Council accounts across the Algarve have shown general improvement in their finances since the recession eased off, some have turned from significant losses to surplus, with an associated increase in social spending and voter happiness.
Not so in Vila Real de Santo António, which has been obliged to launch a Budget Equilibrium Programme, "a rigorous plan that is being executed with maximum responsibility and whose mission is to proceed with the recovery of municipal accounts."
One year after the new Council executive took over, a three year recovery plan was agreed that involved, "restoring the stability of the municipality and recovering the trust of investors, businessmen and citizens" yet expenditure has been running out of control with unanswered question including: for what reason did the Council pay a law firm over €200,000 between 06/11/2017 and 05/12/2017?
The Council has conducted an internal audit, with some seriously worrying results, "all the processes and files in the building were audited, which allowed us to have a global perspective of real local needs, as well as a rigorous knowledge of the total value of the contracted and inherited debt."
For Conceição Cabrita, mayor of VRSA, said that, "the changes to be made in the near future are urgent and are a priority, but they are the only way to right a situation that, over time, would become unsustainable. Only a municipality that is financially stable can guarantee the balance and development of our municipality while not compromising the future, nor mortgaging future generations."
All agreed and the executive said that changes were to be made to the way the Council operates and to the municipal company VRSA SGU, which had been seriously mismanaged.
"We understand that it would not be fair to overburden the population with this effort, so the main changes will mostly be internal ones so that the future of our municipality remains balanced," said Conceição Cabrita, with her fingers crossed behind her back.
The key areas where cost savings are being made are a reduction of the contracting of goods and services, the reduction of telecommunications charges, the reduction of fuel expenses, a review of the supply of goods and services, a reorganisation of Council events, to tighten up criteria used when assessing social support grants, the development of a programme to support local clubs and associations and an internal reorganisation of Council services.
There has been a lack of information as to the progress of the Council's financial planning, until now. In a press release today, the VRSA opposition Socialist Party says that "the implementation report of the Municipal Support Fund for the 4th quarter of 2017, that conveniently has been buried since May by the majority PSD party and by the Council President, Conceição Cabrita, is devastating."
In its report, the executive management of the Support Fund stated that the obligations of the Municipality of Vila Real de Santo António, "were not fulfilled in a positive way, and the Municipality must take the exceptional measures identified in points 1 and 2 of the Conclusions, so that the release of the third and final installment, in the amount of € 2,521,693.40, related to the Loan and Financial Assistance Agreement in force, is subject to compliance with the same."
The Socialist Party says that, "The majority PSD that has managed the municipality since 2005 far exceeded our worst expectations and confirms all that we had already denounced in the Municipal Assembly when discussing the report and accounts for 2017."
For the VRSA Socialists, "the total lack of confidence in the current management led to the suspension of the delivery of about €2.5 million of a loan, further aggravating their financial situation and forcing the appointment of a manager to report directly to the Municipal Support Fund.”
According to the Socialists, the Council’s financial situation "did not stop here and requires a series of measures that will further aggravate the lives of the population and cause, among other things, a 10% increase in the collection of income from fees and taxes, selling off the campsite and a 50% reduction in support to local associations and clubs.”
There also are suspicions that the Council is to remove its water supply business from 'VRSA SGU– Sociedade de Gestão Urbana, E.M., S.A.', and sell the concession to raise money - water bills will not reduce as a result.
This municipal company needs to be made profitable or closed down. The Council also may introduce the dreaded tourist tax, all because of years of mismanagement and a lack of financial control.
Whether or not the new administration really grasps the nettle, remains to be seen but it can expect a prolonged period of sniping from the Socialists.
