Congress overturns Lula’s vetoes on the LDO and makes transfers more flexible in an election year

This Thursday, the National Congress overturned President Luiz Inácio Lula da Silva’s (PT) vetoes on the 2026 Budget Guidelines Law (LDO) and resumed provisions that make rules more flexible for federal transfers to municipalities and for transfers during electoral periods.

The joint session was called by the president of the Senate, Davi Alcolumbre (União Brasil-AP), who is responsible for scheduling Congress meetings aimed at analyzing presidential vetoes. The effort to overturn the devices began this week, during the March of Mayors, an event that brings together municipal managers from across the country in Brasília in search of the release of funds, agreements and parliamentary amendments, in direct contact with deputies, senators and members of the government.

At the opening of the meeting, on Tuesday, Alcolumbre publicly announced that he would organize a Congress session to analyze the vetoes and allow municipalities to once again access federal resources. According to him, around 3,100 cities would be affected by the restrictions imposed by the federal government.

One of the vetoes overturned concerns article 95 of the LDO, which establishes that the “donation of goods, values ​​or benefits by the public administration at a charge to the donee” does not constitute non-compliance with the restrictions of electoral legislation. In practice, the device makes transfers and transfers more flexible during election years.

By vetoing the section, the government claimed that the proposal created an exception to the Elections Law and dealt with a topic outside the scope of the LDO. When vetoing the section, Lula also cited a provision in the electoral legislation that prohibits, in the three months before the election, transfers from the Union to states and municipalities, with the exception of those amounts intended for pre-existing obligations for works in progress or those destined for emergency situations or public calamities.

Opposing the removal of the section, the Psol leader in the Chamber, deputy Tarcísio Motta (SP) stated that the return of the section would enable the “buying of votes”, precisely because it would allow the transfer of amounts to municipalities during the election period. — This is anti-republican, an aberration — he said.

Parliamentarians who defend the measure argue that the non-transfer of amounts could affect investments in municipalities, especially small ones.

Parliamentarians also decided to reestablish a section of the LDO that exempts municipalities with up to 65,000 inhabitants from the requirement to comply in order to receive voluntary transfers from the Union, sign agreements and receive resources, such as parliamentary amendments. The device had been vetoed by Lula on the grounds that the measure contradicted the Fiscal Responsibility Law and could violate constitutional rules linked to social security.

In the message sent to Congress in January, the government argued that the LDO, as it is an ordinary and temporary law, could not remove requirements set out in the Fiscal Responsibility Law. Planalto also stated that the exemption from payment for defaulting municipalities would violate article 195 of the Constitution, which prohibits benefits to entities indebted to social security.

In total, there were 44 vetoes by President Lula to the LDO, but Congress decided to overturn only 4 of them. Other devices that had their veto overturned is an exception that allows the government to allocate resources for the construction and maintenance of state and municipal highways, and also waterways, as long as they are aimed at the integration of transport modes or productive flow.

During the March of Mayors, the president of the Chamber, Hugo Motta (Republicanos-PB), defended the parliamentary amendments and criticized what he called an attempt to “criminalize” the resource transfer mechanism. According to him, the amendments bring the federal budget closer to the needs of the municipalities.

— The amendments are legal instruments for Congress to participate in the Union budget to meet the demands of municipalities and more distant communities, help maintain health services, and be able to invest in education and infrastructure. Because it is not from a cabinet here in Brasília, no matter how competent the minister is, that he can have the sensitivity that mayors, councilors, and community leaders have — he stated.

Pressure by Master’s CPI

Before the veto analysis began, the joint session was also marked by demands on the president of the Senate for the installation of the CPMI in the Master case. Opposition deputies and also government-aligned parliamentarians pressured Alcolumbre on the issue.

Among those who made public demands were Pedro Uczai, Luiz Lima and Kim Kataguiri.

Senator and presidential candidate Flávio Bolsonaro (PL-RJ) also took to the Congress rostrum, also to press for the opening of a CPMI. He declared that he wants to see banker Daniel Vorcaro “sitting” on the commission to explain his relations with authorities from the Three Powers.

— I have a challenge to make. I want Daniel Vorcaro and Augusto Lima sitting at that CPMI talking about the relationship they had with Flávio Bolsonaro, with Lula and with Alexandre de Moraes. Because I have nothing to fear, I have nothing to hide. I’m challenging the Brazilian left here — said the senator.

Despite attempts, the president of the Senate, Davi Alcolumbre, denied the requests and reaffirmed that the session was called only to deal with presidential vetoes.