Where Has the Municipal Money Gone? An Analysis of How and How Much Municipal Governments Subsidize Regional Activities

Abstract

This article presents the results of a survey of 2009 and 2010 Thai municipal budgets. The sample consists of 972 municipalities of various sizes and socioeconomic characteristics throughout Thailand. Additionally, in-depth case studies were conducted in three municipalities. The findings show that about 82 percent of the municipalities contributed funding to programs undertaken by provincial administration agencies, totalling 170.3 and 133.7 million baht in fiscal 2009 and 2010, respectively. The findings indicate that municipalities view provincial administration programs as lacking transparency, as well as duplicating or overlapping with local government jurisdictions. This raises the issue of role conflict between local authorities and provincial administration, which exercises the power of oversight over many local government expenditures. On the one hand, provincial administration can abuse its power by pressuring municipalities for fiscal support; on the other hand, municipalities can bribe provincial authorities by providing fiscal support in exchange for loosening regulatory control. This research calls for (i) redefinement of the roles and authority of provincial administration agencies, and (ii) readjustment of the local-provincial fiscal relationship in order to promote local autonomy and good governance.