The Hindu   27.08.2012

Crisis grips municipalities

The financial crisis gripping urban civic bodies has
derailed the disbursal of salary, pension, and other benefits due to
employees (and retired employees) in a majority of the 60 municipalities
in the State.

If the financial position of the civic
bodies continued to remain precarious, it would eventually lead to an
administrative impasse, sources said.

Official sources told
The Hindu
here that salary for August and Onam advance had not been disbursed in
the Vaikom, Thalassery, Shoranur, Thripunithura, North Paravur,
Chanaganassery, Alappuzha, and Kayamkulam municipalities. Funds
apportioned for other purposes had to be diverted in other places.

Employees of Aluva municipality could draw their salary only on Saturday evening, but their Onam advance had been held back.

The
funds sanctioned from the Suchitwa Mission had to be diverted to meet
the salary bills in Mavelikara. Payment of pension and DA and remittance
of provident fund and other benefits recovered from employees had
reportedly come to a halt in about 90 per cent of the 60 municipalities
in the State.

Financial management

Sources
said shoddy financial management had been taking a toll on the salary
payment in municipalities for a year now. There had been no government
intervention to stabilise revenue sources and streamline financial
management, they added. The lackadaisical attitude of the civic bodies
in garnering own funds had been cited as the main reason for the crisis.
The ‘untied funds’ worth Rs.50 lakh, provided to each municipality, was
being used to take up civil works.

Under assessment
and non assessment of residential and commercial buildings, cut in
entertainment tax, and laxity in revising licence fees, had resulted in a
shrinking tax base for civic bodies. The government’s delay in
contributing to the pension fund had worsened the situation, sources
said.

The Fourth State Finance Commission, headed by
M.A. Oommen, which analysed the financial condition of civic bodies, had
recommended a series of measures to augment revenue sources. It had
recommended constitutional amendments to raise the professional tax
limit from the current Rs.2,500 to Rs.10,000 and also mooted a 50 per
cent revision once in five years. The commission said building tax limit
should outdistance the professional tax limit, but it continued to be
the other way even now. Building tax revenue, a potential source,
continued to remain untapped.

The chairman of the
finance standing should monitor tax collection and make an earnest
effort to bring more services and other areas under the tax cover.

Though
the government had accepted the recommendations and brought out an
action-taken report, the real spirit of the recommendations had not
percolated to the grassroots level, sources said.

• State intervention sought to stabilise situation
• Concern over shrinking tax base of local bodies