Toward a More Inclusive and Effective Participatory Budget in Porto Alegre

Toward a More Inclusive and Effective Participatory Budget in Porto Alegre

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AGENDA

1.Context2.Objectives3.Scope and Methodology4.Impact Evaluation5.What else have we learned?

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CONTEXT

Porto Alegre was one of the first local government to adopt PB as the core policy for improving governance and reducing social inequalities

Macro Changes in Brazil: The process was initiated during the early years of re-democratization and decentralization in Brazil, which significantly expanded the fiscal, political and administrative space of local authorizes

Local Innovation: It started as a response to social pressure for opening decision making and reducing social inequalities, but also as a strategy of a progressive mayor to gain social support for his progressive agenda under a constrained fiscal situation, and adverse local council

No Single Model: From its early experimental phase, PB has evolved from a very simple governance approach to highly diversified forms of engaging citizens in the budgeting process

Global Dissemination: From a left-wing administration in Porto Alegre, it rapidly expanded in more than 200 cities across the political spectrum in Brazil, Latin America, North America, Europe, Africa, and Asia

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CONTEXT

ESW: Joint initiative of LAC Social Development Unit and the Social Development Department Anchor

Demand driven: Municipal Government of Porto Alegre and Participatory Budgeting Council (COP) requested WB support to strengthen the PBsustainability

PoA moved from a fiscal surplus to deficit in 3 consecutive years

About R$ 30 million of public investments prioritized through the PB process on hold

Transition in political leadership

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OBJECTIVES

Analyze the key challenges and recommend strategic reforms for improving the PB process

Research Questions: How can the “quality of participation” in the PB be

improved? How can the interface between the PB and municipal

fiscal management be strengthened? How can the capacity of the PB to monitor budget

execution be improved? How can a more coherent system of social accountability

in the city be established, How to improve the articulation between the PB and

different participatory fora? What are the social and fiscal impacts of the PB?

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SCOPE AND METHODOLOGY

Conceptual Framework

WDR 2004: “the long route of accountability”

OP OP

The state

Politicians Policymakers

Voice Long route of accountability

Citizen/clients

coalitions/inclusions

Non - poor Poor

Providers

Management

Frontlin e

Organization s

Client power Short route

Compact

Services

PB The state



Citizen/clients


Non - poor Poor

Providers

Management

Frontlin e

Organization s


Compact

Services

The state



Citizen/clients


Non - poor Poor

Providers

Management

Frontlin e

Organization s


Compact

Services

The state


The state


Voice Voice Long route of accountability

Citizen/clients


Non - poor Poor

Citizen/clients

Coalitions/inclusions

Non - poor Poor

Providers

Management

Frontlin e

Organization s

Providers

Management

Frontline e

Organization s



Compact Compact

Services Services

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SCOPE AND METHODOLOGY

Chapter 1: Quality of Participation representative survey of Porto Alegre households

1300 interviews Desegregated by gender, age, income, and territory

Focus groups with PB participants and non-participants Interview with key informants

Chapters 2, 3, 4: Interface between PB and Municipal Finance Management, Budget Execution Oversight, the broader local governance space

Information gathering covering the past 15 years Review of key data on municipal revenue and expenditure Review of budget policies and guidelines Review of key internal audit reports Focus groups with PB participants and non-participants Interview with key informants

Chapter 5: Impact Evaluation Uses econometric tools to undertake a counterfactual analysis of the fiscal

and social impacts 150 PB municipalities Porto Alegre

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IMPACT EVALUATION

The impacts of PB on Brazilian municipalities

Challenges/Limitations Need to isolate the influence of PB from other variables which

affect social and fiscal outcomes i.e.: tendency to find PB in LGs run by the Workers Party which have

progressive polices independently of having or not PB PB potentially impacts on many areas, which were beyond the

scope of the ESW Certain impacts are likely to occur over a longer time period

which data is not often available

Approach Use of well-known econometric techniques to evaluate impact on

intended variables Isolating the causal relationship is the most important aspect to

make compelling arguments Comparing Brazilian municipalities that adopted PB to a group of

non-PB municipalities with similar characteristics before the baseline point.

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IMPACT EVALUATION

Although Porto Alegre became internationally known for its progressive governance agenda, few studies tried to estimate the PB impacts

Marchetti’s (2004) evaluation concluded that PB in PoA led to a more progressive distribution of public goods, but did not provide contracfactual to compare results

Zamboni’s (2007) research used randomly Audit Report from CGU to suggest that PB municipalities were likely to have less corruption than non-PB municipalities

Baiocchi et all (2006) used cross-sectional data and a pairing approach to suggest a positive impact on empowerment and poverty reduction

The ESW built on these previous studies, but it used the same set of variables in years prior to the baseline to control for municipalities which have similar dynamics in the intended outcomes before PB was implemented

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IMPACT EVALUATION

Expected outcomes of participatory budgetingWhat effects are

expected from PB?

What are the mechanisms through which it causes the expected effects?

What variables are proxies for outcomes?

• Strengthened pro-poor capital investments

.

PB is a municipal governance approach that aims to close the gap between the preferences of the poor and decision making by means of empowering the poor to voice their needs in capital budget formulation. As such it is expected to come up in the short-term with a capital budget more consistent with the real needs of the poor.

• Access to water• Access to sewerage

By means of redirecting capital budget to pro-poor investment, it is expected that OP can have a mid- to long-term positive impact on poverty

• Poverty headcount

• Strengthened budget transparency and literacy

PB is municipal governance that aims to strengthen budget transparency and citizen awareness. As such it, is expected to come up with increased local tax compliance, a better balance between current and capital expenditure and a lower incidence of corruption

• IPTU divided by municipal GDP as a measure of the willingness to pay taxes

• Incidence of mismanagement of public funds (as evaluated in Zamboni)

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IMPACT EVALUATION

Positive social impacts However, impacts on poverty reduction is more evident in the

long run Positive impact on local tax collection However, the impact on capital investment to current

expenditures is negative

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What else have we learned?

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AUGUST/ SEPTEMBERDiscussion and vote on the Budgetary Matrix;

beginning of the distribution of resources for the regions and non

COP themes.

Second FortnightAPRIL/ MAY

Single round of assemblies in the regions; election of

the thematic priorities; election of councilmen.

MAY/JUNE/JULYRegions, Thematic

and Municipal Forums of

Employees; Election of delegates;

Prioritization of works and services.

MARCH/ APRIL

Preparation Meetings in the

regions; Integration

meetings of the delegate forums

and planning forums.

First fortnight JULY

Municipal Assembly

JULY/ AUGUST/ SEPTEMBERAnalysis of the demands and organization

of the matrix.

NOVEMBER/ DECEMBERDiscussion in the regional, thematic forums

and municipal forum of employees of the alterations of the Internal Regime, general,

technical and regional criteria.

DECEMBER/ JANUARYDiscussion and vote

on the Internal Regulation, general,

technical and regional criteria.

FEBRUARYRecess

OCTOBER/DECEMBERDetail of the Investment and

Service Plan. Finalization of the distribution of resources to the

regions.

Data to send the LDO to the Chamber of Councilmen – August 15th.

Approval of the LDO by the Mayor by Oct 10.

Sanction of the LOA by the Mayor – December 15th.

Data to send the LOA to the Chamber of Councilmen – October 15th.

Interface between PB and Municipal Finance

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The revenue forecasting capacity deteriorated in recent years.

Accuracy of municipal income forecasts, 1995–2005

Expected Income = Actual Income

70%

75%

80%

85%

90%

95%

100%

105%

110%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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The share of investment prioritized through the PB in relation to total capital investment decreased in recent years.

Percentage of total investments planned by the PB, 1997–2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

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Interface between PB and Municipal Finance The capacity to executed the PB decreased

continuously

% of PB Priorities Executed

0%10%20%30%40%50%60%70%80%90%

100%

1999 2000 2001 2002 2003 2004 2005 2006

Ano

%

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PB as an Independent Budget Oversight Mechanisms

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PB as an Independent Budget Oversight Mechanism

Although the PB formally enables citizens to monitor the execution of the Investment Plan, oversight takes place mainly in an ad-hoc manner.

The PB has not fulfilled its potential to improve budget literacy, and has paid scant attention to budget oversight.

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The PB enjoys credibility among participants and the population of Porto Alegre as a whole.

56.91 28.57

53.6 30.11

51.71 29.16

57.26 26.68

65.88 23.61

0 20 40 60 80 100

Is very important

Broadens democracy

Increases government efficiency

Pro-poor

Improves quality of life

Totally Agree Somewhat Agree

%

Public perception of the PB by percentage of population, 2006

Quality of Participation

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Evolution of the number of PB participants1990 to 2006

02000400060008000

100001200014000160001800020000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Year

Number of OP participants General Total

Although the initial increase in the number of participants, the trend started to reverse in recent years


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Social groups that suffer from a lack of incentives to participate: extremely poor, youth, middle- and high-income groups, entrepreneurs.

Over-representation of elder people.

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Mismatch between the PB’s positive public perception and its weak internal accountability system

Uneven playing field for PB participants in delegating to upper levels of representation

Lack of systematization and records in reporting mechanisms between delegates and their constituencies.


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THANK YOU

Documents

Toward a More Inclusive and Effective Participatory Budget in Porto Alegre