04/12/2021

Regional funding: the same old story

2 min
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BarcelonaThe Ministry of Finance has sent the autonomous communities a report drawn up by its own experts on what should be the adjusted population calculation with a view to an eventual reform of the regional funding system. The way in which the population is calculated is the key to the whole system, as it determines how much money is received. The system does not allocate money according to the number of people living in each region, but rather it adjusts this figure with other variables such as age or geographic dispersion, which is considered to make services more expensive. This fact is detrimental to communities, such as Catalonia, which who population is neither particularly dispersed nor old. That is why the Generalitat has argued for the inclusion of other parameters, such as the cost of living, which introduce a distortion in regional funding.

The principle is very clear. One euro does not buy the same in Catalonia as in Extremadura, so that building or maintaining a school or a health centre is more expensive, on average, here than there. This is also reflected in salaries, so the same public salary in Catalonia does not bring the same purchasing power as elsewhere. Therefore, it seems reasonable to include this variable when making a careful calculation of the needs of each autonomous community in order to guarantee the correct financing of public services throughout the State. However, in the Spanish government experts' proposal, this idea is dismissed because, they state, "it does not seem that a consumer price index of the administrations, with the difficulties that it may entail, can bring improvements to the system".

In reality, with this document the Spanish government is already showing what its idea is: to introduce corrections in the current system to avoid some distortions that are produced at present, but in no case to consider an in-depth reform that would put an end to the basic imbalances. What is on the table, then, is a simple review of the system agreed between Antoni Castells and Elena Salgado in 2009, and that most experts consider confusing and not very transparent, in addition to causing large differences between regions. Thus, according to the 2018 liquidation data, Cantabria received €3,400 per inhabitant, whereas Valencia only got €2,400: €1,000 less. In the case of Catalonia, the figure was €2,664. No adjustment can justify these differences, and that is why a structural change is necessary.

It is possible that the Treasury's proposal will correct some of these distortions, but in no case is it a panacea that can solve either Catalonia's chronic underfunding or its fiscal deficit. This solution could only come from a system of its own, such as the independent taxation the Basque Country enjoys. Of course, the Catalan Government has the obligation to fight for every euro that might come to Catalonia and to harness its political influence for the benefit of its citizens. And this means making proposals and establishing alliances with territories such as Valencia and the Balearic Islands, with whom we share the same problems, so that it does not become the same old story.

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