Decentralisation and budget accountability in the twilight of Mexican presidentialism.

This dissertation is an attempt to understand how Mexico's democratisation process transformed budget accountability and the relationship between the federal, state and municipal governments. With the decline of presidentialism, two major changes occurred: the federal Congress became a more powerful regulator of public expenditure; and a large share of the budget was decentralised to subnational governments. The research objective is to produce an empirical analysis of how it came about that the president lost control over a major share of discretionary budgetary spending while state and municipal authorities increased their financial capacities without strong local systems of checks and balances. The dissertation is focused on two reforms related to budgetary policy: 1) The creation of a new Supreme Audit Institution (SAI) at federal level; and 2) The decentralisation of federal spending to states and municipalities. The creation of a new SAI, the Auditoria Superior de la Federacion (ASF), improved the political autonomy and technical capability of the congressional bureau in charge of ex post budgetary oversight. Through the ASF, the Congress improved its capability to demand an accountable presidency. The second reform was the decentralisation of an important share of government expenditure to state and municipal authorities. This implied the creation of clear norms and transparent formulas for the distribution of public resources among the three levels of government. In the former political system, the President had the unwritten prerogative to decide the geographical allocation of public expenditure, according to unaccountable criteria. The federal Executive had deep pockets and full political power to determine the fiscal surplus or financial bankruptcy of a subnational government. The decentralisation process created rules that forced the President to render financial accounts to subnational governments. For the first time, the Federal Executive had to follow transparent and stable criteria for the transfer of resources to states and municipalities. The decentralisation process rested on the premise that local authorities would allocate public expenditure more efficiently and would maximise social welfare. The decentralisation of public expenditure increased the accountability of the federal government to states and municipalities. However, a central claim in my thesis is that an unforeseen consequence of this process was a lack of accountability of political leaders at subnational levels. With the dusk of presidentialism and the decentralisation of expenditure, governors and municipal presidents gained ample margins of political and financial power. Thorough a census of state SAIs and an Index of Budget Information, the thesis will provide empirical evidence on the importance of accountability institutions in the transfer of spending responsibilities to subnational governments. With weak accountability mechanisms at the local level, there are no guarantees that decentralisation will deliver its theoretical expectations of efficiency and welfare. (Abstract shortened by UMI.)