da Luz left its ratepayers facing an unsurmountable pile of debt - an impressive €170 million by the time Luz left last autumn.
Portimão council also faces an extraordinary inspection by the General Inspectorate of Finanças looking into the municipal company Portimão Urbis where the ex-Mayor, Deputy Mayor Luis Carito and Councillor Jorge Campos already have been arrested and accused of financial crimes.
This investigation won't help mayor Isilda Gomes but should see any offenders, crooks and fraudsters locked up, fined and disgraced for stealing public funds, should anyone be found guilty of course.
Despite a good start by Gomes she has now had a year in the job and the council finances seem in no better state than when she took over.
There also will be a pile of debt to be transferred from Urbis to the council’s balance sheet while the criminal investigations continue.
By failing to access money from the Support Programme for the Local Economy, Gomes has had to rely on a ‘business as usual approach’ while incensing locals by imposing an additional 0.02% tax based on property values under the guise of 'raising money for Civil Protection.'
Being jeered by locals last week, gathered to protest at her unilateral decision to impose the Taxa Municipal de Proteção Civil, Gomes at least faced the gathered crowd who were in no mood for more promises of 'jam tomorrow.'
The demonstration outside the council offices could have turned nasty as usually placid Algarveans started screaming ‘Don’t pay!’ and accused the council of blatant thievery.
It therefore is unlikely that Gomes will have the will or the majority to start sacking council workers to accord with this latest government dictat if it is passed as part of the State Budget 2015, which is likely.
If Gomes refuses, or uses the ruse of switching people to short term contracts, the financial situation in Portimão simply will worsen.
