“No es justo”: the grievance everyone sees but Moncloa agreed only with ERC to impose it on the rest

Twelve years later, everything remains the same. The current regional financing model expired in 2014, which has not prevented it from continuing to determine a distribution of resources among the communities that has generated notable differences between territories, according to all experts. Twelve years later, “there is a general problem of inequality in resources,” states Francisco Pérez, research director of the Valencian Institute of Economic Research (IVIE), for whom “it is not fair to maintain the current situation.”

Read more Ten arrested after shooting attack from a drug speedboat against a Civil Guard patrol boat in the waters of Huelva

The change of the financing model was one of the great promises included in the government agreement sealed in 2023 by PSOE and Sumar. Its non-compliance, in fact, has perpetuated what both parties already recognized in writing: the “underfunding of certain autonomous communities,” among which the Valencian Community is particularly situated. To the point that the document added: “Until this reform takes place, the General State Budgets will guarantee the Valencian Generalitat and the rest of the underfunded autonomous communities the provision of public services at the same level as the rest of the State.”

Pedro Sánchez’s government has not fulfilled either of the two promises to date: neither the approval of a new financing system nor a transitional equalization fund that, while the reform is not undertaken, equalizes the underfunded regions with the average. Financing is not only one of the major pending issues of the coalition government. It is also the one that has raised arms among the PSOE barons themselves, and not just the entire block of PP communities.

To find the original sin, one must look again at Catalonia. The Ministry of Finance, under the orders of María Jesús Montero, presented an alternative financing model that was actually the result of a prior pact between Sánchez and the ERC leader, Oriol Junqueras. The Ministry, now in the hands of the Valencian Arcadi España, argues that with the new system the communities would already have an additional 21 billion euros by 2027. By the way, the PP reminds España that, as Finance Minister of the Valencian Generalitat, he not only clamored for the “urgent” reform of financing but also demanded from the Government that transitional equalization fund that he now denies… with the argument that there is already a draft for a new model on the table.

But “the government’s goal has been to improve Catalonia above the rest,” says the Valencian Finance Minister, the popular José Antonio Rovira, in statements to this newspaper. The Valencian case is the paradigmatic example of the burden posed by dragging outdated financing. First, because the Generalitat has had to face the costly reconstruction after the DANA in this legislature, which has forced it to resort to debt without the central government granting it non-repayable loans. And second, because such indebtedness has only increased the snowball of the underfunding problem.

According to Rovira, “the Valencian community is the one with the lowest resources from the current financing model in terms of adjusted income per inhabitant in all of Spain.” This implies that up to 80% of the Generalitat’s debt “is directly attributable to underfunding.” The Valencian Community “does not have excessive spending; what it suffers from is a lack of income that must be corrected.” Result: a debt of around 64 billion euros, a figure that makes it the largest in Spain in relation to the GDP and the second in absolute terms behind Catalonia.

So why hasn’t the Valencian Community then broken the PP block to accept the 3.669 billion more it would get in its case with the new financing? According to Rovira, “with the proposed model, it does not reach the average resources, and this is an indispensable condition.”

This same thesis has also been argued by socialist communities (excluding Navarra, with its own foral system) to oppose the new model. Castilla-La Mancha and Asturias have also criticized it. In an interview with this newspaper, the Finance Minister of Castilla-La Mancha, Juan Alfonso Ruiz Molina, questions it without nuances insofar as “it rewards the autonomous communities with greater accumulation of income among their residents.” In his own words, “it does not fit with a system that should guarantee equality among all citizens, regardless of where they live or their economic capacity, especially in essential public services such as health, education, or social services.” His conclusion, again, is that “it blatantly benefits Catalonia.”

Read more The PSOE clashes with the PP over its “rumors” and Feijóo challenges Sánchez to announce that the King will visit Ceuta

“You cannot treat equally those territories that are not equal because that is not fair, and some autonomous communities, like the Valencian one, are especially underfunded,” lamented in 2022 an autonomous minister named Arcadi España. And what Ángel de la Fuente, executive director of the Foundation for Applied Economic Studies (Fedea), precisely criticizes in an article is the tailored suit of a proposal designed for Catalonia.

He questions, for example, the little sense that “the imaginative excuse that has been sought to give Catalonia a juicy financing premium at the expense of the VAT of corporate SMEs” makes. In his opinion, the SME VAT mechanism – so that communities receive the VAT revenue generated by SMEs in their territories – as well as the climate fund – endowed with 1 billion – only introduce “arbitrariness” when distributing funds among the communities.

Thus, Catalonia is the main beneficiary in financing per adjusted inhabitant, with 507 euros more with the new model, although it was already above average. The Valencian Community or Murcia, at the tail end with the current system, would receive 496 and 468 euros more with the reform, but still remain below average in financing. Aragón or Castilla-La Mancha would also not reach the average threshold. The case of Asturias is also striking, because it would go from being above average to below.

According to the Ministry, however, the new model “improves equity” because it reduces the differences between communities with more and less resources per adjusted inhabitant, going from 1,500 euros… to 700. In fact, for the IVIE researcher, “the core of the proposal is reasonable” because “it improves the sufficiency of the communities.”

However, Francisco Pérez warns that, with the new proposal, the differences in financing per adjusted inhabitant are reduced but do not disappear. Like De la Fuente, he questions the introduction of the SME and climate funds, which “repeat the tendency” to maintain disparities in financing. What Pérez does not agree on is that the big beneficiary is Catalonia: “If we want to point out extreme examples, we should first talk about the foral communities. And if we limit ourselves to the common regime communities, there are some that are much more above average.” Cantabria, La Rioja, or Extremadura, for example. And precisely because of this, the Ministry has also introduced the “status quo guarantee.”

This implies that no autonomous community will receive less money than it currently receives. At this point, Pérez warns: “If we say that no one can lose in relative terms, then the reform cannot be done. If those who are above have to maintain their relative position, it means they will always have to be given more resources. And that way there can be no reform.” In any case, twelve years later, the Government has not managed to unblock an issue that almost no one agrees on.