The Government will deliver 154.5 billion to the communities in 2024 through the financing system, 15% more than in 2023

The regional governments will have 154,467 million euros from the regional financing system to prepare their budgets for next year. This figure represents an increase of 14.9% compared to the resources transferred from the State to the regional administration in 2023. This was announced on Monday afternoon by sources from the Ministry of Finance and subsequently confirmed by Minister María Jesús Montero, who also announced that the autonomies will be able to close at most with an imbalance in the accounts of 0.1% of GDP. while the State will do so at 2.9%.

Of all the financing that the regional administrations will receive next year, 134,658 million correspond to payments on account for the tax revenues expected for 2024, 8.3% more than what was delivered in 2023. The final tax collection of taxes corresponding to the autonomies is not known until more than a year after preparing the budgets, which is why the Government advances estimated amounts to the communities every year based on the forecasts.

In addition, the regional governments will receive another 20,746 million euros as settlement of the 2022 financing system, a year in which tax collection exceeded all expectations.. These almost 21,000 million are the difference between the collection that the State estimated for the autonomies for that exercise and the result that was finally obtained. With 2022 far exceeding expectations, the settlement for communities is especially favorable this year.

The Ministry of Finance has transmitted this information to the regional governments during the meeting of the Fiscal and Financial Policy Council (CPFF), the forum in which communities and the Government discuss public finance matters.. This meeting had been called last week by the fourth vice president and Minister of Finance, María Jesús Montero, to inform the administrations of the budget stability objectives. That is, the public deficit limits that territorial administrations can legally incur.

On this issue, María Jesús Montero has informed the autonomous communities that they will be able to close at most with an imbalance in the accounts of 0.1% of GDP, one tenth more than what the Government committed to Brussels last April. This reference has not pleased some communities governed by the PP. For example, the Andalusian Treasury Minister, Carolina España, has criticized that the adjustment is much more demanding for them than for the State – whose deficit limit is 2.9% – although the autonomies assume a third of national public spending.

With regard to local corporations (city councils, councils, councils…) they must close their accounts in budget balance. That is, with equivalence between income and expenses. The objective that the Treasury has finally set for these corporations is somewhat softer than the one sent to Brussels, which established a surplus obligation of 0.2 points over GDP.

Negotiations for the haircut will begin in January

Minister Montero, who spoke at a press conference after the CPFF meeting, announced that starting in January the Treasury will undertake a round of contacts with the regional governments to discuss debt relief for the communities.. The Montero department will hold individual meetings with each community to study their situation and establish what part of their debt is the result of the 2008 financial crisis, which will be forgiven.. The work is of great technical complexity and the idea is that the communities can progressively finance themselves again in the markets, even if only partially at the beginning.

The forgiveness of part of the regional debt came to the fore after the investiture agreement signed by PSOE and ERC, which established a forgiveness of 20% of the Catalan public debt (15,000 million) in the hands of the State through the Regional Liquidity Fund (FLA). The text of the pact itself established that this forgiveness will be extended to all communities, whether or not they have debt with the State, although it did not specify under what formula.. Something that has not pleased the majority of common regime communities, including Castilla-La Mancha, in socialist hands.

Montero denies bilateral meetings with Catalonia

Montero has also taken the opportunity to deny that the Treasury has had any exclusive meeting with the Generalitat to discuss the financing model of this community.. “There has not been any bilateral meeting on the regional financing model in Catalonia,” Montero concluded.. The Catalan Minister of Finance, Natalia Màs, had been absent from this Monday's meeting, alleging that the Government already has open bilateral negotiations with the State to agree on a new singular financing. A comment that has upset the majority of regional governments, including also that of Castilla-La Mancha, in the hands of the PSOE. The 12 autonomies governed by the PP have presented a common front to the Treasury: they have demanded a reform of the financing system, which has been pending since 2014, and they have criticized the Government's favorable treatment of Catalonia.

The Minister of Finance has also highlighted that all the autonomous communities have once again received the largest financing in their history with this Government, despite the pandemic and the presence of a war on European soil.. Funding that, it is important to remember, comes almost entirely from the collection of taxes that legally correspond to the regional governments.

In this sense, María Jesús Montero recalled that the central government assumed the entire fiscal impact of the pandemic, which amounts to 30,000 million euros.. Likewise, he added that the Treasury has forgiven communities and municipalities for the negative settlement of the system in 2020. That year, tax collection collapsed due to the pandemic and the communities received payments on account that were much higher than what would have corresponded to them. The Government, instead of claiming these amounts in that year's settlement, forgave them to the autonomies.