Around two years ago, the state government started delaying civil servants’ salaries and pension checks. Right now public employees, such as professors from the State University of Rio de Janeiro, are still receiving part of their wages for December, with no expectations for a year-end bonus. There are many reports of state employees who don’t have enough money to pay rent or buy food. For a while now, state hospitals have been unable to afford equipment, supplies and salaries. The education budget has also been slashed. Even police officers and firefighters have threatened to strike over late paychecks.The State of Illinois has been stiffing vendors for years, but so far the first responders are getting paid. And that's without the extra burdens of building Olympic facilities for short-term use.
The budget disaster in Rio could be attributed to many factors, such as the fall in the oil prices, the expansion of the government payroll and the general recession. But there’s no doubt that reckless spending on the World Cup and the Olympics played a role. The city of Rio will be paying off the debts it amassed for years, while it also now has to maintain the arenas it built.For all of Chicago's troubles, at least the three Stanley Cup celebrations and one World Series celebration since 2009 have made use of existing infrastructure, although the rent-seeking in Wrigleyville is getting out of hand. Plus an America's Cup qualifying race on better water. But perhaps, Clout City and the Combine notwithstanding, Brazilians still do corruption better.
As a result of all this, Rio’s governor is trying to pass more than 20 austerity measures. He seems to have decided that the population had effectively joined the party and now wants to split the cost of the beer. The measures include salary reductions and higher social security payments for civil servants, tax hikes, an increase in public transportation fees and the end of many social programs such as rental subsidies for the homeless. The state has also signaled it will sell off the public water supply and sanitation department to private investors.The New York Times assures us that Carnival will go on as scheduled, anyway.
Meanwhile, it keeps granting significant tax exemptions to telephone companies and other businesses. According to a report from the Agência Pública, a Brazilian investigative journalism agency, just 50 companies received $8 billion of tax exemptions between 2007 and 2010. They include luxury jewelry brands, beauty salons and massage parlors. Others are online retailers that barely generate jobs. The suspicion is that these companies have given big donations to political campaigns.