Asturias, neither: the Spanish government will only have Catalonia by its side for the new financing

MadridJuly will be a thrilling month for the Ministry of Finance. Not only because it has set underway the machinery to present the 2027 budgets —with the vote of the stability path in Congress and the presentation of the spending ceiling—, but because it will be key to the funding model. After almost two years of negotiation with Esquerra and the Generalitat, this week the ministry plans to send the draft of the new funding system law in writing and July 29th Minister Arcadi España will make it official at a new meeting of the Council of Fiscal and Financial Policy. And it will be at this meeting that all common-regime autonomies (the Basque Country and Navarre are excluded) will vote against the model, with the exception of Catalonia.

The vote against by the PP-governed communities —almost all of them— was taken for granted from day one. Also the vote of Castilla-La Mancha by the socialist Emiliano García Page, who is Sánchez's main critic within the PSOE; but the Spanish government did intend to convince Asturias, where the also socialist Adrián Barbón has been governing since 2019. However, after several bilateral contacts with the Treasury, from the Asturian executive they confirm to ARA that they will vote against the new model. "Asturias cannot vote in favor of this proposal", they state from the regional government, "it goes against what we have been defending for more than a decade", they resolve. Faced with this position, the Spanish government shows itself resigned to being left alone with Catalonia, even though from the ministry they do not throw in the towel and are looking for a vote in favor or at least a last-minute abstention from some community (except for the three socialist ones and the Canary Islands, with a president from Coalición Canaria, the rest are governed by the PP).

The Santiago Declaration

Sources from the Asturian government recall that at the regional level, socialists and populars have an agreement on how financing should be reformed since 2020. A pact unimaginable at the state level. Asturias also signed the declaration of Santiago de Compostela in 2021 along with seven other autonomies to establish a consensual position regarding the financing reform.

It was assumed, in addition to Asturias, Extremadura, Aragon, Castilla-La Mancha and La Rioja (then governed by the PSOE), Castilla y León, Cantabria (governed by the PRC) and Galicia, at that time governed by Alberto Nuñez Feijóo, now leader of the national PP. That is to say, communities that have significant depopulation problems —of the so-called 'Empty Spain'— and that have common interests when it comes to defending what a new financing model should take into account. A position that does not coincide with that of other more populated communities such as Catalonia or the Valencian Community, Andalusia, Madrid and the Balearic Islands.

The declaration had 35 points and went beyond financing, but regarding the model, it basically stated that all communities should be able to provide similar services "regardless of each one's ability to generate tax revenue". When calculating the slice of the pie that corresponds to each community, the document specifies that population aging should be particularly rewarded —since the cost of healthcare and dependency skyrockets—; geographical dispersion, orography or depopulation. At the same time, they reject any system that may arise from a bilateral agreement, as has happened in this case with the financing agreed between ERC and the Spanish government, and they demand that the system be debated within the Council of Fiscal and Financial Policy, which is a multilateral body.

The Treasury recalls that everyone wins

From the Spanish government they recall that with the new model all the communities would come out winning. They assure that the autonomy and solidarity of everyone is guaranteed, as well as an unprecedented extra contribution of State resources of up to 20,975 million euros (which has not been detailed where they would come from). However, it is also true that, contrary to what Asturias and the rest of the communities of the Santiago declaration claim, the system agreed with ERC gives more weight to the communities in the participation of tax revenues from VAT and IRPF (read here the keys to the model).

In the ranking by communities, as the ARA announced, who would gain the most in resources in the new financing model would be Andalusia (4,846 million euros) and then Catalonia (4,686 million euros) and the Valencian Country (3,669 million), although what would primarily balance the model is oridinality, adjusting the relative position of those that contribute the most so that they do not fall in the ranking after the application of the model.

The autonomies of the Santiago declaration, in absolute terms, would gain less, considering that they are already over-financed: Asturias, 248 million euros or Galicia, 587 million. Extremadura and Cantabria would remain the same as at present thanks to the so-called status quo, clause, which guarantees that no community receives less than it received with the system updates.

Approval at the Council of Fiscal and Financial Policy

Despite the non-majority of the communities, the financing model will go ahead in the Council of Fiscal and Financial Policy, since the Minister of Finance has half the votes and the affirmative vote of the Generalitat will also be added. However, where the Spanish government will really risk it is in the Congress of Deputies, where the new financing law must obtain the absolute majority of the chamber.

The key is held by Junts. So far it has opposed the system because it claims an economic agreement, but it will allow the first debate, the one on the whole, to pass, so that the parliamentary discussion can at least begin. When will it be time to discuss it in Congress? From the Ministry of Finance they do not want to set a date beyond the Financial Policy Council of July 29 —after it must be approved by the council of ministers and sent to the Spanish chamber—, but time is running out: there may be Spanish elections from the first quarter of next year and, if the process has not ended, everything can be left in wet paper.