Portugal

Portugal - Monitoring report

Date of the monitoring visit: from 7 to 9 November 2011
Report adopted on: 22 March 2012

This is the second report concerning the monitoring of local and regional democracy in Portugal in light of the Charter since 2003. The report notes that, since then, Portugal has been engaged in a difficult reform process to increase its capacity to access international capital markets and has been seriously affected by the economic crisis. In this context, the report underlines the importance of improving consultation with the local authorities and their representative associations and of developing the relations between the different tiers of government.

 

The report stresses the necessity that local authorities be given autonomy with respect to local taxes including the local and regional tax-collecting system. The Government is invited to improve consultation procedures, setting up consultation guidelines in agreement with local and regional authorities and encouraged to give the municipal and regional associations the right to appeal to the Constitutional Court. The Congress recommends that the institutional links between directly elected representatives at State, regional and local authority level be strengthened and calls for transparency in administrative procedures. Finally, it invites the Government to sign and ratify, in the near future, the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

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Article ratified Ratified with reservation Non ratified
Compliance Partial compliance Non compliance To be determined
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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.


The Constitution of the Portuguese Republic (7th revision, 2005) stipulates in Article 6 the principle of a unitarian State, while guaranteeing respect of the autonomous island system, the principles of subsidiarity, the autonomy of local authorities and the democratic decentralisation of public administration. The details are set out in Title VIII of the Constitution (local government). Article 2 of the Charter is therefore formally complied with. The exclusive or partially exclusive responsibility for legislating in local and regional affairs is vested in the Assembly of the Republic (Articles 164 and 165 of the Constitution).

 

An important constitutional safeguard is vested in the Constitutional Court (Article 221 of the Constitution). The Constitutional Court has the power to “consider unconstitutionality and illegality, in accordance with Articles 277 et sequitur”. The Court is restricted to controlling the conformity of legal acts with the Constitution. It has no consultative function. The legal benchmarks for examining this question are only the Constitution itself and the European Convention on Human Rights. The European Charter of Local Self-Government is not a legal benchmark, for it is situated within the hierarchy of legal norms below the Constitution, but above ordinary legislation. The institutions that can appeal to the Court are the President, the Assembly, the Ombudsman and the Attorney General, but not assemblies of local authorities.

 

Despite this important function of the Court, representatives of the associations have raised certain points, which according to them obstruct the overarching constitutional safeguard function of the Court with respect to regional and local issues. Members with a local or regional professional background are underrepresented in the Court. The Constitutional Court is a judicial body, whose composition is decided according to political criteria. The Court consists of 13 judges, ten of whom are appointed by the Assembly of the Republic and three are co-opted by those ten. The term of office is nine years and not renewable. But despite the criticisms of the associations, the nomination procedure does not exclude the appointment of members with closer links to local or regional self-government. Furthermore, the judges are obliged to respect all the provisions of the Constitution, including those relevant to local and regional self-government.

 

Secondly, there is no procedure for local authorities whereby the Constitutional Court controls in an abstract way the legality and constitutionality of laws. There must always be prior concrete litigation before an ordinary court, before a constitutional procedure can be instituted. Portuguese constitutional law does not contain a system of prior review of the constitutionality of a legal act.

 

The examination of the constitutionality of the Local Finances Act 2/2007 has shown another restricting element:  The Court has exercised a control of constitutionality of this Act only with respect to those particular provisions submitted by the President of the Republic. The modification of the Act was not brought before the Court in 2008. But, as a matter of course, the President of the Republic has to prove the unconstitutionality of the provisions he submits to the Court. He also has to verify the conformity of the laws with the Constitution before promulgating them. Accordingly, constitutional control is divided between the two institutions.

 

Article 239.3, sentence 3 of the Constitution stipulates that the law shall regulate “the proceedings and operation of the assembly and the collegiate executive body”. The details are laid down in ordinary laws. 

 

Article 8 (2) of the Constitution contains provisions on the entry into force of international agreements. As stated in the Congress monitoring report on Portugal in 2003 (para. 18), “the Charter is effectively an international convention within the meaning of this provision. It is therefore clear that the Charter in its entirety (as far as the material content of each provision justifies it) may be referred to in Portuguese courts and taken into account when resolving legal disputes between local and regional authorities and central government, and between local authorities and the autonomous regions in which they are to be found.” Portugal signed the Charter on 15 October 1985. It was ratified on 18 December 1990 and entered into force on 1 April 1991. No particular declarations were made nor reservations taken by Portugal upon ratification.

 

The main elements of local and regional autonomy were included in the Portuguese Constitution of 1976. The Charter, ratified by Portugal in 1990, thus had no direct influence upon the wording of those provisions.

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.


See answer at article 2

Article 3.2
Concept of local self government - Article ratified

This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.


See answer at article 2

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.


Current legislation in Portugal establishes a major distinction between local self-government and local government by the state. In the present system and in traditional administrative practice in Portugal, the state does not delegate its responsibilities to local authorities.

 

Powers and responsibilities are transferred to established local authorities under legal instruments that specify the type and manner of the transfer, as follows:

 

transfer of powers relating to exclusively municipal matters which are of a general character and universally applicable;

transfer of powers relating to matters connected with regional action programmes, these powers being exercised by municipalities according to the priorities laid down by the regional development co-ordination boards, which are decentralised central government administrative units;

transfer of powers relating to matters relating to national action programmes, these powers being exercised by municipalities in accordance with the priorities laid down by the Assembly of the Republic at the Government's instigation.

 

Article 237.1 of the Constitution provides that the responsibilities and organisation of local authorities shall be laid down in a law. The regulatory power of local authorities is governed by Article 241 of the Constitution. Local authorities are allowed to issue their own regulations within the limits of the Constitution and of laws and regulations established by either a higher level of local government or a supervisory authority.

 

The distribution of powers is defined in Chapter II, Section 13 et seq of Act No. 159/99 of 14 September. The question of a new allocation of powers between the different tiers of government is not a prominent issue in the Green Paper. Representatives of the associations have not called for extending the transfer of state powers to local authorities. Concerning the distribution of powers between municipalities and parishes, there is a strong concentration of powers in the hands of municipalities. Due to the administrative decentralisation, the municipalities today have the following general attributions:

 

1.         Rural and urban equipment;

2.         Energy;

3.         Transport and communications;

4.         Education;

5.         Heritage, culture, science;

6.         Leisure activities and sport;

7.         Health; social action and housing;

8.         Civil Protection;

9.         Environment, public hygiene and basic sanitation;

10.       Upholding consumer rights;

11.       Promotion of economic development;

12.       Regional and town planning;

13.       External (Foreign) co-operation and

14.       Urban policing.

 

In terms of administrative responsibilities, granting local and regional authorities the right to collect their own taxes could be one key way of increasing the fiscal autonomy of these entities. If, in order to ensure the efficiency and effectiveness of the overall tax collecting system, no reform is intended in order to give more responsibilities to local or regional authorities, then at least the co-operation procedures between the different entities in tax collecting measures should be improved.

 

With respect to Article 3.1 of the Charter, local authorities do have of a substantial share of public affairs.

Article 4.2
Scope of local self government - Article ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.


See answer at article 4.1

Article 4.3
Scope of local self government - Article ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.


See answer at article 4.1

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.


See answer at article 4.1

Article 4.5
Scope of local self government - Article ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 


See answer at article 4.1

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 


See answer at article 4.1

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 


Article 164 of the Constitution grants legislative power for the “creation, abolition and modification of local authorities and the rules governing them” to the Assembly of the Republic. Under the constitutional provisions currently in force, the power to lay down rules on the establishment, abolition or territorial modification of local authorities lies solely with Parliament, which under Acts 11/82 of 2 June and 8/93 of 5 March also has to legislate on decisions setting up or abolishing local authorities or modifying their boundaries. When examining relevant legislative initiatives, Parliament must take account of reports or assessments by local government organs.

 

This topic seems to be of special relevance due to the fact that Portugal has decided, in accordance with its commitments under the Economic Adjustment Programme, to launch a vast initiative to rationalise the local authority map in the context of the reform agreed with the EU and the IMF, with effect from 2012, particularly at parish level. According to the Secretary of State for Local Administration, the reconstruction of local units in Portugal should lead to the reduction of the number of units to between1,000 and 1,500.

 

With respect to Article 249 of the Constitution, prior consultation of the local authorities concerned (or their national associations) in the event of boundary reforms is guaranteed. However, Article 249 of the Constitution guarantees the consultation only of the “local authorities in question”. If the reform has an effect on the overall architecture of local government in Portugal, it might be necessary to consult the local authorities through their associations in general.

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.


Article 237.1 of the Constitution gives local authorities the right of self-government within the limits of the law. This includes autonomy in deciding on their internal administrative structures. In accordance with their powers of self-government, local authorities decide on their internal organisation. The executive body submits a proposal on its own organisational structure to the deliberative body for the latter's approval (Acts 169/99 of 18 September and 5A/2002 of 11 January).

 

Services must be organised in such a way as to enable the local authority to perform its functions, and the structure of services and the way they operate must be adapted to the authority's permanent objectives. The organisation of municipal services is governed by Legislative Decree 116/84 of 6 April, amended by Act 44/85 of 13 September and Legislative Decree 198/91 of 29 May. Portuguese regional and local authorities have started to rationalise their administration with a view to using e-government facilities and to make administrative procedures more transparent and less complicated.

 

One important component of the Economic Adjustment Programme is the limitation of staff at central and local level. At local level, the city of Lisbon has to spend 52% of its budget on staff salaries. Whereas in most countries the size of the public sector has been reduced from 1996 onwards, Portugal has had a slight increase, which corresponds to an increase of the public wage bill as well. But the distribution of employees between central government, the regions and the local level is rather uneven - 78% of staff are to be found in central government. This distribution requires a differentiated approach between the tiers of government if rationalisation targets are to be set.

 

The primary staff reduction target differentiated originally between central and local level, obliging local authorities to reduce their personnel in 2011 and 2012 at a rate of 2%, whereas central government staff had to be reduced by 1%. This differential approach was justified by the effects of the reform on the state administration; the State had begun to fulfil its reduction targets. ANMP representatives pointed out that there had been a transfer in powers from central government to local authorities along with a transfer of staff. The “gains” at State level in the form of staff reduction were artificial, because the staff concerned were now employed at local level. The government has since eliminated the differentiation in staff reduction target between State and local administrations. Now both levels have to reduce their staffing complement in 2011 and 2012 at an annual rate of 2%.

 

Nevertheless this target is rather abstract and does not respect legal provisions and particular local features. It might not respect Article 6.1 of the Charter, as it would  impair the power of local and regional self government entities to determine their internal administrative structures, including the number, the qualifications and the remuneration schemes of local and regional staff members.

 

If the overall aim of the government is to reduce public deficits at local level as well, local autonomy would be better served if the practical methods for making savings in administrative matters were left to the local authorities themselves. Local authorities may take into consideration the aspect of unemployment too, particularly in regions with a low employment level outside the public administration. This would probably increase pressure on the associations to negotiate special reduction targets between the different types of local bodies. But if the local self-government bodies were not able to respond collectively to the State staff reduction targets, they would have to give back this task to State authorities.

 

With respect to the staff of local authorities, Article 243 of the Constitution contains general provisions. Article 243.2 refers to the rules to be applied for State staff and agents; Article 269 of the Constitution is also relevant for local authorities. In addition, Article 267 may be applicable to local authorities too, insofar as it contains indications as to the structure of the public state administration. Due to the sectoral rationalising effects of the State administration reform and transfers of responsibilities, for example in the field of education, local authorities recently acquired additional tasks to restructure services. In the Lisbon city administration, 900 employees out of 9,700 were given new (assistant) functions within the school system. The city is “in-sourcing” services and concluding fewer contracts.

 

With respect to the number of parishes, the reduction target is ambitious. But bearing in mind the powers and the financial resources of parishes, the reform of parish structures seems to be of minor relevance. Parishes give citizens a voice in the democratic decision-making process, especially in rural areas. This includes the maintaining of parish representatives on the municipal council despite the fact that these bodies are rather large.

 

The reform should not interfere with local autonomy by defining the number of managerial staff but instead should leave it to the local authorities to decide how best to organise local administration. Local authorities need qualified staff and market-adjusted remuneration schemes.

 

Concerning the restructuring of the membership of executive councils, the refocusing of the representation of political representatives according to a parliamentary model might not be appropriate for local governance. The rapporteurs learnt during their visit to Coimbra that the executive council consists of 11 members (6 from the winning party, 5 from the opposition). If the opposition members were excluded from the executive body, the institutional relationship between the local executive and local assembly would change, most probably resulting in more frequent conflict.

 

The 2003 Congress report (paragraph 46 et seq. “Local and Regional Democracy in Portugal - CG(10)5REV Part II”), discussed the problems linked to the existence of two “representative” and “collective” bodies - the deliberative bodies (“assemblies”) and the executive bodies (“authorities”) – at local level. These topics did give rise to any particular concern, with the exception of the membership question of the executive body.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.


See answer at article 6.1

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.


A law which was adopted at the end of the 90’s, and which will enter into force in October 2013 (for the next local elections) will limit the term of office of mayors to a maximum of three terms. All terms of office above this limit will automatically end with the next local elections in 2013. According to Article 118 of the Constitution, the law may specify limits on successive renewals of mandates of holders of executive political office. ANMP representatives ask whether a national law may restrict the term of office of local office-holders. In their view, such a question should be left to the local decision-makers and the citizens. Article 7 of the Charter requires “free exercise of their functions”. Given the fact that local self-government legislation often sets age limits for local office-holders, a general clause, limiting the duration of the office holder without reference to an age limit, may not be in conformity with Article 7 of the Charter. But with respect to the above-mentioned Article 118 of the Constitution, the existing rules should be analysed more specifically, if there are similar regulations concerning other types of executive office holders.

 

Administrative supervision is restricted to control of the legality of the activities of local authorities (Article 242 of the Constitution) and should normally aim only at ensuring compliance with the law. Details of the administrative supervision are laid down in the relevant law (Act 27/96 of 1 August). The government, via both the Ministry of Finance and the Ministry of Local administration, is the body that performs general administrative supervision over local authorities. Supervision is thus performed through inspections, inquiries and investigations, involving the collection and analysis of information and explanations that are necessary to make sure that laws and regulations are enforced by local government organs and departments, metropolitan areas and intermunicipal communities.

 

Special supervision of local authorities is carried out by the Court of Auditors in accordance with Article 214 of the Constitution. The Court of Auditors has powers not only to scrutinise the different accounts but also to carry out prior checks on the legality of expenditure involving medium- to long-term financial commitment and to verify that the expenditure is covered by the budget. The court is furthermore tasked with monitoring public contracts with a contract value of over €350,000. The scrutiny of the court is strictly limited to the legality of contracts. It covers the legal foundation of contracts, compliance with budget law and whether the financial implications of a contract would oblige the public authority to override debt limits.

 

Ratification by the Council of Ministers of municipal master plans (which are a responsibility of municipal executive bodies and are also approved by the deliberative assemblies), is done in some cases where there is a risk of non compliance of municipal laws with certain laws and regulations. The purpose of such ratification is to make sure that municipal plans fit in with other supra-municipal plans.

 

The question of personal liability of officeholders was raised by several people with whom the rapporteurs spoke during the visit. The starting point of the problem could be Article 22 of the Constitution. In accordance with this provision, it seems quite clear that both officeholders and local authorities may be held civilly liable – the wording is “jointly”. Nevertheless, only civil not criminal liability is mentioned. On the other hand, reference should be made to Section 15 of Act 2/2004 (Lei n. 2/2004 de 15 de Janeiro - Aprova o estatuto do pessoal dirigente dos serviços e organismos da administração central, regional e local do Estado) and Section 14 of the Decreto-Lei n. 93/2004 de 20 de Abril. Under the latter, officeholders may incur “civil, criminal, disciplinary and financial liability”.

 

With regard to these provisions and similar rulings in other CoE member states, the liability of mayors cannot be compared with the political accountability of members of the government towards the Assembly. In accordance with the position of the Court of Auditors, there must be responsibility with respect to the acts of the head of the executive; a system without liability is not in line with the legal stipulations of the Constitution. Office-holders such as mayors may organise the entities they are responsible for in a way so as to limit the risks of illegal conduct by their staff members. But ultimately the law requires the civil (or criminal or disciplinary) responsibility of the head of the executive.

 

Another question relates to the decisions taken by the state supervision bodies against mayors who have exceeded budgetary provisions. If the claim of the ANMP is correct, i.e. that the State cannot fine local authority executives for negative results in debt management under its responsibility, then the supervision measures are in line with the Charter. Obviously local office-holders are obliged to implement legal and administrative provisions with respect to the execution of budgets. But if, due to the implementation of the Economic Adjustment Programme, there is a multiplication of new budget provisions which generate greater administrative difficulties in respect of their implementation, the supervision authority might be obliged to first give useful hints as to the correct implementation of budget norms before they use supervisory instruments.

Article 7.2
Conditions under which responsibilities at local level are exercised - Article ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.


See answer at article 7.1

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.


See answer at article 7.1

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.


See answer at article 7.1

Article 8.2
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.


See answer at article 7.1

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.


See answer at article 7.1

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.


The most important issue concerning local finances for the association representatives is whether it is admissible to limit the size of local indebtedness through national law and if so, under what conditions. As a member of the EU, Portugal has to comply with the TFEU and Protocol no. 12 on the excessive deficit procedure. The national government is therefore responsible not only for its own deficit but also for the deficits of regional or local governments.

 

The Court of Auditors stated the following in connection with the effects of the Local Finances Act 2/2007: The general question of admissibility and the size of limits of local indebtedness is not a question for the court in general. But the court is aware that the setting of debt limits to regional and local authorities within the Local Finances Act 2/2007 is linked to the political problem of the risk of regional and local debt accruing through non-transparent debt schemes within the local units themselves and within MOEs. Setting limits is a way of regaining transparency and limiting financial risks with respect to the country’s European obligations. Debt limits for local authorities, set by national legislation, are a common instrument and may be found in different legal systems in EU member states.

 

Nevertheless, several particular aspects are a feature of the Portuguese situation. First of all, the debt limits have been significantly increased since 2007. Second, due to the fact that local authorities’ own resources are largely dependent on the PIE and that the PIE is calculated on the basis of the yield of three taxes, a reduction in the income from these taxes is equivalent to a loss of revenue for local authorities. Thirdly, state grants to local authorities, which are of particular importance for these entities, have been radically cut back since 2009. In addition, the accumulated local debt is responsible for only about 0.25% of the yearly state debt in terms of GDP. The delegation has been told that the Secretary of State for Public Administration is willing to discuss these issues with the associations in the law-making process concerning local and regional finance laws.

 

Lastly, the general debt limit does not make any allowance for the different budgetary situations of local authorities. ANMP representatives and mayors have pointed out that the financial situation of Portuguese local authorities varies significantly. Some of them have fewer financial problems in balancing their budgets. Others are extremely vulnerable to volatile funding or shrinking revenues, due to different expenditure structures or time constraints for adapting the budget. More than 200 out of 308 municipalities have severe problems in balancing their budget. Furthermore, local authorities have to deal with increasing interest rates for local investments. For example, one municipality had to invest in a school centre with EU funding. The interest rates of the syndicated loans taken from banks are currently 6-7%, whereas formerly the municipality had to pay an interest rate of only 2-3%. On the expenditure side, local authorities have increased charges in contracting with state service providers. Costs are rising (e.g. water supply, sewage), but the authority is not able to pass on these increases to the citizens since about 50% of the people are unable to afford them. As a result, the municipality is subsidising a part of the cost increase with negative effects for the budget.

 

With respect to the cumulating effects of this revenue depreciation, the debt limit blocks the only instrument local authorities have to balance their accounts. A strict debt limit might not be sufficient to restrict local revenue schemes if there is not only a general will to offer special aid programmes but  also a concrete compensation scheme for special financing needs of local authorities within the 2011 and 2012 State budget. The government has committed itself to set out definitions and procedures to make the revenue reduction mechanism more transparent, but the details are yet not known.

 

The dispute concerning debt limits seems to be rooted not merely in different legal assessments of the constitutionality, proportionality or expediency of such a guiding instrument. The Ministry of Finance’s position is based on the premise that there is a need now to improve control over municipalities in general, and particularly their budgets. On the other hand, central government and local authorities face new financial challenges, and not only with respect to the commitments of the Economic Adjustment Programme. At EU Level, the commitments of the “Six pack” regulation relate to the European Semester, the stability and growth programmes and the new stipulations regarding budgetary supervision at central and local level. The Euro-plus pact will link more closely decisions having a financial impact on state and local level. Closer macro-economic co-ordination will be introduced at European level, which will obviously result in more detailed guidelines concerning budgetary and economic core decisions at local and regional level as well. The draft of a “new international agreement on a reinforced economic union”, to which the heads of governments of the Eurozone committed themselves on 9 December, will strengthen the budgetary discipline rules for all tiers of government. Finally there are difficult aspects of fiscal equalisation between urban and rural areas as well as between coastal and inland municipalities to consider. The government indicated that it is aware of the complexity and the inter-connectivity of these topics with respect to their special relevance for the local and regional level.

 

With a view to guaranteeing coherent policy co-ordination between the different tiers of government with respect to the aforementioned topics and to maintaining the fiscal autonomy of local authorities within the meaning of Article 9 of the Charter, the rapporteurs suggest that a national stability board be set up. Its members could be representatives of the associations of regional and local authorities along with an equivalent number of representatives from the relevant ministries. The board should be chaired by the Ministry of Finance; the vice-chairmanship should rotate between regional and local representatives. The recommendations and decisions of the board, though not legally binding, would have an effect through peer pressure and should be published.

 

Although Article 9 of the Charter contains no special provision concerning the municipal business sector (MBS), this topic was of special interest during the monitoring visit. First of all, municipal assets are protected by Article 9.1 of the Charter, where national law authorises the setting up of an MBS and economic integration within the local authority. Article 238 of the Constitution allows local authorities to own assets, so existing assets are constitutionally protected within the limits of the law. Second, the Green Paper announced a far-reaching reform of the MBS as one of the main focal points.  There is broad political agreement in the government that the MBS depends economically and financially on municipal resources. Following a meeting with the Court of Auditors the government’s approach has been refined: There will not be a total prohibition for setting up an MBS, but some further regulations to avoid the negative impact of MBSs on their municipalities are necessary. The rationalisation effect must also be strengthened. A government white paper on MOEs (municipality owned enterprises), will now serve as the basis of this reform.

 

According to the Green Paper (page 15 seq.), the reform of local government within the domain of MOEs pursues the following objectives:

 

to adapt the number of MBS entities to the local situation in their municipality (significant reduction of the number of entities);

to limit the functions of MOEs to strategic purposes (to define the sectors where MOEs should operate in lieu of and/or in addition to the municipalities);

to match the aim and activities of MOEs to the powers and responsibilities of municipalities;

to limit the significance of the (fiscal) contributions of the municipalities towards the own resources of the MBS (establishing a maximum ceiling for subsidies from the municipality).

 

A reform of the MBS should take these factors into consideration, because the simple abolition of MOEs on a cost-effectiveness basis may fail to take into account the advantages that can be derived from setting up such enterprises, if differences in the management culture between the classical local administration and administration through MOEs persist. Cost-effectiveness is clearly not the sole benchmark for all MOEs. For example public transport enterprises are generally not able to cover the cost of the service throughout Europe – a massive tax or cross subsidy system is necessary to stabilise the revenue of the systems concerned.

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.


Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.


See answer at article 9.1

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.


See answer at article 9.1

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.


See answer at article 9.1

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.


See answer at article 9.1

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.


See answer at article 9.1

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.


See answer at article 9.1

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.


The provisions of Article 10 of the Charter are fully complied with. ANMP representatives underlined the need to increase the association’s influence on national policy with regard to local government affairs. The political context and the consultation procedures have been analysed above. Based on the various opinions of central government and local representatives heard during the visit, the rapporteurs have the impression that local self-government has a strong constitutional backing, but that in reality, local affairs are often overridden by national interests and thinking. In the wording of Article 4.2 of the Treaty of the European Union, the extent of local identity within the fundamental political and constitutional structures of the country is not totally clear. It might therefore be necessary to improve the institutional influence of the local self-government sector on the national level through new co-ordination and co-operation structures, ensuring appropriate participation by the self-government level in national and European affairs. The participation of local authorities in the Economic and Social Council has not so far been sufficient, bearing in mind that this body focuses, in particular, on social consultation, including regional development and spatial planning, and does not have responsibilities with respect to local self-government as a whole.

 

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.


See answer at article 10.1

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.


See answer at article 10.1

Article 11
Legal protection of local selfgovernment - Article ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.


Article 242 of the Constitution defines the scope of the supervision of local authorities and the procedures to be complied with. The focus of the supervision is compliance of the acts of local authority bodies with the law. Details are governed by Act 27/96 of 1 August. This act (Diario da Republica I Serie-A No 177 1-8-1996 p. 2235) relating to the legal regime of administrative supervision, contains the details of the legal remedies available under Portuguese law to local and regional authorities to protect themselves against supervision measures. Details of the legal protection system of local government affairs and the political weaknesses of the control system are set out above.

 

Bearing in mind that there is no general procedure for local authorities, and that the Constitutional Court controls in an abstract way the legality and constitutionality of national laws with special relevance for regional and local self-government, the rapporteurs would suggest that the jurisdiction of the Constitutional Court be extended to include a special procedure, giving the right for local and regional authorities to apply to the Court, if they consider that the “principles of local self-government, enshrined in the constitution or domestic legislation” within the meaning of Article 11 of the Charter have been violated. To avoid any misuse of the control of constitutionality, there could be prior examination by the Court of the admissibility of such supervision-related complaints.

Article 12.3
Undertakings - Non ratified

Any Party may, at any later time, notify the Secretary General that it considers itself bound by any paragraphs of this Charter which it has not already accepted under the terms of paragraph 1 of this article. Such undertakings subsequently given shall be deemed to be an integral part of the ratification, acceptance or approval of the Party so notifying, and shall have the same effect as from the first day of the month following the expiration of a period of three months after the date of the receipt of the notification by the Secretary General.


 

Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

Article 12.2
Undertakings - Non ratified

Each Contracting State, when depositing its instrument of ratification, acceptance or approval, shall notify to the Secretary General of the Council of Europe of the paragraphs selected in accordance with the provisions of paragraph 1 of this article.


 

Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

Article 12.1
Undertakings - Non ratified

Each Party undertakes to consider itself bound by at least twenty paragraphs of Part I of the Charter, at least ten of which shall be selected from among the following paragraphs:

 

– Article 2,

– Article 3, paragraphs 1 and 2,

– Article 4, paragraphs 1, 2 and 4,

– Article 5,

– Article 7, paragraph 1,

– Article 8, paragraph 2,

– Article 9, paragraphs 1, 2 and 3,

– Article 10, paragraph 1,

– Article 11.


 

Portugal has not formulated any declarations or reservations, or has it so far signed the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

ACCESSION

to the Council of Europe

RATIFICATION

of the European Charter of Local Self-Government

CONSTITUTION | NATIONAL LEGISLATION

The Constitution of the Portuguese Republic (7th revision, 2005) stipulates in Article 6 the principle of a unitarian State, while guaranteeing respect of the autonomous island system, the principles of subsidiarity, the autonomy of local authorities and the democratic decentralisation of public administration.



30Ratified provision(s)
0Provision(s) with reservation(s)
3 Non ratified articles
9Compliant Provision(s)
0Partially Compliant Provision(s)
14Non-compliant Provision(s)