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Hacienda Apercibe 660 mayors for incompliance with adjustment plans

The required municipalities pledged to take savings measures to access liquidity under advantageous conditions

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Hacienda Apercibe 660 mayors for incompliance with adjustment plans

Hacienda claims by letter to 660 mayors with an adjustment plan that y have not put in place to approve necessary measures to fulfil ir commitments. These adjustment programs, explains letter of four pages sent by Ministry, were validated by municipal plenary. It was a condition to have access to liquidity offered by Treasury. But mayors who have received letter signed by Secretary general of territorial administrations, Belén Navarro, have not fulfilled ir commitments. Hacienda now threatens m with additional control of state intervention and, even, to apply toughest measures of Stability Act, which includes dissolution of local corporation.

Among affected municipalities, 660 of almost 8,200 local authorities in Spain, re are city halls of all sizes. The most important are: Algeciras, Cádiz, Chiclana, Jerez de la Frontera, El Puerto de Santa María, San Fernando, Granada, Huelva, Jaén, Vélez-Málaga, Palma de Mallorca, Telde, San Cristóbal de la Laguna, Avila, Ciudad Real, Cuenca, Lleida, Tarragona, Mérida, Alcalá De Henares, Alcorcón, Móstoles, Parla, Rivas-Vaciamadrid, Las Rozas, San Sebastián de los Reyes, Torrejón de Ardoz, Lorca, Orihuela, Gandia and Valencia.

The government launched in 2012 plan of payment to suppliers, a line of credit with very favorable conditions, so that communities and municipalities could liquidate invoices that y had in drawers. Since n, it has opened a few funding lines each year to help liquidity problems. It is a mechanism similar to Autonomous Liquidity Fund (FLA). In last five years, ministry has injected nearly 19 billion euros into local coffers in this way.

Raising IBI or lowering spending to ensure that mayors return money when loans are overcoming, ministry demanded a sanitation program. Given delay of municipal corporations to implement measures committed in se plans, Hacienda has sent those letters to 660 mayors warning that "failure to comply with adjustment plan will lead to enforcement of coercive measures of The law of stability. "

Articles 25 and 26 of this standard, approved to combat red numbers of public administrations, stipulate that defaulting administrations will have to pass a credit non-availability agreement — a procedure consisting basically of Cut budgeted spending — to ensure that financial plan is met. Hacienda can also withhold income from city councils and, in case of repeated non-compliance, punish m with a deposit equivalent to 0.2% of municipal GDP, and ultimately can intervene municipal corporation and dissolve it.

"In order to guarantee reimbursement of amounts derived from agreed borrowing operations, local entities which have concluded m may be subject to control actions by General State Intervention (IGAE)", Signal missive as a warning.

The situation, in any case, has not reached that point of gravity. The vast majority of municipalities that have been apercibido, 526 corporations, have problems to reduce period of payment to suppliers to legal limit. In or words, y fail to comply with law of delinquency which establishes that it should not take more than 30 days to pay bills. This period begins to count 30 days after receiving invoice, ie, that takes half more than 60 days to pay.

Hacienda explains that mayors will be able to correct ir adjustment plans with measures y decide in ir municipal plenarys. Some of m, for example, had agreed to raise IBI with a cadastral revision equivalent to 50% of market price. Or cities will have to eliminate some of bonuses and exemptions from ir local taxes. and ors should reduce some of ir expenses.

The ministry explains in letter that "it will monitor adjustment plans and that if it detects risks of non-compliance or non-compliance with measures, it shall propose its modification with adoption of new measures or alteration of timetable of Execution ". These programs of financial adjustment are different to those demanded by administrations that violate objectives of deficit or debt, remember in Hacienda.

Notice to Auditors

The Ministry of Finance has also sent letters to auditors of Autonomous Communities and city councils with financial problems during last weeks. He has reminded m that y are also responsible for monitoring fulfillment of budgetary objectives and that territorial administrations comply with rules of delinquency.

The objective of se letters, referred to auditors in December, is to warn m that y must be more proactive in detecting possible budgetary deviations. In this sense, department of Cristóbal Montoro aims to prevent budget offsets from being detected only at end of year when re is no more room to correct gaps. The auditors have to warn municipal full of deviations, insists Hacienda.


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