The path to solid finances: The case of Centro, Tabasco
by Fernando Calzada Falcón
The municipal government of Centro, Tabasco, which began its term in October 2021, has committed to following the Municipal Development Plan 2021-2024, which has as one of its main objectives to strengthen local public finances. To achieve this, they seek to improve the municipal collection system and increase municipal contributions to maintain healthy public finances.
In this article, we will focus on revenues, which are directly the responsibility of the Finance Department. Revenues are essential for the functioning of the government and the provision of services to citizens. Both revenues and expenses are important, as both are necessary to maintain financial balance.
It is crucial to understand that revenues are like the roots of a lush tree, while the budget is like the stem. If the roots are strong and solid, they will be able to support a robust budget that allows the different areas of the administration to function properly and provide quality services to the citizens.
At the beginning of its term, the municipal government faced financial challenges, such as the lack of sufficient funds to cover all the expenses foreseen in the budget, including year-end benefits for municipal employees. This was partly due to an overestimation of own revenues in the 2021 Revenue Law. To address this situation, it was necessary to resort to short-term borrowing to cover year-end obligations.
Before the start of the term, refinancing long-term debt was planned to reduce monthly payments and free up resources during the government period. This refinancing was finalized in April and became an urgent measure due to the short-term borrowing.
Taxes are mandatory, and contributing to the payment of public expenses is a responsibility of Mexican citizens. To strengthen revenues, strategies were implemented, such as offering attractive discounts on property tax and water rights during events like the “Buen fin” (Good End). Additionally, efforts were made to streamline the collection process so that taxpayers could make payments from the first business day of January.
These measures had positive results, as own revenue collection in January 2022 significantly increased compared to the previous year. Overall, own revenue collection exceeded expectations and allowed for sustaining the expenditure budget.
In summary, the municipal government of Centro, Tabasco, has focused on strengthening public finances through revenue collection improvement strategies. Despite initial challenges, positive results were achieved in revenue collection, which allowed for maintaining stronger municipal finances.