RNs have the highest staffing salary obligations in the nation; understand – Portal

According to data from the National Secretariat of the Treasury (STN) obtained on October 19, 2023, Rio Grande do Norte has the highest wage obligations with personnel costs (DTP) in Brazil. Spending exceeded 50% from August 2021 to August 2023, reaching 57.76% in the 12 months to August of this year.

Under the Fiscal Responsibility Act, the relationship between total personnel costs and state executive-adjusted net current income—for state employee salaries and fees, including inactive employee benefits—is capped at 49%, making 46% 0, 55% of the prudential limit and 44.1% of the warning limit.

Overall, personnel costs in Brazilian states continued to rise as a share of revenue in the second four months. In addition to the RN, in seven other states, executive personal spending exceeded the established prudential limit. These were: Amapa, Paraíba, Rio de Janeiro, Rio Grande do Sul, Acre, Minas Gerais and Raraima.

The increase is across states, with many below the LRF. The data, however, show a disparity between the growth rate of government revenue and personnel expenditure. For example, in the 12 months to August, states’ combined net current revenue (RCL) fell by 0.8% compared to the same period in 2022, while staff costs rose by 6.1% in real terms.

The data shows that among 27 organizations, 25 saw personnel costs increase while revenues fell or also increased, but at a slower pace than expenses. On the other hand, the collection of Goods and Services Tax (ICMS), the main tax for states, has been hit by the federal government’s measures in 2022 that have led to lower rates in sectors such as fuel.

State of Rio Grande do Norte wants to maintain ICMS at 20%

In RN, the state government intends to maintain the ICMS rate at 20% through 2024 and thereby increase revenue. According to State Secretary of Finance (Sefaz/RN) Carlos Eduardo Xavier, the plan is to raise another R$700 million, comparing a scenario where the tax will return to 18%.

The rationale is to remain competitive with neighboring states such as Ceara and Paraíba, which have increased their rates to 20%, as well as Pernambuco, which is trying to raise its rates to the same level. However, even with Brazil’s highest figure for personnel costs, the secretariat has not announced any spending cuts as a measure to balance public accounts next year.

The two percentage point increase was approved by parliamentarians in late 2022 and took effect from April 1, 2023 to December 31, and is due to return to 18% in January 2024.