Among the important changes brought by the Federal Constitution of 1988, those referring to the Brazilian federative system stand out. As regards the metropolitan question, the theme is disregarded in the chapter concerning the economic order, when metropolitan regions were creatures of the federal government. However, the them is considered in the scope of “ Organization of the State”. As ruled in Article 25, competence to create metropolitan regions, urban conglomerations and micro-regions by grouping near-by municipalities now belongs to the states. The union of forces purports “to integrate the organization, planning and performance of public roles of common interest”.

However, this determination comes simultaneously with the elevation of municipalities to the category of units of the federation, like the states, and to the expansion of their autonomy, in so far as it grants them the largest slice of federal income. From this point on, the relationship of the federal government with local ones was reinforced by the growth in the importance of entailed transferences for the execution of decentralized policies. Such is the case, for instance, of the financial of SUS (Unified Health Services) of Fundef and numberless covenants. For average-sized municipalities, for instance, the transferences of SUS are larger than those of The Fund of Participation of Municipalities (FPM).

The new institutional context brought as a result that the several levels in the coordination of interests and ordinary suits have a merely administrative character: they are not political entities and therefore have no legislative body To the difficulties of an institutional order others are added, of an economical and social character, which make cohesion difficult, chiefly as regards investments in urban infra-structure, where a large part of matters of common interest in metropolitan regions are concentrated: sanitation, housing, transportation, the disposal of garbage, among others.

In the economic sphere, state finances deteriorate openly, which decreases their power as providers of resources to accelerate actions of common interest. In the federal area, the loss of receipt due to the division of tributes and to the new social duties following from changes introduced in the 1988 Constitution leave little margin for new commitments. The final fiscal adjustment promoted ín the late 90´s, based chiefly on the increase in taxation, eliminates the primary deficit, and generates resources for the state to comply with obligations added by the service of the debt. The lack of institutional support for the financing of investments in urban development is added to the difficulties relating to state and federal funds. As regards housing, for instance, losses following the crisis of the Housing Financing System (Sistema Financeiro de Habitação) were not made up for. This resulted in the extinction of the BNH (National Housing Bank) in 1986 and the absorption of its functions by the CEF (a Federal Financing Institution). The absence of the sustained growth of jobs, the loss in purchasing power of salaries and the increasing informality of the labor market affected the principal source of funds of public credit for the urban area, the FGTS.

The 90´s and the early 2000´s have been witnessing the growth of metropolitan regions in number and expression: the 10 regions created by federal law have now become 26, which congregate more than 400 municipalities with a population larger than 42% of the total for Brazil. Particularly, in the regions created initially, peripheral municipalities are growing, generally with a low tributary basis. The nucleus city loses expression, but is called upon to provide services for a larger and larger population that comes to work there, while it suffers a relative loss of revenue, partly because of mechanisms related to the fiscal war between states and between the municipalities themselves.

In this scene, the performance of actions in the Metropolitan Regions demands a deeper knowledge of the fiscal condition of its municipalities and of the way they relate to the Union and to the state where they are located.

The general purpose of this project is to analyze the situation of municipalities in the Metropolitan Regions (RMs) so as to evaluate their capacity to attract resources for the development of projects meant to solve common problems. The knowledge thus produced will guide the construction of instruments of cooperation among federative entities. This general objective includes the following specific objectives: (i) situating the RMs in the national context and in the state where they are located, by means of economic, demographic, political and fiscal indicators. Comparisons will underline data of nuclei cities and of the other cities of each region. In the whole project, whenever advisable, municipalities will be differentiated as to size and kind of population; (ii) evaluating revenue structures of metropolitan municipalities, so as to delimit the degree of their autonomy to make new commitments and the sustainability ― availability of reliable revenue; (iii) evaluating the expenditure structure of metropolitan municipalities and their financing, so as to define how free they are to make new commitments, considering their constitutional duties in the areas of health and education; evaluating the capacity of metropolitan municipalities to generate savings so that they can make long term investments. Here, particular attention will be paid to the financing structure of projects requiring guaranteed resources through several fiscal years; (v) evaluating debts and how far they compromise revenues with their service.

The study of fiscal variables will allow for the construction of a cluster of indicators which will make it possible for us to know and check the degree of autonomy of the municipality; the degree of revenue sustainability; how far permanent revenues are compromising; the capacity to attract resources for investments and actions of a permanent character.

Data will be preferably obtained in the following sources: IBGE, for demographic data; IPEA, for economic characterization; Tribunal Superior Eleitoral (Higher Electoral Court) for data concerning the political situation. Secretaria do Tesouro NacionaL (Federal Finance Bureau) for fiscal data.

The demographic and population data will possibly include several periods, depending on availability and consistency. After analytical treatment information concerning the fiscal area may be made available, also under the form of indicators for online consultation. They will include the period of 1988 to 2003, subject to availability of consistent data.

Heads of the research team:Prof. Luiz Cesar de Queiroz Ribeiro – IPPUR/UFRJ, Prof. Sol Garson Braule Pinto, Rio de Janeiro Nucleus; Prof. Maria do Livramento Clementino – UFRN and Prof. Ilza Araújo Leão de Andrade - UFRN.

Research team:local team

Products:a report on fiscal-financial difficulties in inter-municipal cooperation and between state and municipalities in metropolitan areas. A report on the institutional difficulties of municipal and state government in adjusting their institutional schemes to the dynamics of decentralized politics to face metropolitan problems; a Ph. D. thesis. fiscal-financial data bases of municipalities.