At the beginning of 2017, the City of Curitiba faced an extremely delicate financial situation and was on the verge of a collapse of public services. 1 Expenses growing more than revenues Personnel Expenses and Net Revenue from 2012 to 2016. 70% 28% EXPENSES REVENUE 2 US$ US$ City expenses didn’t fit in the budget 3,2 2,5 Budget scenario of 2017. billion billion EXPENSES REVENUE 3 Unsustainable Welfare for the Municipality 48,5% more than 5 Period from 2013 to 2016. new retirees THOUSAND in the last retirements 4 years granted *Average exchange rate BRL to USD in the year of 2017: R$ 3,19. In this scenario, the City Without the adoption of presented a budget immediate recovery measures, deficit for 2017 of most of Curitiba’s public services would collapse US$ 680million Health Services would The Education System have resources available would have funds until only until August of 2017 September of 2017 US$ 192 US$ 71 million million In expenditures not Remaining balance covered in the budget. outside the budget in 2016. The salary of the City Hall The garbage collection employees would have been paid in the city would have only until November of 2017 been kept only until July of 2017 US$ 321 US$ 102 million million Defict for the Defict for secretariat’s operating personnel expenses in 2017. expenses in 2017. Personnel expenses would have The City would have reached more than 58.39% ended 2017 with a debt of the net revenue at the end of almost US$ 313 of 2017, exceeding the legal million with the Public limit established by the Fiscal Servants Pensions Fund Responsibility Law In 2017, the Brazilian Association of Finance Secretariats of the State Capital COMMITMENT Municipalities confirmed, using the National Treasury new methodology, TO FINANCIAL that Curitiba had the worst Liquidity Indicator among all Brazilian capitals: SUSTAINABILITY Public Accounts Liquidity Index Already at the beginning of the João Pessoa 0,00 Porto Velho 0,12 A rating, if Financial Obligations ≤ 1,0 Administration Manaus 0,12 LI = Cash Flow A Fortaleza 0,19 C Rating, on the contrary term, the Curitiba’s Vitória 0,24 Salvador 0,26 Recovery Plan Cuiabá 0,26 defined immediate São Paulo 0,28 Belém 0,33 actions to recover Belo Horizonte 0,62 Teresina 0,65 the financial health Rio de Janeiro 0,90 Natal 1,36 MFRL MAIN INNOVATIONS of the city. Palmas 1,40 Mechanism that limits the personnel expenses’ ■ The Municipal Fiscal Responsibility Aracaju 1,74 increasing, linked to the rise in tax collection. Campo Grande 1,97 Law (MFRL) ensured a sustainable Goiânia 2,04 Creation of the Fiscal Management and Liability trajectory for public expenditures. Council, responsible for decisions to optimize and São Luis 2,06 qualify the public expenditures. Maceió 3,49 ■ Reduction of more than US$ 33 Florianópolis 10,28 C Mandatory reduction of personnel expenses when million in operating expenses, Recife 13,74 they reach 50% of the net revenue, preventing the renegotiating contracts in areas such as Curitiba 38,73 City to exceed the legal limits. cleaning, IT, transportation and others. Mandatory provision of financial resources for the 0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00 40,00 implementation of new public facilities. ■ Establishment of a New Fiscal Target, Note: Elaborated with data from the National Treasury. No data are available for the cities of Rio Branco, Macapá, evidencing the commitment to the and Boa Vista. Porto Alegre with negative cash availability. Source: ABRASF. seriousness and transparency of public accounts. In 2016, Curitiba was ■ Exclusion of the Curitiba Urbanization PUBLIC ACCOUNTS last place among the Fund (CUF) from the calculation base LIQUIDITY INDEX C RATING Brazilian capitals. of the net revenue, ending the “fiscal illusion” in the municipal budget. ■ Decreasing in the number of To overcome of this dramatic situation, the secretariats and commissioned posts. Secretariat of Finance of Curitiba structured a series of short, medium and long-term measures, called Curitiba’s Recovery Plan (CRP): DEBT PAYMENT INTELLIGENCE Curitiba came out ahead The lack of payment and adapted its pension fund to suppliers and to the new times. service providers ■ Innovation with the creation of CuritibaPrev, a undermined the complementary pension fund for municipal employees. Curitiba becomes the first capital in the country to City’s essential have a complementary pension fund for its public services, such as employees. the provision of ■ Implementation of a new regime of social security contributions, ensuring the system’s strengthening and medicines. guaranteeing the City’s payments. ■ Creation of reverse auctions for the municipal debts, saving more than ■ For the first time, social security contributions are US$ 1,1 million for the City. foreseen and guaranteed in the municipal budget. ■ Prompt payment for more than 600 ■ Increase in the Social Security Tax rates, strengthening , totaling US$ 7,8 million the municipal fund. small creditors in obligations paid. ■ Compensation of amounts wrongfully transferred to the Social Security Institute. ■ Payment in installments of debts greater than US$ 94,000 for the ■ A consensus was reached about the payment of the providers of essential services such as employer’s share for the retirees, avoiding improper medicines, school meals, and cleaning, transfers to continue. totaling more than US$ 54 million in ■ Creation of an installment plan to pay for more than debts paid in installments. US$ 110 million in City debts to the Social Security Institute accumulated during the previous administration. STRONGER PENSION FUND In recent years tax collection rates fell sharply at the main revenue sources*. ■ Launching the Nota Curitibana program which, in addition to the tax education and cash awards, will improve Services Tax collection. ■ Simplified collection for the Real Estate Transfer Tax and adjustment in its rates. ■ Creation of new technologies in the taxation area such as the Taxpayer Electronic Domicile, providing more agility to communicate with the citizens. RESULTS ■ Detachment of the garbage collection fee from the Property Tax, solving the service’s operation expenses deficit and the risk of interruption of the collection service. THAT REFLECT ■ Promotion of a modern regulatory bill for ridesharing apps. In only three months, the city has collected more than US$ 1.1 million. CURITIBA’S ■ Creation of the Coordinating Body for Information Projects (CBIP), to coordinate the implementation and to monitor information projects and programs, seeking to achieve strategic objectives and efficiency RECOVERY in the delivery of services. ■ Update of the Services Tax Law, adjusting it to the federal legislation, with the introduction of new services’ categories and the minimum rate of 2%. * Services, goods, merchandise and real estate transfer tax. MORE ADMINISTRATIVE EFFICIENCY Number of days without the % of personnel expenses Liberatory Certificate 2018 2 60% 58,39% The Curitiba’s Recovery Plan 2017 218 55% 51,72% presented results and, in only 2016 365 51,30% one year, the City was able to 2015 365 50% 50,80% resume public services, balance 2014 329 47,83% 45% 47,30% 46,51% its accounts, regain credibility 2013 128 43,63% and increase investments. 2012 87 40% 0 100 200 300 400 2012 2013 2014 2015 2016 2017 Prudential limit – LRF The Municipality obtained the Personnel expenses WITHOUT the Plan Liberatory Certificate from the State Personnel expenses WITH the Plan ■ In 2017, all commitments of the City with its of Paraná Court of Auditors. suppliers were paid strictly on time. SINCE 2012, THE CITY STAYED ALMOST 1500 DAYS WITHOUT With the Curitiba’s Recovery Plan, personnel expenses did not THE CERTIFICATE ■ With the employees’ payroll in good standing, exceed legal limits it was possible to advance the 13th salary. With the Liberatory Certificate from WITHOUT THE PLAN, THE CITY WOULD the Court of Auditors, the City was once HAVE EXTRAPOLATED THE PRUDENTIAL The City restructured the Curitiba Health again able to receive federal and state LIMIT EVEN FURTHER, GOING TO 58.3% ■ funds for investment in the city. Institute and obtained legal authorization to pay its debt with the institute in installments. Previous administration’s expenditures – Treasury Fonts 180,000,000 From the reorganization of the public accounts, ■ 160,000,000 WITHOUT the Plan 154,545,454.54 public services were regularized and 140,000,000 WITH the Plan investments increased by 58%. 120,000,000 100,000,000 80,000,000 62,838,299.69 60,000,000 38,375,558.14 40,000,000 20,000,000 7,297,266.78 20,703,922.09 1,861,891.96 And even more results showed up. 2014 2015 2016 2017 2018 With the Curitiba’s Recovery Plan, the previous administration’s expenditures were significantly reduced. If the Plan weren’t implemented successfully, the expenditures would have reached US$ 154.5 million at the end of 2017. With the Curitiba’s Recovery Plan, the Municipality no longer has the worst liquidity rating granted by the National Treasury. With ‘A’ rating on liquidity, Curitiba can receive credit guarantees from the Federal Government to require fundings. Public Accounts Liquidity Index Fortaleza 0,12 Salvador 0,18 Vitória 0,21 A Curitiba 0,23 Rio Branco 0,23 São Paulo 0,26 Belo Horizonte 0,27 Aracaju 0,60 Belém 0,74 Campo Grande 0,87 João Pessoa 0,96 Palmas 0,99 Recife 2,32 São Luís 5,48 C Natal 10,73 Manaus 16,17 Goiânia 16,57 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 16,00 16,00 Note: Elaborated with data from the National Treasury. Porto Velho, Cuiabá, Teresina, Rio de Janeiro, Maceió, Florianópolis, Macapá and Boa Vista don’t have available data.