The new team at Loulé council has heard back from the external auditors, called in last September to address a noticeable lack of cash, and found the damage was worse than they had been led to believe.
The new socialist mayor Victor Aleixo has taken over after a 12 year period of financial incompetence from the Social Democrats and ordered the audit to see what needed to be done.
Loulé council was once the richest municipality in the Algarve as it receives rates from Quinta do Lago and Vale de Lobo alongside many thousands of luxury properties in the hills and significant contributions from businesses yet it has been run with the fiscal competence of a sailor on shore leave.
"The situation that we have found is very difficult,' said Victor Aleixo, "we inherited a financial liability in the order of €80 million. This is big, big money. It is a great burden and certainly will affect our ability until the end of this mandate."
The new mayor admitted that part of the problem has been the existence of external factors that hit the whole country. He added that the situation "is not really an excessive amount, given that in these past 12 years, Loulé municipality raised and managed €1,100 million.”
Vice President Hugo Nunes explained how Loulé got into this situation, "The municipality of Loulé, like most municipalities, lived in a golden age at the beginning of the last decade. Loulé received up to €40 million per year in IMT when, last year, that figure fell to €12 million.”
"On top of this, 2009 was catastrophic for our finances. This was an election year and one in which the then board overspent by €30 million in one year."
Loulé has been forced to resort to a government rescue package, "we now have €15 million of LMP payable over five years, when it could have been paid over 10 years, it was only a matter of negotiation. Just to amortize and pay interest we have to spend €3.1 million per year for 5 years," explained Aleixo.
Hemmed in by financial constraints, the budget for 2014 will be "the lowest in the last five years" at approximately €101.8 million, down from €130 million this year.
Vítor Aleixo announced that the priority for the 2014 Budget is social policy, "our first responsibility is towards citizens who are living below the threshold of human dignity," said the socialist mayor, adding without conviction that there will be a marketing plan released next year.
