The events of the past three years have created a level mistrust between people and their governments. While the Organization for Economic Co-operation and Development (OECD) has praised Jamaica as having demonstrated major improvement in this area, over the last 16 years, scepticism towards the state’s public health response, as well as its implementation of a national ID, have shown that there is still a sizeable trust deficit. Perhaps a deeper insight that the pandemic has drawn out is that people’s trust in their local and provincial leaders is often greater than for their national governments. However, proximity to one’s constituents isn’t enough to build a trusting relationship. There must also be transparency.
The Local Government (Financing and Financial Management) Act, which Parliament passed in 2016, brings Jamaica’s municipalities in line with international standards in public sector accounting. On the 31st of every October, each parish must submit five items to the Ministry of Local Government: the operational budget; the capital budget; the statement of financial position; the cash flow statement and the strategic plan.
The operational budget details the local government’s income (typically from taxes, fees, or transfers from the national government) and expenses, associated with day-to-day operations. Operational expenses, typically, consist of the compensation for civil servants, as well as the costs associated with equipping those employees to carry out their duties (for example, uniforms for firefighters). By contrast, the capital budget details larger expenses, such as public buildings, infrastructure, or other equipment (i.e. firetrucks). Local governments are responsible for approximately 80 per cent of the road network in Jamaica, and thus, maintenance forms a large part of their capital funding responsibilities.
The statement of financial position shows the assets and liabilities of the municipal corporation. At a glance, this statement is often the clearest indicator of a municipal corporation’s financial wellbeing. A highly complementary report is the cash flow statement which identifies the timing of the government’s revenues and expenditures over the course of a fiscal year. This statement can be useful for understanding why service quality may vary at different points in the year. Municipalities are often flush with cash shortly after taxes are paid but are more likely to deplete this reserve over the course of the year. Thus, it isn’t uncommon to see contractors delaying service or needed repairs in the community remaining unresolved, toward the end of a fiscal year.
The final item is the strategic plan, which outlines the priorities of the municipality over the following four years. While last on the list in the legislation, it is perhaps the most important part of the Act, as it allows local governments to clearly communicate their goals and expectations to their constituents. Those constituents can, in turn, have some satisfaction in seeing whether their local government is taking an initiative in tackling the problems faced by their communities.
While it is certainly a step forward that this reporting takes place, much of its value to the community is lost if they are not made available to the public. Citizens are broadly unaware of where their local taxes go, so it should be no surprise that some are uninterested in paying them. Last week, Member of Parliament Juliet Cuthbert Flynn suggested that many Jamaicans do not pay their property taxes and that this is the reason for the state of the road network. In much of the United States, such a claim could be easily verified with a check of the collection rate in the local budget. Yet, in a country with only 13 municipalities, no such database exists.
If transparently implemented, The Local Government (Financing and Financial Management) Act can be an instrument to help both citizens and their leaders, hold each other accountable. After all, the government can only uphold its end of the social contract if citizens uphold theirs. Initiatives at the national level, like the “Citizens Guide to the Budget”, have shown that the general public does care about the state’s finances – especially when the extra effort is made to make it understandable and accessible. The ability to stream parliamentary proceedings and committee meetings on-demand have shown that people will tune into public debates at the times that suit their schedules. Similar options at the local level can have a tremendous impact on the level of trust and public engagement in our society, but we must demand them.
Shua McLean (@shuakym) is a Master of Public Affairs student at Princeton University, concentrating in International Development. He writes regularly on issues of public finance, budgeting, and public-sector reform.