The Municipality of Quito has initiated a lawsuit challenging the constitutionality of a recent reform to the Organic Code of Territorial Organization, Autonomy, and Decentralization (Cootad) that was classified by the Assembly as economically urgent. This legal action was taken by the city's Attorney General's Office on Wednesday, following a decision by the Metropolitan Council during a session held on February 24, where fifteen votes were cast in favor of filing the lawsuit with the Constitutional Court of Ecuador. The reform, which has already been implemented, mandates that local governments allocate 70% of their resources to public works and restricts operational spending to only 30%. Failure to comply with this regulation could result in corrective measures enforced by the Ministry of Economy and Finance.

The urgency of the reform stems from ongoing discussions about the efficient use of resources by decentralized autonomous governments (GADs), which play a crucial role in regional development. The legislation was published in the Official Registry on February 23, 2026, marking its effective enforcement. The new rules necessitate a significant structural change in how local governments manage their budgets, likely leading to debates regarding the viability of such restrictions and their potential impacts on public service delivery.

This lawsuit not only highlights tensions between local governance structures and national regulations but also raises questions about the balance of power and financial autonomy for municipalities in Ecuador. As Quito contends with compliance issues and potential penalties from the national government, the outcome of this legal challenge could have far-reaching implications for how local entities are allowed to operate within the current legislative framework and may influence future reforms in the decentralization policy.