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Portugal - Monitoring report

Date of the monitoring visit: 17 to 19 June 2019 and 27 November 2019
Report adopted on: 28 September 2020
Files : Report CG-FORUM(2020)01-02 | Recommendation 445 (2020)
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This report follows a two-part monitoring visit to Portugal which took place in June and November 2019. This is the third monitoring report since the country ratified the European Charter of Local Self-Government in 1990.

 

The report notes with satisfaction that the Portuguese constitution gives prominence to local and regional self-government, the reforms carried out since 2013 have had lasting effects on local authorities and their budget
situations and the appeal mechanisms enabling constituents to challenge the acts of territorial authorities areoperative and they are fairly effective parallel procedures for oversight by the State.

 

The rapporteurs however draw the attention of national authorities to the fact that local authorities and their representative associations are not systematically consulted on the basis of a clear and binding procedure;
Portuguese municipalities are affected in unequal ways by the transfer of powers and do not all benefit from adequate funding support from the state to properly carry out their tasks; local and regional authorities lack
sufficient autonomy with respect to local taxes; the co-operation between the state administration at local and regional levels lacks a clear and coherent basis and the legal situation of associations of local authorities within autonomous regions seems uncertain.

 

Consequently, national authorities are invited to introduce a procedure for systematic consultation of representative associations of local and regional authorities prior to any decision which concerns them directly;
to consider temporarily setting up special aids procedures to enable municipalities in financial difficulties to rebalance their budgets under the supervision of the court of audit; to provide local authorities with more
autonomy with respect to local taxes; consider setting up a national stability board including local and regional representatives, in order to streamline budget objectives and procedures and guarantee more harmonious cooperation between the different tiers of government and clarify the legal situation of associations of local authorities in the autonomous regions in order to stabilise their status and action.

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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.

Article 6 of the Portuguese Constitution sets out the principle of the unitary State and enshrines the system of insular autonomous regions and the principles of subsidiarity, autonomy of local authorities and the democratic devolution of public administration. Title VIII of the Constitution (on local government) sets out more detailed provisions. The Assembly of the Republic has exclusive competence to legislate on local and regional affairs (Articles 164 and 165 of the Constitution). Article 2 of the Charter is therefore strictly complied with.

 

Owing to a strict hierarchy of norms, the rapporteurs noted that the Constitutional Court had a key role to play in protecting the Constitution, in accordance with its Article 221: it had the task of “assessing cases of unconstitutionality and unlawfulness in accordance with Articles 277 and following”. The Court’s role focuses therefore on supervising the conformity of legal acts with the Constitution (and the European Convention on Human Rights). On the other hand, it does not have the task of verifying the conformity of those acts with the European Charter of Local Self-Government. The institutions entitled to lodge a constitutional appeal are the President, the Assembly of the Republic, the Ombudsman and the Prosecutor general.

 

The role of the Constitutional Court is important: while it is a true court of law, its composition is subject to political considerations as the judges are chiefly appointed, for a non-renewable 9-year term, by the Assembly of the Republic (10 out of 13), with the other 3 co-opted by the first 10 to be appointed. The judges are appointed for a non-renewable term of nine years and must ensure compliance with all of the Constitution’s provisions, including those relating to local and regional self-government. That said, there is no procedure open to local authorities for referring a matter to the Constitutional Court: a prior application to an ordinary court is always required before a procedure can be initiated before the Constitutional Court: it is therefore a verification prompted by an objection.

 

Finally, Article 8 (2) of the Constitution contains provisions for the entry into force of international conventions: the Charter definitely constitutes an international convention according to that provision, and Portuguese courts may therefore refer to it and take it into account when they have to settle disputes between local and regional authorities and the central state administration and between local authorities and the administrative region to which they belong. This is a further possibility afforded by Portuguese law for ensuring compliance with the Charter.

 

In the light of the above, the rapporteurs consider that Article 2 of the Charter is correctly applied in Portugal.

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.

In the view of the rapporteurs, the Constitution precisely regulates everything to do with local authorities: it expressly lays down the principles of devolution. Title VIII of Part III of the Constitution is devoted to local authorities, stating that they are territorial bodies corporate, possessing representative bodies, with the aim of upholding the interests of their communities (Art. 235); the categories of local authorities are parishes (freguesias), municipalities (municípios) and administrative regions (Art. 236), and they have specific powers conferred upon them, defined by law in accordance with the principle of administrative devolution (Art. 237).

 

The principle of autonomy in the area of finances and assets is recognised: local authorities have their own assets and finances (Art. 238); the organisational structure of each local authority comprises a deliberative assembly and a collegiate executive body (Art. 239), and local authorities have their own regulatory power within the limits laid down by the Constitution, laws, regulations of higher-level local authorities and those established by oversight authorities (Art. 241).

 

Oversight of local authorities, defined as supervision of lawfulness (verification of local authority bodies’ compliance with the law), may be exercised only in certain cases and in certain forms stipulated by law (Art. 242); local authorities have their own staff, and the rules governing state staff and officials are applicable to them (Art. 243).

 

Consequently, the rapporteurs consider that Article 3 paragraph 1 of the Charter is complied with.

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.

Under the Constitution, the members of elected local authority bodies are elected by universal, direct and secret suffrage on a periodical basis, under the proportional representation system (Art. 239). However, not all of them are elected directly, as the parish committee chairs are ex officio members of municipal assemblies.

 

Competence to legislate on local elections, the status of members of local authority bodies, direct consultations of voters at local level, the system for creating and abolishing local authorities and finally changes to their territory lies exclusively with the Assembly of the Republic (Art. 164). The general rules governing the drawing up and organisation of local authority budgets, the statute of local authorities (including the system of local finance) and the participation of citizens’ organisations in the exercise of local authority are also matters lying within the remit of the Assembly of the Republic. This means that the government can intervene in these spheres only if expressly authorised to do so by the Assembly (Art. 165).

 

Finally, laws revising the Constitution must respect not only universal, direct, secret and periodic suffrage for the appointment of elected local authority office-holders but also the autonomy of those local authorities (Article 288); foreigners and stateless persons staying or residing in Portugal enjoy the same rights and are subject to the same obligations as Portuguese citizens, meaning that they have the right to participate in local elections and seek election as local representatives themselves.

 

The rapporteurs also note that, where the use of direct democracy mechanisms in local authorities is concerned, holding a local referendum has been a possibility since 1990 with respect to any important question falling within the exclusive competence of a local authority. The result of a referendum has the value of a binding decision if at least half of the registered voters turn out. However, certain matters (such as the budget) may not be put to a referendum. Any local referendum initiative requires prior authorisation from the Constitutional Court. Beyond that mechanism, there are other more conventional means of ensuring that citizens are involved in decision-making by Portuguese local authorities: opening meetings of deliberative bodies to the public, possibility for voters to demand the convening of an extraordinary meeting, publishing of deliberations, right of petition, application to the Ombudsman, court actions and popular action for example.

 

In the view of the rapporteurs, Article 3 paragraph 2 of the Charter is therefore complied with, as the relevant provisions are largely covered in the Constitution.

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.

In the eyes of the rapporteurs, following their talks on the spot, Portugal’s politico-administrative system is undeniably devolved and fully respects local authority autonomy. It is chiefly Law 159/99 of 14 September 1999 which offers the most detailed definition of the current system of flexible devolution, allowing the gradual adaptation of local authorities. Law 169/99 of 18 September 1999 then specified the allocation of powers between the different levels of authorities.

 

The principles set out in these laws are more or less clear references to the regional policies and values of the European Union: territorial cohesion, subsidiarity (Article 2 of the law). The law also emphasises the necessary co-ordination between the local authorities and state departments, stating in its Article 3 that central and local authorities shall exercise their powers in such a way as to preserve unity in the implementation of public policies and avoid dispersal or overlapping of action.

 

Consequently, the rapporteurs consider that Article 4 paragraph 1 of the Charter is complied with.

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.

The principle of state unity and the principle of respecting the system of sharing responsibilities between the State and local authorities in the area of public investments constitute a restriction on the autonomy legally granted to local authorities. The municipalities have assumed their responsibilities for mandatory spheres of competence but remain very reluctant over the idea of taking charge of other public policies, owing to the lack of a financial guarantee. The lack of an intermediate level, owing to the fact that the regions provided for in the Constitution have remained hollow constructs in practice, leaves the following powers (which should have been regionalised) without a home:

  • economic and social development,
  • planning,
  • environment,
  • social facilities,
  • communications networks,
  • education and vocational training,
  • culture and heritage,
  • youth and sports,
  • tourism.

 

The rapporteurs noted that the municipalities could delegate some of their powers to parishes and join forces in associations. In the absence of a regional level, there is still territorial cohesion between districts and the State, to ensure that local action plans are in line with national plans. The autonomy of Portuguese municipalities is therefore relative: without autonomous territorial co-ordination via regions, they cannot perform their public action efficiently and, accordingly, remain dependent on the State, notably to obtain the funding needed for their functioning.

 

The rapporteurs consider that Article 4 paragraph 2 of the Charter is therefore generally complied with in spirit but could be applied more rigorously in practice.

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.

The main local level concerned, as regions have not been created, is formed of municipalities. These all benefit from a transfer of universal powers on a mandatory basis but they may also become involved on a voluntary basis in partnership policies via contracts (cf. Article 8). This form of devolution, where municipalities are alone (or nearly) in their dealings with the State, has the initial advantage of avoiding conflicts and overlapping in public policies but also the major drawback of excessively extending the list of local powers well beyond their means.

 

The rapporteurs note that a great many powers are transferred to the municipal level:

  • rural and urban facilities (green spaces, roads, cemeteries, markets);
  • energy (public lighting, mains power distribution);
  • transport and communications (municipal road network, urban transport, municipal aerodromes and heliports);
  • heritage, culture and science (municipal cultural centres, scientific centres, libraries, theatres and museums);
  • consumer protection (information and protection, mediation, arbitrage);
  • health care (municipal medical facilities, health care centres);
  • welfare (nurseries, kindergartens, programmes to combat exclusion);
  • urban development (municipal planning strategies);
  • municipal police (creation of municipal police forces);
  • external co-operation (devolved co-operation).

 

Where the allocation of powers between municipalities and parishes is concerned, there is a significant concentration of powers in the municipalities.

 

Consequently, the rapporteurs consider that Article 4 paragraph 3 of the Charter is complied with, in that prominence is given to the municipal level.

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.

The rapporteurs note that some powers and responsibilities are transferred to local authorities via legal instruments specifying the type and method of transfer, as follows:

  • the transfer of powers linked to exclusively municipal matters which are of a general nature and universally applicable;
  • the transfer of powers linked to matters relating to regional action programmes, with these powers being exercised by municipalities in line with the priorities laid down by regional development co-ordination councils, which are mere decentralised administrative units and therefore dependent on central government pending true regionalisation;
  • the transfer of powers linked to matters relating to national action programmes, with these powers being exercised by municipalities in line with the priorities laid down by the Assembly of the Republic at the request of the government.

 

The rapporteurs consider, therefore, that Article 4 paragraph 4 of the Charter is complied with.

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.

 

Article 237 paragraph 1 of the Constitution stipulates that the powers and the organisation of local authorities must be established by law. The regulatory power of local authorities is governed by Article 241 of the Constitution, which allows local authorities to adopt their own regulations within the limits of the Constitution and the laws and regulations issued by a higher category of local authority, or by an authority with oversight over the local authority in question.

 

The rapporteurs conclude, therefore, that Article 4 paragraph 5 of the Charter is complied with.

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.

 

The issue of consultation of local authorities in planning and decision-making processes was discussed during the monitoring visits and proved to be a sensitive one, even though there is now a national monitoring commission: the associations of local authorities are still calling for changes in this area, but both the government and the Assembly of the Republic do not appear to envisage reforms at this stage. These associations feel that there is a need for close monitoring if devolution is to be made a reality. The president of the ANAFRE expressed his regrets to the rapporteurs that the municipalities have no say on territorial reorganisations and have no access to the Constitutional Court and that the independent commission looking at the reorganisation of the State does not involve the regions in its discussions. For its part, the ANMP considered that it is given a proper hearing when the government prepares new legislation, although the discussion time is sometimes very short, and its comments are not always all taken into consideration.

 

The rapporteurs consider, therefore, that, despite noteworthy progress made since the last monitoring visit, Article 4.6 of the Charter is not yet fully heeded and accordingly conclude that it is only partially complied with.

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.

 

In Article 164, the Portuguese Constitution states that the “creation, abolition and modification of local authorities” fall within the legislative responsibility of the Assembly of the Republic. Accordingly, it is for Parliament and Parliament alone to legislate on the creation and abolition of local authorities and changes to their boundaries. That said, when examining the draft legislation concerned, the Assembly of the Republic must take account of the reports and assessments produced by local authority bodies.

 

In the view of the rapporteurs, this means that there is real consultation of the local authorities concerned or national local authority associations, as could be seen in the reorganisation of boundaries undertaken from 2012 onwards in line with commitments entered into under the Programme of economic adjustment and reform devised with the EU and the IMF, particularly at the level of the parishes.

 

Article 249 of the Constitution therefore guarantees prior consultation of the local authorities concerned (or their national associations) if territorial boundaries are reformed. Nevertheless, this relates to consultation solely of the “local authorities concerned”, and no procedure involving all local authorities in decision-making exists as such in Portugal.

 

Despite these reservations, the rapporteurs consider that Article 5 of the Charter is complied with.

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.

The Constitution indicates, in Article 237 paragraph 1, that local authorities have a right to autonomy within the limits established by law. This constitutional right includes the definition of internal administrative structures. This means that, in keeping with their own powers, local authorities decide on their internal organisation. Within each authority, it is for the deliberative body to approve the pattern of institutional organisation proposed to it by the executive body.

 

This means that each authority may organise its departments for optimum fulfilment of its missions: accordingly, the structure of departments and their functioning must be tailored to the authority’s permanent goals. In addition to this prime goal of efficiency, most of Portugal’s local and regional authorities pursue two others: the digitisation of dealings with the communities they serve and greater transparency of administrative procedures.

 

Consequently, the rapporteurs consider that Article 6 paragraph 1 of the Charter is complied with.

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.

Article 243 paragraph 1 of the Portuguese Constitution stipulates that “local authorities shall possess their own staff, as established by law”. Local authority civil servants therefore have an institutional guarantee comprising principles common to all public administration staff as well as others specific to local authorities. As Article 243 paragraph 2 of the Constitution puts it: “The rules governing state staff and officials shall apply to local government staff and agents, as laid down by law, mutatis mutandis”. The principles common to all public administration staff and therefore also applicable at local level include the following:

  • the competence of the national legislature to lay down the bases of the staff regulations;
  • equal access to public-sector employment, in particular, via competitive examination;
  • the obligation to serve the public interest within the limits of the powers of the employing corporate entity;
  • exclusivity in the exercise of the function, i.e. supervision of the rules governing the accumulation of functions and incompatibilities;
  • protection in respect of political authority (neither pressure nor privilege);
  • the right to be heard and defend one’s case in disciplinary proceedings.

 

The rapporteurs further note that local authority staff must comply with the principles specific to them, which are set out in a basic list drawn up by the Constitution:

  • the principle of local authority autonomy in staff management (recruitment, career management and leaving service);
  • the equivalence of local authority staff regulations with those of state administration staff, as a guarantee of mobility between public administrations and equal rights and obligations for all;
  • the principle of technical co-operation: one example being where staff are moved from the state administration to local administrations in certain spheres of competence which have been transferred to local authorities (such as education), or the possibility of granting financial aid for the recruitment of staff for a fixed duration in connection with certain programmes developed to fulfil common interests.

 

At local level, it should be noted that municipal and inter-municipal industrial public enterprises (municipal or inter-municipal public corporations) have working regulations governed by private law. The same applies to certain forms of associations of local authorities, resulting in the expanding use of work contracts in local public administration.

 

Finally, the Constitution states that municipalities shall have a representative assembly, without the power to dismiss the local government, and a collegiate executive body, appointed on the basis of proportional representation, with a president. The law gives the president power to “decide on all matters relating to the administration and management of the human resources of the municipality’s departments”, except with regard to the exercise of disciplinary powers, which lie with the collegiate executive body. The municipal assembly has the power to define the establishment table or staff lists and vote to approve bonuses intended as an incentive to local authority staff to stay in post in the long term. There is an equivalent system in the parishes: there the local assembly also has the power to establish the number of posts, but human resources management is the responsibility of the collegiate executive body.

 

The report produced by the Congress in 2003 (in Part II, paragraphs 46 and following) mentioned problems linked to the existence of two local “representative” and “collective” bodies, namely the deliberative bodies (“assemblies”) and executive bodies (“authorities”). However, during the 2012 and 2019 visits, these issues were not brought up by the talking partners of the Congress and may therefore be regarded as being settled or at least accepted.

 

The rapporteurs conclude, therefore, that Article 6 paragraph 2 is complied with.

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.

On this point, the Charter appears to be complied with even though certain restrictions were introduced as of 2013 to limit the number of terms of office of mayor to a maximum of three. Furthermore, this reform conforms to Article 118 of the Constitution, which states that the law may specify limits on successive renewals of mandates of holders of executive political office. The reservations expressed in 2012 (in the previous report) by representatives of the ANMP regarding this reform were not reiterated, suggesting that it has now been accepted. It is true that an age limit might have been opted for by the legislature, but its choice, which conforms to the Constitution, has therefore prevailed.

 

Among others, the rapporteurs put questions to the Secretary of State for Local Authorities during their visit in June 2019, who emphasised the governmental measures taken in the area of liability which put on an equal footing the liability under civil law of local elected representatives and that of their administration where it had provided guidance and support to that representative in the taking of the decision. On the other hand, criminal liability remains a logical counterpart to the exercise of new responsibilities, as observers could see during the major fires of 2017 and the indictment of local elected representatives for manslaughter.

 

On the more specific question of remuneration and compensation connected to local office, the rapporteurs did not hear any particular complaints. A socialist member of Parliament who sits on the Committee on Environment, Spatial Planning, Devolution, Local Government and Housing and is the former mayor of a large municipality told them she was not in favour of increasing local elected representatives’ allowances, as they were already well remunerated, this was a very sensitive issue in public opinion. The rapporteurs saw the main challenge above all as the participation of women in the municipalities (less than 10% of them were presided over by women) and parishes, despite the fact that the Constitution is supposed to guarantee gender equality, and the law now imposes a minimum of 40% women in elections.

 

Finally, the problem of corruption was raised several times in interviews with the rapporteurs during their visits in June and November 2019. It appears to be an issue but remains difficult to accurately quantify the phenomenon – criminal convictions of elected representatives being only what is visible – and to distinguish how much of such activity is local or national. Various solutions have been put forward or experimented with, such as increasing allowances, with no real success so far. However, the Congress has already had occasion to stress the extent to which corruption could be directly linked to the low level of remuneration of local elected representatives, even adopting a recommendation to this effect at its 36th session.6 Articles 6 and 7 of this recommendation state that “Corruption in all its forms is a destructive threat to the efficiency and quality of good governance at both local and regional level. For this reason, not only should the financial compensation of local and regional representatives be appropriate and adequate, it should also be publicly transparent. Applying such transparency at the local and regional level will contribute to instilling trust in local and regional governments. The means, levels and sources of financial compensation for local and regional representatives should be made clear and accessible. Reliance on systems of local and regional elected representation which are voluntary and nonremunerated representation can result in certain socioeconomic groups of the population dominating elected positions. Only in the smallest councils, where duties are light, should it be considered acceptable for elected representatives to be voluntary or unrecompensed.” It cannot be denied that the phenomenon is a reality in Portugal, but it must not be overstated.

 

Paragraph 3 of Article 7 on the rules on incompatibilities does not in itself give rise to any difficulties, as Portugal complies with it to the letter: it is in fact a legal and regulatory mechanism that establishes these rules and therefore ensures the proper exercise of local mandates.

 

Notwithstanding the above reservations, particularly with regard to paragraph 2, the rapporteurs consider that the three paragraphs of Article 7 of the Charter are generally complied with.


6 Recommendation 434 (2019) on the financial compensation of local and regional elected representatives in the exercise of their office

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.

The government, through the Minister of Finance and the Minister responsible for Local Government, is the entity exercising overall administrative supervision of local authority acts, in accordance with Article 242 of the Constitution. It is not the expediency of the acts that is supervised, and this is in keeping with the principle of the Charter.

 

As pointed out by the rapporteurs, supervision is carried out through inspections, inquiries and investigations, gathering and analysing information and clarifications that are important for checking on the application of laws and regulations by local authority bodies and services. Inspections are carried out regularly, according to the annual plan approved by the competent entities. The inquiries and investigations are decided on by the government where there are valid grounds. Unlawful acts committed while managing local affairs may result in two kinds of sanction: removal from office in the event of unlawful acts committed individually by members of local bodies or the dissolution of those bodies where unlawful acts are the result of a collective act or failure to act. Decisions to remove officials from office and dissolve local authority bodies lie within the remit of constituency administrative courts, under an emergency procedure, and mean that officials removed from office or previously members of dissolved local authority bodies are ineligible for the duration of the following mandate.

 

In the view of the rapporteurs, Article 8 paragraph 1 of the Charter is complied with.

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.

Another form of supervision of local authorities’ activities is exercised by the Court of Audit, which is competent not only to rule on their accounts but also to verify a priori the lawfulness and proper budgeting of expenditure incurring the financial liability of local authorities in the longer term. This is special supervision of local authorities made possible by Article 214 of the Constitution. The Court of Audit is authorised not only to examine the different accounts but also to carry out upstream checks on the lawfulness of spending entailing financial commitments in the medium or long term, as well as ensuring that it is covered by the budget. However, the Court’s supervision is strictly limited to the lawfulness of contracts and focuses on their legal basis and conformity with budget legislation. It is only the financial implications of a contract for a local authority’s indebtedness that are also subject to close expediency checking, in order to avoid any excesses.

 

As in 2012, a number of talking partners raised the issue of individual liability of local elected representatives, particularly mayors, during the visit. According to Article 22 of the Constitution, which clearly states that any elected office-holder and any local authority may be held “jointly” liable under civil law. This reference to solely civil liability in the Constitution may be supplemented by legislative mechanisms implementing criminal, civil, disciplinary and financial liability… but, even so, no form of political accountability, equivalent to that of members of government before the Assembly, exists.

 

Consequently, the rapporteurs conclude that Article 8 paragraph 2 of the Charter is complied with.

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.

The supervision exercised by national bodies of the actions of mayors when they take decisions resulting in budget overspends in their municipalities does raise questions where the Charter is concerned. It is not a problem, however, as the State cannot sanction the head of a local executive for poor management of the debt coming under their responsibility: in this case, the supervisory measures duly conform to the Charter, as no one disputes the obligation incumbent upon mayors to apply the legal and administrative rules on the implementation of budgets.

 

The rapporteurs may conclude, therefore, that Article 8 paragraph 3 of the Charter is complied with.

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.

Despite the devolution process embarked upon in 2011 and continued with the local government reform of 2013, Portugal remains a centralised country. The spending levels of local and regional governments within the GDP and public spending are far lower than the OECD average for unitary countries (13.4% of GDP and 29.0 % of public spending) .7 Accordingly, budget devolution in Portugal is among the lowest rates in the OECD zone, falling well below the OECD average. The spending of infra-national administrations stands at 1540 euros per head of population in Portugal, compared to an OECD average of 6052 euros. In Portugal, this is equivalent to 12.6% of total public spending and 5.7% of GDP. By way of comparison, in the whole of the OECD, the spending of infra-national administrations represents 40.4% of total public spending and 16.2 % of GDP. Where public investment is concerned, Portugal is slightly below the OECD: 52% of total public investment was made by local and regional governments (compared to an average of nearly 57%).

 

The rapporteurs questioned local authority associations on this point during their visit in June 2019. While local situations differ greatly, given the great diversity of municipalities in particular, the ANAFRE deplored the lack of a clear vision for the funding transferred and the fact that certain powers are inadequately funded already: transferred assets and security/safety were mentioned in this connection.

 

For its part, the ANMP underlines the still insufficient level of funding for municipalities in Portugal, compared with the European average. Admittedly, in 2018, there was a revision of the law on local finances that brought this level closer to European standards, but the first two years of implementation have highlighted the difficulty of putting into practice the principles set out. With regard to municipal taxes, tax exemptions decided by the state do not systematically give rise to compensation by the central administration, even though this principle is also enshrined in law.

 

The rapporteurs therefore conclude that Article 9 paragraph 2 of the Charter is only partially complied with, as certain funding levels are not guaranteed in the long term.


7 OECD, Regional profile for Portugal, 2015

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.

The rapporteurs noted with satisfaction that local authorities do not require prior authorisation for borrowing but are still subject to some restrictions, including short-term debt control mechanisms, which are to be found, for example, in Law no. 73/2013 of 3 September, Articles 49 to 52.8 This is understandable as, as a member of the EU, Portugal must comply with the Lisbon Treaty and Protocol no. 12 on the excessive deficit procedure. The national authority is responsible, therefore, not only for its own deficit but also for those of local and regional authorities.

 

Nevertheless, the rapporteurs regret that uniform restrictions on debt take no account of the diversity of local authorities’ budget situations. There is a great disparity between the financial situations of Portugal’s local authorities: while some benefit from very comfortable financial revenues, others find it difficult to balance their budgets and some may be exposed to fluctuating finances that render them vulnerable. Even though the overall situation is less delicate than at the time of the previous visit, some municipalities still face serious difficulties in balancing their budget. Although the interest rates on loans have been on a downward trend for the last few years, where spending is concerned local authorities continue to have increased charges and costs to cover in certain sectors such as sewage treatment or health care, which may lead to growing imbalances in budgets.

 

The rapporteurs observed that the indebtedness of Portugal’s local authorities remained a highly topical issue despite the efforts made to limit its scale. The role of the Court of Audit in this area seems vital, although its president, Mr Vítor Manuel Da Silva Caldeira, who spoke to the rapporteurs in June 2019, was keen to put the problem into perspective: of all local authorities, he believed that only 24 municipalities were truly in a tricky financial situation.

 

In the light of the above comments, the rapporteurs consider that Article 9 paragraph 8 of the Charter is complied with.


8 Local Autonomy Index for the European countries (1990-2014): Portugal (POR), https://ec.europa.eu/regional_policy/en/information/publications/studies/2015/self-rule-index-for-local-authorities-release-1-0

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.

Although the Portuguese State can no longer formally give support to local authorities under the applicable European legal rules, municipalities may still be granted specific aid in exceptional circumstances (in the event of a natural disaster, creation of new municipalities or parishes, major works on buildings accommodating local authority administrative departments, for example) or via programme-contracts. In the latter case, the State agrees to supplement the financing of investments by local authorities in varied fields such as the environment, sewage treatment, health care, economic development or education.

 

As this specific financing remains marginal, the rapporteurs conclude that Article 9 paragraph 7 of the Charter is complied with.

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.

The rapporteurs find it regrettable that the Portuguese local authorities are not formally consulted on the methods for allocating redistributed resources. During the previous visit, in 2012, the rapporteurs had proposed setting up a national stability board, with a view to guaranteeing a coherent policy of co-ordination between the different levels of authority and preserve the budgetary autonomy of local authorities within the meaning of Article 9 of the Charter. The report explained that “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”. However, it is now 2019 and this suggestion has still not been followed up.

 

The rapporteurs therefore find that Article 9 paragraph 6 of the Charter is still not complied with.

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.

The rapporteurs see the Portuguese system of financial equalisation as an original one as it hinges on spending and not revenue. It is fairly complex as it relates to different levels (municipalities and parishes) and incorporates a whole host of objectives and apportionment criteria. At the municipal level, equalisation accounts for one quarter of the allocated shares of national taxes and revolves around two funds: one is intended to give the municipalities adequate financial capacity to exercise their powers and the other is aimed at the least well-off municipalities and takes account of both economic and social inequalities. This dual equalisation system is geared to counteracting the effects of unbalanced devolution.

 

The rapporteurs note with satisfaction that their meeting with the President of the Court of Audit in June 2019 provided an opportunity to gain a broad overview of the financial situation of local authorities and highlight the small number of them experiencing difficulties. Where equalisation is concerned, the President of the Court thought that the mechanism fulfilled the aims it was supposed to achieve but that it was perhaps not the best suited tool in the context of the devolution reform. He described a number of risks, particularly as regards the sustainability of public finances in general and the quality of local public service provision.

 

Consequently, the rapporteurs consider that Article 9 paragraph 5 is complied with on the whole.

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.

According to the principles of devolution and local self-government, the transfer of powers from the State to local authorities is accompanied both by a transfer of prerogative and also by a transfer of funding. Accordingly, local authorities have different sources of funding: their own income, financial equalisation, subsidies and borrowing.

 

For the running of public services, communal facilities and infrastructures, the rapporteurs note that the municipalities receive most of the taxes collected on their territory by the competent departments and can set the amount of certain taxes and dues. The following levies come back to local authorities:

  • municipal tax on real estate property whose rate may be set by the local authorities via the municipal assemblies within the limits established by law;
  • the tax on the transfer of property rights in return for payment;
  • part of the road traffic tax.

This means that, simply because local authorities’ own resources are largely dependent on allocated shares of national taxes and these are calculated according to revenue from three taxes, any drop in that income results in lost revenue for local authorities.

 

The municipalities also have their own income of another type: dues and taxes for the use of their services, and management of their assets. They may decide to introduce a tax to fund the running of infrastructures and facilities made available to users (creation of urban infrastructures, occupancy of squares reserved for markets and fairs, cemeteries, hunting permits). Finally, they receive revenue from the use of their assets and income from financial placements.

 

Nevertheless, the rapporteurs are concerned by the major disparities that exist between one municipality and another. Some of the mayors spoken to during the June 2019 visit believed that, for the powers currently exercised, financial resources were inadequate and inequalities were making themselves felt: in some cases around 50% of a municipality’s resources came from the State and it was impossible to increase local taxes, which suggests that the financial system is not satisfactory and requires a rethink.

 

Consequently, the rapporteurs consider that Article 9 paragraph 3 is complied with but that there is non-compliance with Article 9 paragraph 4.

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 basic rules of the system of local authority finance are guaranteed by Article 238 of the Constitution. This article contains at least five guarantees: autonomy of local authorities in terms of their own assets and finances; the principle of fair sharing of public resources between the State and local authorities; the need for equalisation to correct inequalities between local authorities of the same category; the allocation of income derived from local assets and charges for local services, and the power to levy taxes in accordance with the law.

 

On a formal level, the rapporteurs conclude, therefore, that Article 9 paragraph 1 of the Charter is complied with.

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 9.3

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 rapporteurs noted that there were chiefly two national associations of local authorities: the National Association of Portuguese Municipalities (ANMP) and the National Association of Freguesias (ANAFRE), both of which operate in partnership with the government in terms of consultation.

 

The National Association of Portuguese Municipalities (ANMP) is an entity governed by private law. Its overall goal is to promote and defend local authorities, to uphold respect for them and to represent them, and in particular to represent and defend municipalities and parishes before bodies of sovereign power; it carries out studies and projects regarding topics relevant to local authorities; it sets up and maintains consultancy and technical and legal advice services for its members; it runs information campaigns for local elections and further training for local authority staff; it facilitates exchanges of experience and information on technical and administrative issues between its members and represents its members in dealings with national and international organisations.

 

The National Association of Freguesias (or parishes) (ANAFRE) is an entity governed by private law with a public-service mission, whose overall goal is to promote and defend local government and in particular to represent and defend parishes before bodies of sovereign power; it carries out studies and projects regarding local administration issues; it sets up and maintains consultancy and technical and legal advice services for the member parishes; it runs information campaigns and trains local elected representatives and represents its members in dealings with national and international organisations.

 

These associations’ influence over national policy with regard to local government affairs is still only relative however and could be reinforced. The national and local representatives met by the rapporteurs during their visit commended the constitutional protection of local self-government but deplored the fact that their analyses and concerns were not taken into account at national level. The lack of co-ordination and co-operation structures capable of guaranteeing real participation of local authorities in national affairs still calls for reform therefore, as the local authority participation in the Economic and Social Council is regarded as insufficient.

 

With the notable exception of an unsatisfactory legal situation in the autonomous regions (see the analysis below on regionalisation), the freedom of association of local authorities in Portugal appears to be a reality. The rapporteurs conclude, therefore, that Article 10 of the Charter is partially complied with.

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.

Administrative oversight (Art. 242 of the Constitution) is intended to ensure that local authorities conform to the law and is exercised by the civil governor, who refers unlawful measures to administrative courts. Oversight is also exercised through inspections or, more rarely, through prior approval, as for urban planning. But in parallel to this oversight of local authority acts there is a possibility afforded to the local authorities themselves, enabling them to settle disputes with higher authorities through the administrative and constitutional courts.

 

That said, there is no general procedure open to local authorities whereby the Constitutional Court carries out a theoretical check on the constitutionality of national laws having a particular impact on local and regional self-government. A special procedure, entailing a verification of constitutionality open to local and regional authorities but preceded by a preliminary phase ruling on admissibility, could fill this gap and fully ensure compliance with the “principles of local self-government as are enshrined in the Constitution or domestic legislation”, within the meaning of Article 11 of the Charter.

 

During their visit in June 2019, the rapporteurs met the vice-president of the Constitutional Court who pointed out that, while the Charter was an international treaty, the country’s domestic legal order was particularly accommodating for such texts. Article 8 paragraph 2 of the Constitution stipulates that such treaties become part of the domestic legal order once ratified and published. So while the Charter has no constitutional value, it does have strong legislative value.

 

Likewise, the rapporteurs note with satisfaction that the Fundamental Rights Defender, whom they spoke to in June 2019, draws no distinction between the local and national level. This institution, set up in 1976, may receive applications from any citizen as well as any local authority, and local authorities do avail themselves of this remedy, particularly for disputes with the State, mostly over financial matters or the definition of prerogatives.

 

Consequently, the rapporteurs consider that Article 11 of the Charter is partially complied with.

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).

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 12.3
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).

ACCESSION

to the Council of Europe 22 September 1976

RATIFICATION

of the European Charter of Local Self-Government 18 December 1990

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
22Compliant Provision(s)
6Partially Compliant Articles
2Non-compliant Provision(s)