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Costa Rica Country Report Trends in Decentralization, Municipal Strengthening, and Citizen Participation in Central America, 1995-2003

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Costa Rica Country Report Trends in Decentralization, Municipal Strengthening, and Citizen Participation in Central America, 1995-2003 Costa Rica Country Report Trends in Decentralization, Municipal Strengthening, and Citizen Participation in Central America, 1995–2003 June 2004 Prepared for U.S. Agency for International Development Bureau for Latin America and the Caribbean Office of Regional Sustainable Development Prepared by INTERNATIONAL CITY/COUNTY MANAGEMENT ASSOCIATION Cooperative Agreement No. LAG-A-00-98-00060-00 Contents Acronyms....................................................................................................................................... iv Introduction......................................................................................................................................1 I. Progress of Decentralization in Costa Rica, 1995–2003 ...........................................................2 Context and Constitutional Framework.....................................................................................2 Summary of Historic Trends................................................................................................2 Constitutional Framework and the Centralist Model...........................................................4 Local Governments..............................................................................................................4 Political Decentralization...........................................................................................................5 From Municipal Executive to Mayor...................................................................................5 District Councils ..................................................................................................................6 Municipal Elections .............................................................................................................7 Summary of Political Decentralization................................................................................7 Administrative Decentralization ..............................................................................................10 Fiscal Decentralization.............................................................................................................12 Law 7509, Real Estate Tax (1995).....................................................................................12 Law 7755, Control of Specific Budget Items (1998).........................................................13 Law 8114, Tax Simplification and Efficiency (2001) .......................................................14 Summary of Fiscal Decentralization..................................................................................15 II. Evolution of Municipal Development and Local Democracy in Costa Rica, 1995–2003.......16 Municipal Development...........................................................................................................16 Financial Strengthening .....................................................................................................17 Financial Management.......................................................................................................21 New Municipal Services....................................................................................................23 The Municipal Administrative Career System and the National System for Municipal Training and Education......................................................................................................25 Summary: Progress and Obstacles in Municipal Development.........................................27 Local Democracy: New Opportunities for Participation and Agreement at the Local Level..29 District Councils ................................................................................................................29 The Canton and Communal Committee on Sports ............................................................31 Mechanisms of the Municipal Code to Promote Participation ..........................................31 The Triangle of Solidarity: A Central Government Initiative of Participation..................33 Summary: Progress and Obstacles in Local Democracy ...................................................34 New Topics on the Agenda of Municipal Development and Local Democracy Since 1995 ..34 III. National and Regional Associations ........................................................................................37 Federations of Municipalities ..................................................................................................37 The National Union of Local Governments.............................................................................39 Structure.............................................................................................................................39 Personnel, Budget, and Membership .................................................................................40 Functions of the Organization............................................................................................41 Services to Municipalities..................................................................................................41 1-i Costa Rica Country Report Trends in Decentralization, Municipal Strengthening, and Citizen Participation in Central America, 1995-2003 Municipal Congresses........................................................................................................41 Strengths and Weaknesses of the UNGL...........................................................................42 The UNGL and FEMICA ........................................................................................................44 Other Regional Bodies.............................................................................................................46 Foundation for the Development and Municipal and Institutional Strengthening of Central America and the Caribbean (FUNDEMUCA)......................................................46 Central American Conference for the Decentralization of the State and Local Development (CONFEDELCA)........................................................................................46 IV. Summary of International Support for Decentralization, Municipal Development, and Democratic Strengthening in Costa Rica.................................................................................47 Municipal Development Projects.............................................................................................47 Actors Involved in Municipal Strengthening...........................................................................51 Executive Branch...............................................................................................................51 Legislative Branch .............................................................................................................52 UNGL ................................................................................................................................52 IFAM..................................................................................................................................53 FEMICA ............................................................................................................................53 International Donor Agencies............................................................................................54 Bibliography ..................................................................................................................................55 Annex 1: List of Persons Interviewed............................................................................................61 Annex 2: 1994 Agenda of the UNGL and FEMICA .....................................................................63 Annex 3: The Current UNGL and Regional Agendas...................................................................65 List of Tables and Figures Table 1-1. Summary of Political Decentralization ......................................................................... 8 Table 1-2. Trends in Decentralization ............................................................................................ 9 Table 1-3. Share of GDP of the National and Municipal Budgets, 1995-2002 (in percent) ........ 12 Table 1-4. Ratio of Municipal to National Government Revenues and Expenditures, 1995-2002 (in percent)............................................................................................................................ 12 Table 1-5. Land and Real Estate Tax, 1995-2002 (in percent)..................................................... 13 Table 1-6. Amounts Transferred to Municipalities for Specific Budget Items ............................ 14 Table 1-7. Summary of Fiscal Decentralization ........................................................................... 15 Table 1-8. Ratio of Municipal to National Government Revenues, 1995-2002 (in percent) ....... 17 Table 1-9. Municipal Revenue Structure, 1995-2001 (in percent) ............................................... 18 Table 1-10. Breakdown of Municipal Revenues by Economic Classification, 1995-2001 (in percent) ................................................................................................................................. 18 Table 1-11. Ordinary and Capital Transfers to Municipalities, 1995-2002 (as a percentage of total municipal revenues)....................................................................... 19 Table 1-12. Transfers by Canton, 2001 (as a percentage of total
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