Caracas Chronicles

Venezuela is divided into states. States are divided into municipalities. Each municipality has one mayor, and each state has one governor.That is what the Constitution says.

Simple, right?

Well, no. The Maduro administration wants to change Venezuela’s territorial distribution and put it all upside down.

But even if the new Territorial Organization bill has not been yet discussed in the National Assembly, most state governments are feeling the pinch in their budgets. What we are witnessing is an all-out attack on (opposition-held) state and local governments.

Since they are largely forbidden from raising their own funds, state and local governments get their funds from a portion of the national budget. The transfer of funds from the central petro-state to state and local governments is known as the situado constitucional, because its rules are set out in the Constitution.

Since 2010, the situado has been under-estimated thanks to the absurdly low average price of oil upon which the national budget is calculated, resulting in Venezuelan states getting less money than they should.

The official budget, however, is simply a small, small part of what the government spends. Extra-budgetary spending is enormous, and all of it goes to chavista institutions. In the end, parallel state and local governments are the ones privileged by central authorities.

For example, let’s take CorpoMiranda. Founded in late March as an ad hoc consolation prize for losing gubernatorial candidate (and Foreign Minister) Elías Jaua, it has received more money this year from legislative appropriations than many State governments put together.

In comparison, the Miranda State Government got only one appropriation so far, a fraction of what CorpoMiranda is getting. Right now, there’s a titanic struggle between the Miranda Government and the Chavista-controlled Legislative Council over the funding of several projects, 2014’s proposed budget, and the debt owed to school teachers.

Thanks to that, in addition to the elimination of FIDES and LAEE funds and the denial to give states some financial autonomy through a long-proposed piece of legislation, states have been forced to stretch the little money they have, while new parallel governments are loaded with huge checkbooks, which they can use on a discretionary basis.