Governors go to the Supreme Court over the transfer of FPE funds.

Heloisa Cristaldo, Reporter for Agência Brasil

Brasilia – Governors of the states of Bahia, Maranhão, Minas Gerais and Pernambuco filed a lawsuit this Monday (21) in the Supreme Federal Court (STF) asking for an extension of the deadline for the national congress to create new rules for the distribution of the State Participation Fund (FPE) and the maintenance of the criteria currently used until this update takes place.

In 2010, the Supreme Court deemed the distribution criteria unconstitutional and ordered the federal government to change the formula by December 31 of that year. The Court did not prohibit the general principles of distribution, but requested that the tables, which have remained the same since the end of the 1960s, be updated. However, the deadline set by the Supreme Court expired without Congress having addressed the issue.

In the lawsuit, the governors request an urgent ruling on the preliminary injunction, stating that the legislative omission, if not remedied, could prevent the transfer of FPE (Fund for Participation of States and Municipalities) resources, causing a serious imbalance to the economies of the federated entities.

Without a new distribution criterion approved by Congress, the states and the Federal District received R$ 774,8 million from the FPE last Friday (18), under the old rule, considered unconstitutional by the Supreme Court. The amount refers to the second installment of the January transfer from the fund.

On the 8th of this month, the states had received the first installment of January according to the old criteria. However, the Ministry of Finance argued that the funds could be distributed in the manner prohibited by the Supreme Court because the distribution referred to taxes collected in the last ten days of 2012. Last week's distribution, however, reflects taxes collected from January 1st to 10th of this year.

The State Participation Fund is made up of 21,5% of the revenue from Income Tax and the Tax on Industrialized Products. Of this total, 85% is transferred to states in the North, Northeast, and Midwest regions, and 15% goes to the Southeast and South. The amount allocated to each federative unit takes into account its territorial extension, population size, and per capita income. The more populous and poorer the state, the more resources it receives.