2025 Local Government Election and future of local governance

The NPP Government is highly likely to use its two-thirds majority to change local governance to a form that will consolidate its political power

If we allow the Member of Parliament to be the driver of local development, aren’t we electing local councils just for the pretence of keeping up with democracy and representation, etc.? For a real change in the development of rural areas, we must go beyond the motions of democracy and representation, and seek new mechanisms aimed at the convenience, comfort and welfare of the people

Upcoming 5 May, the Election Commission is preparing to elect more than 8,700 members to more than 330 local government bodies. Voters will be putting an X in front of the name and symbol of a party or independent group on their ballot paper. Will you as a voter pay attention to the person behind the party symbol when casting your vote? Or will you vote for a party which is riding a popularity wave or even a dissenting wave? Will the NPP be able to secure the 50% or more vote threshold that would mark the victory in this election?

Answers to these questions and others will be known only after the 6th. For now, we have enough information to make other predictions. For example, the economic storm unleashed by US President Trump and sweeping the world is unlikely to abate despite recent pullbacks by same. The newly elected councils will be facing this economic storm from a weaker position than the central government, as I will outline later.

During his local government election campaign, specifically at Deiyandara and Weligama rallies, the President stated that his Government has worked hard to secure funds for the development of local government institutions and that the funds will be available for spending from June. At the same time, he said, jokingly or not we are sure, that with non-NPPERs not being trustworthy, the Government might consider development proposals from NPPers only.

Besides the inappropriateness of this statement during election time, what it reveals is that the present Government is no different than others before. For any governing Party, local authorities have been simply extensions of the central government that carry out the centre’s political agenda and are rewarded accordingly. 

However, under the current economic conditions, if newly elected local councillors think they can depend on gifts from the big brother, they are in trouble. The central government will have enough trouble balancing its books and monies dedicated for spending at local level will be reduced significantly. 

Therefore, it is the responsibility of the voters to elect local leaders who understand these realities and are able to find alternatives to diminishing subsidies from the central government. Why so and how so?

Weak institutions that depend on subsides from the centre 

There are three sources of revenue for local governments. These are (1) Taxes, fees, fines and other revenues collected by the institution (2) Grants or supplements received from the central government to cover salaries and other recurrent expenses and (3) Grants received for capital expenditure. For example, a budget document published for 2023 or 2024 by a Pradeshiya Sabha in the Ratnapura district shows that about 70% of the capital and recurrent expenditure of the Sabha is received as grants from the central government. These percentage is significantly less for municipal councils or urban councils with developed local economies.

Tax revenue criteria have not been updated in decades 

The criteria for collecting taxes for local government institutions are determined by Acts passed in 1987 or earlier, and these tax amounts have not been updated since then. According to a former chairperson of a municipal council, the highest monthly fee allowed even for a business like Food City is only Rs. 1,000 per month.

These tax assessments should be updated without delay and the current tax structure where local government receives only about 3% of total tax revenue in the country will have to be reconsidered at some point, if not now. Here it is worth noting that In China, for example, 85% of tax revenues are redirected to local level for local services and development.

Will the salary supplement be abolished in 2028? 

All local government institutions receive a grant from the central government to cover the salaries of the approved number of employees. The process of approving the required number of employees does not seem to be rational. As the former chairman of a municipal council noted, his institution has a staff of 75 or more, but he can run the institution with half that number of employees, and he notes that the excess number of employees really slows down the work.

According to the debt restructuring agreements, the salary supplement is to be removed when the country is required to being to paying off the debt from 2028. This fact must also be considered when thinking about the future of local government institutions.

Uncoordinated capital expenditures 

As part of the annual budget process of the central government, local government institutions also receive capital grants channelled through the provincial councils. But amounts larger than the amounts received through the budget process are spent in the local government jurisdictions through other means.

For example, in 2024, each Member of Parliament received Rs. 10 million from the decentralised expenditure head for spending in his/her electorate which may cover one to three local authority areas. Although this money is received by the Divisional Secretariat through the District Secretariat, the relevant work often needs to be carried out by the local authority which is responsible for the infrastructure of the area and the necessary facilities.

In addition, allocations for special projects are channelled from various ministries through the Divisional Secretariats. The allocations received from such special projects can exceed the capital grant provided to the provincial government through the provincial councils from the budget. For example, the Ministry of Economic Development in its 2019 performance report says it implemented projects worth Rs. 43 billion through the Gamperaliya program between September 2018 and December 2019. In comparison, the capital expenditure allocation for all nine provincial councils and local government institutions that year was only Rs. 80 billion.

Activities funded under the Gamperaliya program included the rehabilitation of tanks and canals, development of road infrastructure, construction of small-scale bridges; development of sanitation facilities in schools, sports-related infrastructure and other social infrastructure facilities, provision of electricity facilities to houses, development of religious centres, conversion of temporary roofs into permanent roofs, etc.

Road and bridge development is clearly the responsibility of local government institutions, while other social infrastructure projects also fall under the legislated responsibility of local government institutions for the “convenience, comfort and welfare of the people”.

Option 1 for local councils: more efficiency in spending 

From the perspective of the people of a given local government area, it does not matter whether the funds received by the area come through the local government or the divisional secretariat. However, from the perspective of efficiency and effectiveness, large projects implemented with the expectation of quick results in a short period of time and based on the political objectives of the central government are unlikely to be effective. 

Moreover, it is questionable whether they are designed according to the needs of the area. Such projects also often become a burden on the local government institutions in the area. For example, the cost estimates for project proposals and the approval of completed projects fall on the shoulders of the single technical officer of the local government, and he/she is not able to devote sufficient time for proper investigations. As a result, these projects often do not yield the desired output. Also, as the Director General of the Finance Commission noted, some of the assets developed or purchased through these temporary projects are not properly documented and are therefore not being followed up.

Overall, the fundamental problem in the local governance is that various actors and institutions – namely the Divisional Secretariats operating in the local authority area, as well as the Members of Parliament and the Cabinet of Ministers – carry out various projects without coordination or an approved master plan for the area.

Although the National Policy on Local Government has named the local authority as “the lead institutions for development of the area”, it does not match the reality of an underdeveloped democracy like Sri Lanka. Provisions coming from the decentralised budget and various projects are crucial for politicians at the national or provincial level to reach out to their voters. Sri Lankan voters value their representatives’ ability to deliver tangible benefits with little awareness of their in legislation and overseeing the State’s finances.

A more realistic solution is to think of new mechanisms for about planning and development at the local level which assigns a role for each stakeholder.

Option 2: Raising more revenues locally 

Here I am reminded of a story told by Lasantha Deepal who has been a member of the Katana Pradeshiya Sabha for many years and is contesting this time around as well. According to him, just as a decrease in salary reimbursement is in the horizon now, there was a situation prior to the 1991 local election where certain reimbursement allowances received from the central government were slated to be removed or decreased. At that time, President Premadasa, faced with a situation where several senior local politicians were lobbying to be nominated for the post of mayor, mayor of a certain municipal council, had said that the person who gives the best proposal to cover the decreasing income would get the post. That kind of approach to selecting or nurturing local leaders is it is more important than ever in this election, because the incoming councils will have to work creatively to increase their income locally and allow the big government to face the big storms.

New form local governance is essential 

Experimentations in new forms of local governance have come and gone in the name of coordinating committees at the divisional level and various grass roots assemblies in different names such as People’s Committees, Gramodaya Mandala, Jana Sabhas, and so on. 

Even now there are divisional coordinating committees, but they are formed ad hoc with vague terms of reference. It is said that the roots of the existing Regional Coordination Committees are the Regional Development Councils which were set up during the Sirimavo Bandaranaike government of 1970-1977, with the leftist ideology of establishing state-owned enterprises at the village level. Even after devolution of power intended in the 13th amendment, succeeding Governments have used these mechanisms bypass the devolution mechanisms, including the independence of the local councils guaranteed by law. 

The leadership of these coordination committees is vested in the Member of Parliament representing the area. The chairpersons representing local councils in the administrative division are only minor members of these coordination committees assisting the Member of Parliament to carry out his/her agenda, although there can be exceptions depending on the personality of the leader of the local councils and independence in finances that would have secured. 

If we allow the Member of Parliament to be the driver of local development, aren’t we electing local councils just for the pretence of keeping up with democracy and representation, etc.? 

For a real change in the development of rural areas, we must go beyond the motions of democracy and representation, and seek new mechanisms aimed at the convenience, comfort and welfare of the people. 

The NPP Government is highly likely to use its two-thirds majority to change local governance to a form that will consolidate its political power. Given the current abysmal state of local government institutions, we should be willing to look critically but positively at any new structure that the Government would propose.

As Deng Xiaoping is reputed to have said, “If a cat catches mice, it doesn’t matter whether it is black or white.” This saying applies to both the left and the right in this country.