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Mexico’s New Experiment: More Power to States and Cities

<i> Andrew A. Reding, an associate editor of Pacific News Service, directs the North America Project of the World Policy Institute at the New School for Social Research, where he is also senior fellow for hemispheric affairs</i>

It is 9 a.m. on “Citizen Wednesday” in Leon, an industrial city of more than 1 million inhabitants in the central state of Guanajuato. Arranged on the periphery of the town hall’s interior courtyard are many tables. A banner over the entrance welcomes citizens. Men and women of all ages filter in, fill out short complaint forms and are directed to one of the tables where they discuss their concerns, face to face, with the police chief, various public officials, the city treasurer, even the mayor.

In a country accustomed to vertical rule, this is a revolutionary, though little-heralded, political experiment. Capitalizing on President Ernesto Zedillo’s call for reform, opposition governments at the state and municipal levels are expanding efforts to whittle away authoritarianism, corruption and inefficiency through decentralization. These efforts, begun years ago, center on three principles: devolution of power from the federation to states, from states to municipalities and from municipalities to citizens.

In Leon, citizens are learning that they are entitled to expect service from elected officials, a right reinforced by a computerized system that keeps track of their complaints until they are resolved. Along the way, public officials are being made accountable.

The fiscal benefits are twofold: While fraud and abuse are curtailed, new efficiencies are made possible through cooperation. As citizens gain confidence in the police, for example, they are helping identify where drugs and gangs are a problem, allowing more efficient deployment of officers. Organized into neighborhood associations, residents are also setting priorities for public-works projects, making the most of tight budgets.

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This is all part of a larger process of reinventing government. Its leaders are Luis Quiroz, municipal president of Leon, and Vicente Fox, governor of Guanajuato. Both are from the center-right National Action Party (PAN), which now governs four of Mexico’s 31 states and dozens of its most important cities. This Wednesday, the mayor and the governor, both wearing their trademark open-necked blue button-down shirts--reflecting the party’s color and symbolizing dedication to hard work--met with the city’s business community to transfer an industrial park from the state to Leon.

In all his public appearances these days, Fox points to Jan. 1 as a new dawn for Mexico. On that day, the federal government will transfer responsibility for agriculture, water resources, health, secondary education and roads to several states, among them Guanajuato. This pilot project will inform a yearlong national dialogue, culminating in constitutional and legal reforms scheduled to take effect nationwide Jan. 1, 1997. At a recent conference on federalism in the neighboring and similarly PAN-dominated state of Jalisco, Zedillo won applause when he reaffirmed his “conviction that the federal government should cede real powers to the states and municipalities.”

Devolution of federal powers to the states will require a new formula for taxation. According to Fox, 90% of tax revenues now go to the federal government. That leaves the state dependent on Mexico City for 80% of its budget. Traditionally, that dependency has been one of the pillars of authoritarian rule in Mexico. But now that the Institutional Revolutionary Party’s political monopoly has been broken in much of Mexico, state and local governments are demanding control over their own budgets. They have the constitution on their side. Article 40 states that Mexico is “composed of states that are free and sovereign in all that concerns their internal affairs,” and Article 115 assigns property taxes to the “Free Municipality.”

Most municipalities have until now seen little of the tax revenues to which they are entitled. Federal and state governments have collected taxes on their behalf, losing much of the revenues to inefficiency and fraud, spending a good part of it themselves and linking delivery of the remainder to political loyalty. Towns that have dared to vote for the opposition have been punished by losing their tax revenues. For example, Ciudad Juarez, which is also governed by the PAN, receives only 4% of the toll collected on the bridge to the United States. The city, which needs a sewage-treatment plant, has instead been required to use its small allotment of federal funds to build an Olympic-size swimming pool.

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Earlier this year, municipal president Francisco Villarreal responded by setting up a city toll booth on the international bridge. When Mexicans enthusiastically paid toll to the city instead of to the federal government, federal authorities jailed the mayor, turning him into an instant folk hero. Though released two days later, Villarreal’s act of civil disobedience galvanized nationwide support for municipalizacion .

In Guanajuato, where the PAN has held the governorship since 1991 (first under interim Gov. Carlos Medina, then, following a 2-1 landslide in last May’s election, under Fox), municipalizacion is already well under way. All the larger municipalities, including Leon, are collecting their own taxes. That has not only made them more independent, but better financed. To maximize revenues, municipalities have conducted new assessments, identified who has not been paying or not paying enough and eliminated administrative inefficiencies. The bottom line is delivery of more services to the citizenry, even in the midst of economic hardship. In Leon, which pioneered this effort with the first PAN government in 1988, the citizens have responded by voting into office three PAN governments in succession.

There are, of course, possible dangers to decentralization in a country marked by enormous regional differences in economic development, education, ethnicity and wealth. Not the least of these is that if too much of the tax base is reserved for local use, inequalities will be compounded by vastly divergent opportunities, as schools and other public services deteriorate in already marginal areas. Guanajuato and Chihuahua may thrive, while Chiapas and Guerrero fall farther behind.

Speaking for Southern Mexico at the Jalisco conference on federalism was Maria de la Luz Nunez, municipal president of Atoyac de Alvarez, Guerrero. “Southern Mexico provides the republic with more than 60% of its electric energy, but suffers in darkness; we supply oil and asphalt, but lack decent transportation . . . The South is rich in natural resources . . . and we pay the martyrdom of poverty.” She found an echo in Zedillo, who argued that Mexico’s new federalism must promote unity amid diversity, and regional development aimed at a “combination of strong and prosperous regions, not in perpetuation of inequality and disequilibrium.”

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In a series of conversations with Fox, the governor shared the same concerns. Each level of government, he emphasized, has its legitimate role. The problem in Mexico is that the federal government has been far too powerful in relation to state and municipal governments, contributing to a political culture of authoritarianism, corruption and inefficiency. Rather than go to the opposite extreme with its specter of national disintegration, he envisions an equilibrium in which each level of government is in constitutional balance with the others, in a rough parallel with the federalist system in the United States.


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