Portugal has long been a centralized political system not only in terms of its legal system, but also in terms of its system of public administration. The pattern, like the legal system, derives from Roman law and the French Napoleonic Code. The result was that Portugal's central authorities kept most powers for themselves and administered the country from Lisbon. Local government remained underdeveloped and passive.

The framers of the constitution of 1976 sought to change this pattern of centralization. Article 238 of the 1989 revised constitution states that "local authorities on the mainland shall be the parishes, municipal authorities and the administrative regions." A plan for dividing Portugal into seven administrative regions (five based on the country's major river basins, and one each for the Porto and Lisbon metropolitan areas) had been worked out in the mid-1970s, but in the early 1990s its implementation had not yet been effected. Fear of officials in the capital that they would lose power to local authorities was seen as a principal reason for this delay.

Article 291 of the revised constitution of 1989 states that until the administrative regions have been created, the highest level of subnational government will be the mainland's eighteen districts, administrative divisions established in the nineteenth century. In the early 1990s, these eighteen districts (each bearing the name of its capital) constituted the layer of government between the national government and local government. Portugal was not a federal state, and the districts had no legislative powers. District officials conducted elections, maintained public order, and exercised what the Portuguese termed "administrative tutelage" by monitoring the performance of local government. Each district was directed by a civil governor, who was a political appointee.

The districts did not function as administrative bodies. As a result, most of the national government's activities were carried out by the ministries within territorial divisions that they established and that did not necessarily correspond with those of the districts. The district governor was not seen as occupying a higher position than ministerial officials.

Because the administrative regions envisioned in the constitution had not been established as of the early 1990s, Portugal's local government at that time consisted of 305 municipalities, further subdivided into about 4,000 parishes. Despite its name, a parish had no ecclesiastical functions but merely provided social assistance and maintained voter registration lists. An elected parish assembly met four times a year and chose the parish board, which served as the parish's government. The board drew up the parish's budget, executed the parish assembly's laws, and managed its public business. The size of these bodies was determined by the population of the parish.

Municipalities, like parishes, were classified as urban or rural, except for those of Lisbon and Porto, which were classified as metropolitan areas. A municipality was governed by a municipal assembly, half of whose members were 95c e elected every four years and half of whom were the presidents of parish boards operating within the municipality. A municipal assembly met five times a year, and its members were unpaid. A municipality's executive body was the municipal chamber. Its members (aldermen) were elected, served year-round, and were paid. The chamber was headed by a president (mayor). The president of a municipal chamber was the candidate for that body who had received the most votes. Each chamber had a council, composed of representatives from a variety of organizations, which served as a consultative body. The size of these municipal bodies was determined by the number of registered voters within a municipality.

The many tasks managed by a municipality were carried out both by city employees and private firms considered part of the municipal government. Funds to pay for these tasks came both from the national government and local sources (taxes, licensing fees, etc). The constitution stipulates that these local authorities should be financially independent, and plans existed to establish by law a system of local finance that would arrange the "fair apportionment" of public funds between the state and local authorities. As of the early 1990s, however, over 90 percent of the funds used by local government were still national in origin. In addition, the national government was obliged to see that these funds were spent properly, thereby reducing even further the independence of local authorities.

Data as of January 1993