victimized areas
The Foundations for Applied Economics Research, known as Fedea, presented a new report on a regional funding model. The document outlines reform formulas that are meant to be complex and long-term, acknowledging the significant hurdles such changes would pose for Castilla-La Mancha, the Valencian Community, Andalusia, and Murcia. The organization, led by Ángel de la Fuente, argues that a new model must be agreed upon to resolve persistent issues of transparency and inequality created by the current arrangement. The push comes despite expected political obstacles to reaching consensus, with Fedea calling for action to address underlying disparities. The plan suggests applying temporary tweaks now while awaiting a broader agreement. This would aim to bring the autonomous communities closer to the national average by activating a temporary leveling fund funded by the state. The fund would serve as a stopgap to support essential services in health, education, and social provision, helping the affected regions reach a more equitable resource level in the interim. The emphasis is on stabilizing the system as negotiations continue and structural reform is shaped around a fairer distribution of resources. (Citation: Fedea)
victimized areas
Fedea’s calculations indicate that the leveling fund would require capitalization to be effective. A total of 3.277 billion euros would be distributed among the four affected regions: Andalusia 1.409 billion, the Valencian Community 1.148 billion, Murcia 405 million, and Castilla-La Mancha 315 million. The aim is not to create lasting inequality but to elevate spending in these regions to the level of the national average. In the shorter term, a per-person authorization of 500 euros would be provided to bring these regions closer to others such as Cantabria, with compensation payments continuing until the reform is fully embedded in the new mechanism. (Citation: Fedea)
Fedea notes that a comprehensive reform of the system is highly intricate, which places pressure on the two major political parties, PSOE and PP, to reach an agreement in advance for the amendment to be workable and peaceful. The recommendation is for negotiations to occur in joint forums rather than bilateral settings to avoid a piecemeal approach that could undermine the reform. The report also critiques the timing of decisions surrounding the appointment of leadership and the approval of decrees in the Congress of Deputies, signaling a need for coordinated, transparent action. (Citation: Fedea)
Balancing the fund and addressing technical problems are central to the discussion. The report argues that increasing resources for the distribution system is essential for reform, while proposing that additional funding come with greater alignment of regional tax revenues and incentives linked to the new state resources. These extraordinary funds would be allocated through solidarity mechanisms that reflect population adjustments. (Citation: Fedea)
Fedea also proposes creating autonomous departments within transferred taxes such as value added tax. The idea is to determine these departments collectively by the autonomies and distribute returns proportionally to the adjusted population, maintaining a balanced status quo. Among the simplification measures, the plan includes a review of the withholding system and payment deadlines, with potential tax changes for regional administrations to streamline funding flows. (Citation: Fedea)
The report questions the lateness of a previous liquidation, arguing that delays dilute financial movements and undermine direct transfers to the public accounts of the communities involved. The overarching message is that timely reforms are crucial to stabilizing regional finance and improving service delivery across all affected regions. (Citation: Fedea)