From Montoro's envelopes to Montero's fund

For many years, the autonomous communities knew exactly how much money they would have to prepare their budgets for the following year thanks to a figure written inside an envelope given to the Secretary of Economy before the summer. Literally. This was done at the end of the meeting of the Fiscal and Financial Policy Council held in Madrid, where the Spanish government holds the deciding vote, dominating any decision. The communities under the common regime accepted this, while the chartered communities remained observers with voice but no vote, because they didn't need to. Incredibly, a white envelope containing a mysterious figure was handed out, announcing how much of the money collected in Catalonia would be transferred to the central government for spending in Catalonia. Spending on what? On community responsibilities, basically public services such as healthcare, education, social services, and security. This is how the system works: controlling tax collection and transferring funds according to the whims of the central government's interests through an opaque and arbitrary system that could never be predicted with certainty. In 2008, Cristóbal Montoro took advantage of the debt crisis to push Catalonia to the brink of bankruptcy and blackmail it by threatening to withhold the salaries of hundreds of thousands of public employees. Chronically underfunded, the Generalitat (Catalan government) had been forced to go to the markets and borrow to provide services. When the markets closed due to the crisis, Montoro saw an opportunity to tighten spending and stifle management. The 2008 crisis not only shook the Catalan economy; it structurally altered the financial relationship between the Generalitat and the Spanish State. In this context of falling revenues and virtually impossible access to the markets, the Spanish government created the Regional Liquidity Fund (FLA), a mechanism initially conceived as a way to rescue liquidity so that the autonomous communities could pay their debts and suppliers. But the political translation of that decision is clear: when an autonomous community cannot finance itself normally, it becomes dependent on the State for funds.

This dependence was not neutral. It was an intervention. de factoThe turning point came in 2015, when the Ministry of Finance made explicit what had previously been implicit: to receive FLA (Regional Liquidity Fund) payments, it was necessary to accept monthly certifications, prior spending authorizations, and an imposed prioritization of payments. This was a backdoor application of Article 155, because in Catalonia the conditions were openly linked to political criteria. The decisive step came in 2017. Here, the intervention took a qualitative leap: the State stopped limiting itself to controlling the extraordinary FLA credit and entered directly into the Generalitat's (Catalan government's) ordinary treasury. The Ministry of Finance began to withhold and manage the advance payments—that is, the monthly advances of tax revenues due to Catalonia—and to set payment priorities based on political and administrative criteria. And this point is key: this control no longer pertains to the FLA, but to the ordinary treasury. It's not about lending money with conditions, but about deciding when and how revenues belonging to the Generalitat can be spent. It's a demonstration of who holds the key to the till.

Seen in perspective, the sequence is unequivocal. The 2008 debt crisis generated treasury pressure; the 2012 FLA (Regional Liquidity Fund) offered liquidity in exchange for control; in 2015 this control became operational intervention; and in 2017 it culminated in direct control of ordinary revenues. The result is a Generalitat (Catalan government) with approved budgets but without effective sovereignty over its resources. An instrument created to address a financial emergency ended up becoming a lever of political control, the consequences of which go far beyond budget management and directly challenge the democratic quality of the State. Subsequently, with the Generalitat's recovery, the Catalan government remains obligated to provide the Ministry of Finance with detailed information on expenditures, budgets, and financial needs in order to access liquidity funds (such as those from the FLA or the financial facility mechanism) and justify them.

ORDINALITY

The principle of ordinality is a basic rule of fairness in any decentralized financing system: solidarity can and should exist, but it should not alter the relative order of the regions according to their fiscal capacity. In other words, a region that is among those that contribute the most before redistribution should not fall below the average—much less behind territories with less contributory capacity—once redistribution has been made. This principle does not question inter-territorial solidarity, but rather establishes a reasonable limit: preventing redistribution from becoming a mechanism of structural penalty. The fact that this criterion has not been effectively applied explains much of Catalonia's fiscal discontent and helps to understand why the debate on financing is not only technical but profoundly political.

The financing system now presented has some flaws and two great strengths. The main drawback is that it doesn't take the cost of living into account in the formula for allocating resources based on a tight budget. Although we all know that a euro isn't worth the same in Hospitalet de Llobregat as it is in Vall-de-roures, it seems that the cost of living isn't considered necessary. Its two advantages are eliminating advance payments—so that the money goes directly into the Generalitat's coffers—and the ordinal allocation system. Is it enough? No. Is it unique or similar to the Economic Agreement? Neither. Is it better financing that moves in the right direction toward being able to control the administration's income and expenses? Undoubtedly, yes.