November 30, 2020

Resilience, rebuilding and fair financing



No one doubts the difficulty of negotiating and carrying out a global reform of the Autonomous Financing System in the midst of a pandemic. But neither did anyone question the challenge for the Government of Spain to negotiate in the European Council – before 26 other heads of state – that the Next Generation EU reconstruction program should take into account that not all European economies had been hit equally due to Covid-19, nor that all States had the same fiscal room for maneuver. Nothing seems simple in this 2020 that has blown up our income forecasts, our spending lines and, above all, our future projects.

But Spain succeeded and the double perspective of equity and financial realism was imposed in the negotiations. Our country will be one of the most benefited by European reconstruction funds. And if it was possible in Europe, now it is the turn to also demand the reform of a financing model that will solve once and for all the problem of inequity in the distribution of resources between the autonomous communities.

Even so, the problem of equitable distribution between the territories is not the only one that invalidates the current financing system. Article 156 of the Constitution states that “the CCAA will enjoy financial autonomy for the development and execution of their powers in accordance with the principles of coordination with the State Treasury and of solidarity among all Spaniards.” That is to say, it also includes the precept of sufficiency, when the reality is quite different: there is an Administration with resources and few powers –the central one– and others –the autonomous ones– with many obligations and a considerable lack of funds to face them.

Of course, a global reform is complicated, but this situation cannot last any longer. We need a vertical distribution of tax resources to better meet the needs of citizens, who are the ones who pay taxes and who expect from their governments an adequate provision of services.

It is necessary to recognize, of course, the important advances that have occurred in recent years in terms of sufficiency. The Central Government has addressed the demands of the autonomies and in the face of an unprecedented crisis it has chosen to guarantee liquidity and resources for the autonomies. A completely remote position from the one that the Popular Party government adopted in 2011, when cuts in health, education and social services were the only proposed solution. An unprecedented degradation of public services linked to the Welfare State from which the autonomies have not yet recovered. And the current pandemic has shown it again.

The decision of the current Ministry of Finance to maintain payments on account to the autonomies planned for this year to guarantee the same level of income and the incorporation of the COVID fund, endowed with more than 16,000 million, has allowed health, educational and – dependent on the Autonomous Communities – have not been resentful by the real fall in collection, and has revealed the change in criteria on the part of a Government that conceives regional financing and the reinforcement of the Welfare State as two faces of the same coin.

For this reason, we are convinced that the Government will understand today more than ever that there are no possible extensions for a pandemic that has weighed down our economy, but above all it has caused thousands of human losses and an unprecedented socio-health crisis. The central Executive has declared the financial year 2021 as the starting point for the recovery and reconstruction of the country, but while the reform of the financing system continues to be postponed, many of the autonomous communities will not be able to face the way out of the crisis with equal chances of success. And that despite the fact that our citizens have equally suffered the consequences of a virus that has not understood social classes, ages, and much less financial inequalities between territories.

Today, in the middle of the second wave of infections, Valencians and Valencians reinforce, as every November 18 for three years, the demand for the reform of a system that accumulates seven extensions (from 2014 to 2020, both inclusive) that already double the five-year period of initial validity of the current System (from 2009 to 2013). There is broad consensus on the need to address the reform of the system, but so far the extensions have been the only way out of this problem. And this despite the fact that, as recognized by the Minister of Finance, María Jesús Montero, in July 2018, the current system “favors the weakening of the State of Autonomies” and, consequently, of the Welfare State.

Yes, the problem of under-financing is not just a Valencian problem. The asymmetries in the treatment received by the different autonomous communities is putting at risk the viability of our social and territorial model and our autonomous structure. This is a State problem that will not be resolved between the CCAA, but with the determined will of the Central Government and the rest of the parties of the parliamentary arch to put an end to it. Until now, the situation was extremely serious, but in the current circumstances the disparities have simply become dramatic because resource inequalities have a direct impact on the ability to face economic reconstruction after the impact of the Covid-19 crisis. .

In 2021, the income per inhabitant provided by the common and regional autonomous financing systems ranges from 2,136 euros in the Valencian Community to 2,956 euros in the best-financed region, a difference of 40%. Not to mention that those under the provincial regime reached at least 60% more. But what is most worrying, however, are the different levels of per capita spending that we can cope with. In 2019 the Valencian Community spent 3,498 euros per capita; the best financed communities of the common system, 4,320 euros, and the Foral Communities, 4,954. How to speak of the equity mandated by the Constitution in the distribution of resources while we continue to allow the autonomous communities – which carry out 92% of health spending in Spain; 91% of spending on education and half of spending on social protection not linked to unemployment or pensions – do we have such disparate instruments at our disposal to protect our citizens?

The extraordinary transfer to the Autonomous Communities, reported in the last Fiscal Policy Council and endowed with 13,486 million euros for 2021, should be the instrument that allows covering two key issues in regional financing: sufficiency and equity. On the one hand, these resources should strengthen the current Welfare State and favor prevention against new waves of the pandemic. And on the other hand, it must serve to equalize the starting financial capacities of the territories to face the recovery under the same conditions. Otherwise, we will consolidate – inexplicably – within Spain an inequality of treatment that will be identical to that against which we are fighting in Europe. And the risk that the under-financed communities – such as Andalusia, the Valencian Community, Murcia, Catalonia, the Balearic Islands or Castilla-La Mancha – continue to be far from the Spanish average, as has happened in the last decade, will be even greater. And even more so in those Autonomous Communities that are under-financed and also have a per capita income below the average.

Let us not allow financial injustice to consolidate when we have the most effective tool available to overcome it: additional resources through the General State Budgets to provide resources to the least financed autonomies while we undertake the reform of the system. To solve the problem of the lack of resources, the Consell del Botànic is forced to introduce a claim in its budgets since 2016, which in 2021 will be 1,336 million euros, an annual figure that represents our under-financing.

Reconstruction, resilience, and fair financing go inexorably linked. The convergence in the per capita income levels of all the territories is a great challenge in which Spain has not managed to advance. If a global pandemic that has put our health and socio-health systems in check and whose pressure has fallen mainly on the autonomous communities is not enough to speed up the reform of the model, we will not have understood anything about well-being, or about the generation of wealth, nor about progress in 42 years of democracy.

A new delay is not viable, we deserve to get a future with no more mortgage than equal opportunities.

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