One of keys to forthcoming reform of autonomic financing system has to do with sufficiency: debate about how much money communities need to provide public services. Andalusia, Comunidad Valenciana, Murcia, Cantabria, Aragón, Castilla-La Mancha, Castilla y León, Canarias and Extremadura call on central state to give more resources to stock exchange of financing system, regardless of how that money is distributed Subsequently, according to allegations that communities have submitted to project of reform of financing system developed by experts appointed by Treasury and ir own autonomy.Learn More
- Montoro does not rule out debt of communities with state
- Communities will receive in 2017 more money than before crisis
- Madrid and Catalonia, most benefited by funding proposed by Sages
- Communities save 22 billion for state credits
- Funding experts present ir reforms with doubts that y go ahead
The differences between communities are exacerbated precisely by determining distribution criteria of that stock exchange between territories. The problem is that, unlike or occasions — in 2009, for example, Zapatero's government put 11 billion more into system — central administration barely has enough money to contribute to system, as insisted by Ministry of Finance. Especially when executive still has to cover Social security hole, with a structural financing problem.
However, from department that manages Montoro are supporters of giving to communities part of increase of revenue generated by greater economic growth. But sources of finance do not clarify wher it will be through new annual contributions or with a greater transfer of tax capacity.
The issue of resource sufficiency is controversial because some of Commission's experts believe that autonomy already has enough resources to provide services. And y propose that if y want more money y will exercise ir fiscal responsibility. Therefore, y raised possibility that y could raise VAT in a collegiate way.16.5 billion more
In any case, academics figure between 9.5 billion and 16.5 billion resources necessary for autonomy to be able to pay same basic public services with same level of quality as in 2009, when y had highest level of expenditure. The paradox is that communities will receive in 2018 more money from financing system than before Great Recession, which erupted in 2008. They'll see more than 100 billion next year. An amount y consider insufficient to cover increasing health and dependency costs, which are unbearable to ageing of population.
The problem is that communities have not recovered level of pre-tax income from before crisis, when y got a good slice of real estate boom. And finally, y have to pay in interest almost triple that a decade ago. Some experts believe that autonomy will always want more money and argue that optimal level of public services needs to be determined before providing more resources.
"The new financing system must be restarted from an agreement between administration of State and autonomy on how to distribute public resources for development of competencies that various administrations have entrusted", The experts in his report explain. They recall that autonomic public expenditure for essential services reached in 2009 almost 42% of total. Seven years later, communities are burdened with 37% of public spending in public administrations as a whole. Social security, for its part, has absorbed more than half of commitments.Regional debt will be key in negotiating
The Government is committed to addressing reform of regional funding during first quarter of next year. Its intention is to link new regional framework to approval of budgets of 2018. But negotiating scenario is different from previous editions, when successive governments closed new financing system with more money. Now, executive has barely enough resources. But it does keep a bargain with which to negotiate: 66% of community's debt is in hands of state.
The public treasury has injected some 232,834,000,000 euros into autonomy from 2012. The supplier payment plan, Regional Liquidity Fund (FLA) and financial facility are mechanisms devised by State to support local governments.
Several autonomous presidents have called on government to remove part of this debt. Although forgiveness of se loans is complicated, because Brussels would put legal bonds, Hacienda admits that it is open to study debt situation. In fact, Minister Cristóbal Montoro did not rule out a restructuring of this debt a few months ago.
Experts have deep discrepancies about what to do with this debt. Some propose a consensus solution such as turning it into perpetual or postponing its maturity to 50 years. Although political scenario was blots to closeness of negotiation, because autonomic presidents Maximalizan ir postures, almost all autonomy would accept a solution of this type.