From 1999 to 2002, the participation of expenditure on education in the total expenditure of State Governments increased from 14% to 16%; in the municipalities surveyed this figure also increased from 18% to 21%. The expenditure on health also changed at both governmental levels. In this period, it went from 6% to 9% in the state government and from 18% to 22% in the municipal government. The Survey of Public Expenditure by Function, relative to the period 1999-2002, shows that in a scenario of financial constraints, the hierarchy of public expenditure has been directly connected to the compulsory expenses, especially those related to health and education. Another increasing expense along the analyzed period was Public Security and Order, which went, considering state government, from 11% in 1999, to 13% in 2002. These and other relevant data are included in the IBGE survey, with state and municipal coverage - the latter restricted to some specific municipalities ¹.

Profile of state government expenditure

From 1999 to 2002, the expenditure on active workers was the major contribution to the state public expenditure, accounting for 27% of the costs in 1999, and for 29%, in 2002. The expenditure on inactive workers (16%) remained stable along this period.

In the period 1999-2002, the main state expenses were General Public Services and Social Protection, which represented, on average, 34% and 20%, respectively, of the total expenditure. The high cost of social protection was mainly due to the participation of social security. In fact, 18% out of the 20% in this category refer to Social Security, and the other 2% are divided into Management and Support and Social Assistance. In the general Public Services are included all the management expenses (not by category).

Still from 1999 to 2002, Education was the third category with major participation in the period: 15% on average. This high percentage of participation in the total expediture can be explained by the percentage of state revenue compulsorily directed to education, and also by FUNDEF (Fund for the Maintenance and Development of Basic Education), na organization which transfers resources from money raisers to entities which apply these funds in education. Most of the state expenditure on education (58% in 2002), was directed to basic education, despite the state priority being secondary education. The expenditure on education also had a reduction of the percentage spent on salaries (active workers) between 1999 (68%) and 2002 (63%).

The expenditure on Public Security and Order, which was placed in the fourth position, besides being relevant to volume, also grew with the period analyzed (11% in 1999 and 13% in 2002). In terms of expenditure, the highlight was the relative growth of the expenses with police, which changed from a 4% to a 6 level of participation from 1999 to 2002. The participation of state governments in the expenditure on Health increased by 1 percentage points each year. Expenditure on Health by economic activity showed the reduction of the participation in the expenses with active workers (39%, in 1999, and 34%, in 2002) and increase of other cost expenses (46% in 1999 versus 48% in 2002). It is worth mentioning that the level and the behavior of expenses with health are influenced, similarly to Education, by the legislation of public financing aimed at the sector. It is necessary to highlight, in this case, the Complementary Amendment no. 29, of 2000, which approaches the compulsory investment of resources in Health.

On the other hand, the expenditure on Economic Activity had decreasing participation along the period. This behavior reflects, above all, the reduction of the enterprise participation of the government as a consequence of state privatization programs. Besides, the reclassification of actions related to the urban transportation system, which used to be previously under the head Transportation, with the new classification considered in the sub-category Urban Development.

The other categories, Housing and Urbanism, Culture and Sports and Environment Protection, make up, together, 3%.

Profile of municipal government expenditure

From 1999 to 2002, in terms of the expenses of the municipalities surveyed, the highlights were Health and Education, categories protected by the legislation of resource use, which expanded its percentage participation in the general results for expenditure. These changed from 18%, in 1999 to 22% and 21%, in 2002, respectively. The category of Economic Activities, which encompasses governmental actions directed to the promotion of agriculture, industry, trade and services, and the expansion of economic infra-structure, presented the major fall in proportional terms, going from 9%, in 1999, to about 4%, in 2002. The expenditure on Transportation was the main responsible for this fall, being reduced, in nominal terms, from R$ 2,6 billion, in 1999, to about R$ 1,2 billion in 2002. This result is partially explainable by the change in the classification of actions aimed at the promotion of urban transportation, which was previously classified under the category Transportation.

Considering the total expenses of municipalities in the sample, by economic category, it was observed that the cost expenses presented two different tendencies: whereas expenses with personnel (active, inactive and social benefits) kept with increasing participation (from 44% to 47%), the other cost expenses were  continuously reduced in relation to the total expenditure. 

 The continuous growth in the category Education was stimulated, throughout time, not only by expenditure on personnel and costs, but also by the increased participation of fixed capital expenses in the total amount spent on this category. This figure went from 6%, in 1999, to 10%, in 2002. This behavior differs a lot from that observed in the composition of percent participation in the total category expenses, in spite other cost expenditure.

Although there has been fall of the participation in the total expenses, the category Housing and Urbanism had significant increase of investments (fixed-capital expenses) in the period surveyed. It went, in nominal terms, more than 102% up in the period and expanded its participation in the total expenditure, from 24%, in 1999 to 36%, in 2002. This evolution of fixed-capital expenses differs from those expenses with personnel (active workers and social benefits) in the category, which were reduced by 10.64% in nominal terms.