There was a lively debate in the Senate today on proposed amendments to the Town Councils Act which, according to the description of the bill given to Parliament, would afford greater autonomy to town councils to raise money for capital projects.
The presentation of the bill comes about 6 months ahead of the next municipal elections, which will see voters from 9 municipalities (two cities and seven towns) go to the polls to choose their local governments.
The seven towns are Corozal Town, Orange Walk Town, San Pedro Town, Benque Viejo del Carmen, Dangriga Town, Punta Gorda Town, and the twin towns of Santa Elena/San Ignacio – the municipality for which the bill was apparently crafted, in order to enable them to borrow funds from the National Bank of Belize to complete their town hall.
In the House of Representatives on Friday, the bill was passed through in one sitting, and today in the Senate, the same was done, with the bill passing without amendment after being returned from committee.
The bill was approved by a narrow 7-6 majority, with church senator, Pastor Ashley Rocke, being the only non-government senator to vote ‘yes’ when a division was called by the Opposition People’s United Party (PUP). Had Rocke voted ‘no’, the bill would have been delayed, giving a window period within which Cabinet could have considered amendments proposed by other senators to the bill.
During the debate, Rocke said that he supports the bill in principle, and that it gives no carte blanche authority to town councils to do as they please. He said that he takes comfort that the town councils are under the scrutiny of the Ministry of Finance, whether it is under this ruling United Democratic Party or any other party to come.
However, for other non-government senators, there were salient concerns about the impetus for the bill and the rush through Parliament ahead of the municipal elections. Furthermore, PUP Senator Valerie Woods said that the company contracted to do the work on the town hall, Johan Construction and Engineering Limited, is owned by the brother and sister-in-law of the Minister of Works, Rene Montero. She said that the company was incorporated on February 10th of this year—not 5 years ago, with a history of construction and building.
“No, I guess that should not cause any of us to pause. Why should it, Mr. President? We accept things like this now, apparently! We’re good with it, because ‘it is what it is,’ and we don’t care anymore!” Senator Woods said, asking whether the Senate should be concerned about any conflict of interest with the project. Woods said that the mayor, back in April, had said that the company had not gotten the contract.
“Are we seriously in this upper chamber going to support and agree with this bill when you know that there is a lot going on that was not disclosed?” she questioned.
Speaking on behalf of the business community, Senator Mark Lizarraga, who voted ‘no’ on the bill but said that he would support it if the suggested amendments were to be incorporated, asserted that while the business community’s overall position is to support any move for autonomy for these bodies, they have some cautions and major concerns to raise, especially the criteria governing companies that can be established by town councils to carry out projects, and the type and size of debt that they can incur.
“In effect our concern is more taxes, more burdens on an already overburdened and overtaxed society, especially when one can anticipate and know that there will be a desire to have heightened borrowing and spending in an upcoming election cycle,” Lizararga said.
Under the new provisions, the town councils will be able to “borrow to meet any of its obligations or discharge any of its functions,” he added. The amendment removes the need for a two-third majority of councilors to agree to approve a loan, he also pointed out. Lizarraga said that the Minister of Finance is the only check and balance left.
Responding to Lizarraga, Government senator, Aldo Salazar, said that the government is simply trying to create an environment which gives some autonomy, so that there can be an evolution in how town councils raise capital, to meet evolving times.
He said that Lizarraga had used a fallacy of logic, a slippery slope argument, suggesting that allowing councils more autonomy and the use of special purpose vehicles to raise capital for projects will result in tax increases.
He argued that senators should not oppose the amendment because of the view that it may result in an increase in taxation.
“All that it is doing is that it is creating a better environment for the town councils to operate,” he said, adding that it will allow town councils to operate on an equal footing with city councils, which are already able to contract debt.
After Salazar spoke, Lizarraga reaffirmed his position, saying that the business community does not oppose the amendments but is lending caution about what needs to be strengthened and the potential negative impacts on taxpayers.
Senator representing the NGO community, Osmany Salas, said that the legislation is indeed a step in the right direction, but added that it needs to be carefully thought out before Parliament moves ahead.
Senator Salas said that in many municipalities, the tax collection rate is dismally low, which suggests that a lot needs to be done to improve fiscal management. He said that he would like to see robust, sound criteria put in place before councils are allowed to establish companies and also would like for independent annual financial audits to be undertaken, which would be made public.
“With greater autonomy comes greater responsibility, and the need for checks and balances,” Salas said.
Senator for the trade unions and civil society, Elena Smith, also raised concerns about the loan approval process and how decisions would be handled in split councils which have members from different political parties. She also questioned why the Government is rushing with the passage of the legislation.
Smith said that there has been since 2014 a set of municipal service regulations to address the welfare of workers at the municipal bodies, and Government could have brought both at the same time.
“Elections will be coming up soon. These workers will be wondering what will happen to them… From 2014 [that regulation] has not come to the Senate. Is [the Town Council amendment] more important than the welfare of employees at the municipalities?” Smith asked.
Leader of Government Business, Senator Godwin Hulse, said that regulations had been prepared while he was minister responsible for local government, and the last he knew there was a plan to craft new provisions under the respective legislation for the city councils and town councils. Since he is no longer the minister overseeing that portfolio, he could not say what the status is at this time.
Near the close of the debate, Government Senator, Dr. Carla Barnett, said that her understanding is that the town council plans to generate revenue from rent earned from extra space at the town hall. She also said that no money had been advanced by the National Bank towards this project.
According to Senator Woods, the sign posted at the construction site says that the project is funded by the Santa Elena/San Ignacio Town Council with financing from the National Bank of Belize. She said that the council is seeking more funds than what has already been borrowed from the national bank, and there has been no disclosure to the Senate about the amount borrowed and the council’s ability to repay, or what would be used as collateral for the loan.
The sign at the construction site, Barnett said, reflects the cooperation between the bank and the town council, whose staff has been helpful with reviews and suggestions. Had the council gone ahead and borrowed from the National Bank without the amendment, it would have been illegal for them to do so, she said, adding that other councils may have done it but this amendment helps to cure that.
Barnett also said that borrowing by municipalities is included in general government borrowing, and it is very important in determining the overall debt of the country. The amendment to increase autonomy gives them now the capacity to borrow in their own name, as they currently have no authority to borrow in their own name, she said.
Barnett, who is also the chair of the National Bank, told our newspaper that the town council of Santa Elena/San Ignacio wants to borrow $1.5 million. The bank has agreed to lend them once everything is in order. She indicated that the council has gone ahead and used some of the funds that it had raised by selling the land where the old hall was located to Atlantic Bank, but once the bill passed by the Senate is signed into law and the financing comes through, the National Bank would refund the portion that the town council has already put in.Amandala