New law dictates how funding can be spent by local governments, drawing warnings from leaders

A law passed Friday by the National Assembly requiring municipal and provincial governments to spend 70% of their funding on infrastructure and investment is being sharply criticized by local leaders. Mayors from the country’s largest cities say the law is illegal and plan to take their case to the Constitutional Court.

President Daniel Noboa

Under a new spending formula, local governments (GADS) will be restricted to allocating only 30% of funding to “current projects,” which includes payroll.

The Law on Sustainability and Efficiency of Expenditure of Decentralized Autonomous Governments (GADs) also changes the definition of funding categories and considers most social programs, such as those that assist abused women and children and the poor as part of current projects.

Proponents of the legislation from President Daniel Noboa’s National Democratic Action party claim the law will guarantee additional spending for infrastructure, including water and sanitation projects, highways and other public construction projects. “What it does is make mandatory that funding go to works that provide physical results that benefit all citizens,” says ADN Assemblyman Sergio Peña. “Currently, the GADS are spending large amounts of money on parties, festivals and purchases that benefit only a few, mostly the leadership of the municipalities and prefects. We are insisting that the money go to public works and services.”

Peña adds that projects such as those to provide drinking water to rural communities are being delayed for years due to “frivolous priorities” of mayors and prefects.

Mayors and prefects from Pinchincha, Azuay and Guayas provinces claim that the law is a “power grab” by Noboa and the national government and reduces the discretion of local governments to spend money based on community needs. In addition, Mayor Cristian Zamora of Cuenca says it includes a “secret agenda” to allow the national government off the hook for paying GADS more than a billion dollars it owes. “The government has help back massive amounts of money it owes us and now they want to wipe the debt off the books,” he says.

Azuay Province Prefect Juan Cristóbal Lloret says the law will lead to “large-sale layoffs” of prefecture staff. “The loss of personnel will effectively end many services for the elderly, people with disabilities, victims of violence as well as education and culture programs.” he said. “The government says we must redirect funds to construction projects but how can we do that when we are forced to fire machinists, tractor drivers, and support staff necessary to carry out those projects?”

Social Christian Assemblyman Alfredo Serrano believes the law will be overturned by the Constitutional Court. “This is very obviously unconstitutional and will be rejected by the court, just as other illegal actions have been by this government,” he said. “The constitution specifically provides autonomy on funding matters to the GADS so they can address local issues and this is an attempt to remove that autonomy.”