The Governance of Public Budgeting: a Proposal for Comparative Analyses - the Cases of São Paulo and London

Peres, Ursula Dias

doi:10.1590/1981-3821202200020003

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ARTICLE • Braz. political sci. rev. 16 (2) • 2022 • https://doi.org/10.1590/1981-3821202200020003 copy

The Governance of Public Budgeting: a Proposal for Comparative Analyses - the Cases of São Paulo and London ^* * Acknowledgments: The author would like to thank professors Anthony Pereira (Brazil Institute/KCL) and Patrick Le Galès (Sciences Po) for supporting this research and for all the suggestions to improve this paper. Thank are also due to all the colleagues from Center for Metropolitan Studies (CEM/USP) and the BPSR reviewers.

Authorship SCIMAGO INSTITUTIONS RANKINGS

This paper aims at understanding the governance of public budgeting in large metropolises with the use of comparative analysis. The analysis is focused on budgetary governance in London and São Paulo and uses qualitative and quantitative data from 2008 to 2019 to understand whether analytical categories such as incrementalism of expenditures, complexity of budgetary rules, bureaucratic hierarchy, bargaining, and muddling through are useful to compare two metropolises, especially to determine the discretionary power of mayors in making budget allocation decisions. The analytical categories are derived from the studies of theorists of economics and political sociology, notably Wildavsky (1975, 1969), Wildavsky and Caiden (2004), Schick (2009, 1976), Caiden (2010) Lascoumes and Le Galès (2005), Baumgartner and Jones (2005), and Fuchs (2012, 2010). The main argument of the paper is that, despite the administrative and political differences between London and São Paulo, similar dimensions can explain decisions about budget allocation and the political discretionary power of mayors. The study shows that mayors have little discretionary power, particularly in contexts of fiscal austerity; it also highlights the importance of property tax as a means to protect such power.

Public budgeting; governance; London; São Paulo; fiscal austerity

São Paulo’s Expenditure per inhabitant: £870	São Paulo’s Annual Budget	London’s Expenditure per inhabitant: £8,890	London’s Annual Budget
Federal Level Funding	0.7 billion (6,7%) (1)	Central Gov (NHS, Housing and others)	48 billion (56%)
State Level Funding	0.5 billion (4%) (2)	GLA and GLA Group	16.6 billion (18%) (4)
Municipal level	9.8 billion (89,3%) (3)	Boroughs	22.4 billion (26%) (4)

	São Paulo	London
State Structure	Federal	Central State
Administrative Decentralization	Mandatory local public services and political responsibility	Mandatory (Statutory) local public services (The GLA and 32 Boroughs +City) and political responsibility
Political Decentralization	Elected members of the executive and legislative branches / constitutional autonomy - 32 Sub-Municipalities indicated by the Mayor	Executive Mayor (elected by citizens, Legislative Power (Assembly) with few powers (GLA) - 33 Boroughs/Councils: elected mayor/leader and cabinet or committee system ⁵ 5 In the UK, local districts are required to adopt one of three types of ‘executive arrangements’ to govern and make decisions within their councils. These arrangements are based on the ‘Local Government Act 2000 ’ and were later updated by the ‘Localism Act 2011 ’ . There are two main forms of executive arrangement: ‘leader and cabinet’ and ‘elected mayor and cabinet’ models. In the former, the mayor is elected directly by residents of the borough; in the latter, the majority party or coalition in the council appoints the leader and the cabinet. Since 2012, principal authorities have been allowed to adopt the ‘committee system’ form of governance. Under this model, the power is exercised by the Council – which elects the leader – and by committees made of councilors in proportions of their parties' representation in the Council.
Financial Decentralization	-Partial Budgetary Autonomy: budgetary laws & earmarked funds -Partial Fiscal Autonomy -Tax Autonomy -No Bank Autonomy (no access to credit)	-Budgetary Autonomy: annual budget and mandatory competences -Low Fiscal Autonomy -Low Tax Autonomy -Bank Autonomy (access to credit)
Two economic capitals	-Privileged access to state and federal administrations; - Sub-municipalities - low budgetary autonomy; -Pressure from interest groups;	-Privileged space in central funds (capital city) - High Dependency; -Boroughs – autonomy to deliver public services – social pressure; -Pressure from Central Gov to reduce expenditure -Pressure from interest groups

Dimensions	São Paulo	London (The GLA and The Boroughs)
Complexity of budgetary rules	Budget with two preparation rounds, a calendar, and legal rules; implementation power is concentrated in the executive branch.	Calendars, segmentation of the budgetary process, administrative decisions. Power is concentrated in the executive branch. (Rules have been implemented for centuries and they depend on definitions by the Treasury).
Hierarchical organization of the budget/ budget bureaucracy’s influence on the decision-making process	The budgetary process is structured similarly to the budgetary process involving the Ministry of Finances and other ministries at the national level; locally, however, the process is even more insulated. Power is concentrated in the Budgetary Board and in the mayor.	Structuration of the budgetary process depends strongly on Central Government decisions and, secondly, on the mayor or Borough leader. The Assembly scrutinizes the budget; to reject it, however, this legislative body needs 2/3 of the votes.
Incrementalism and inertia in the allocation of resources (Decrementalism)	Almost 90% of the expenses are already allocated. There is little negotiation about investments, especially at the beginning of new administrations. Current economic crisis has reduced various expenditures.	London’s budgets are in a decremental path since 2010 – with limits being set by the Spending Review”
Bargaining and muddling through	All secretaries concurrently try to bargain with the Budgetary Board.	There is some bargaining between the GLA and the Central Government. But, in general, funding for the boroughs depends on technical formulas.
Discretionary power of politicians in allocating a small part of the financial resources	The mayor decides on the allocation of a small but symbolic part of the financial resources; The Mayor must resolve the distributive conflict over public funding; Relative tax autonomy guarantees some discretionary power.	The mayor decides on the allocation of a small but symbolic part of the financial resources; The distributive conflict is partially affected by the funding and decisional power of the boroughs; Low tax autonomy reduces discretionary power. But the importance of London – as a metropolis – guarantees the mayor the informal power in strategic decisions (not always in the GLA budget).

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[1] Correspondence: ursuladiasperes@gmail.com