Reforma y disciplina financiera en estados y municipios

The present document emphasizes some of the main causes of the growth of state public indebtedness that has been observed in Mexico during the past few years. These causes are mainly referred to the world-wide economic crisis (in 2008), the insufficient generation of own resources on the part of Mexican States and Municipalities and to the increasing expenditures on decentralized health and education. In order to confront the possible dangers that the greater public indebtedness could carry to the economy as a whole, the Mexican Congress presented and approved an act which reforms the law in the matter of Financial Discipline in States and Municipalities, that grants among other things, greater faculties to the House of Representatives to legislate in this matter, to impose limits to the subnational indebtedness, as well as to know and to object on the strategies of reduction of the indebtedness of each one of the States. Although, these limits possibly make subnational public finances seem “healthy”, they do not face the problem the main problem of the state and municipal public finances, that is, its inefficient taxation