Community income in Catalonia, within the regional financing framework, remains just above the national average. Similar to regions like Andalusia, Murcia, and Castilla-La Mancha, Catalonia’s financing per person is not only below the average in several cases, but those areas are also shifting positions as reforms to the financing model—promised by the current coalition—have stalled this legislature.
At the end of July, the Ministry of Finance presented the final 2020 settlement for regional funding. The Applied Economics Research Foundation (Fedea) notes a modest improvement for 2020 in the distribution of regional funds for Catalonia, while some regions already started from a lower, underfunded baseline.
Above or below average
Under the 2020 final settlement, Catalonia received 2,604 euros per capita, slightly above the overall average of 2,555 euros. When adjusted for per capita financing—which accounts for geographic distribution and aging patterns—Catalonia stood at 101.9 points in 2020, above the national norm of 100 by nearly 2 percent. Fedea’s analysis shows that Catalonia not only stayed above average in 2020 but also posted a small positive shift of six-tenths compared with 2019, when the resources equaled 101.3 points out of 100, starting from a base of 100.
Across the board, seven autonomous communities increased their share of the regional financing pie in 2020, according to Ángel de la Fuente of Fedea. Besides Catalonia, they were Galicia, Asturias, the Valencian Community, Aragon, Extremadura, and Castilla y León. By contrast, eight communities reduced their participation: Andalusia, Cantabria, Murcia, Castilla-La Mancha, the Canary Islands, the Balearic Islands, and Madrid. The Basque Country and Navarra maintain their own regional financing regimes and are outside the common framework.
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Furthermore, three of the declining regions—Andalusia, Murcia, and Castile-La Mancha—began from a notably underfunded starting point, as their per capita resources under the current model lag behind the average. The Valencian Community also remains underfunded (93.1 points out of 100 on average), though it showed a slight improvement in 2020.
Where is it most collected?
Fedea’s analysis shows that Catalonia, while ranking ninth in regional-funding income, is the third-largest collector of taxes per capita among autonomous communities, following Madrid and the Balearic Islands.
In line with the mechanics of the regional financing model, Madrid collected 7,735 million, Catalonia 1,869 million, and the Balearic Islands 196 million, together totaling about 7,800 million in 2020 to support other communities and level service quality. The Balearic Islands rank fourth in overall collection, while Madrid moves to tenth place when considering per-capita financing resources.
Extraordinary resources
Overall, the share of the financing cake available to the autonomous communities in 2020 contracted significantly. Fedea’s analysis indicates that the total definitive funding for the co-financed regime dropped by 11,200 million euros (9 percent) in 2020 versus 2019, largely due to the slow recovery of regional and state tax revenues amid the covid crisis.
Nevertheless, this decline was more than offset by an extraordinary injection of 19,600 million euros from the State. This amount includes 4,400 million that the communities temporarily had to return to the State, plus covid-related funding (about 15,207 million).
When the extraordinary transfers of 19,600 million are included, the adjusted average per capita financing for 2020 rises to 2,996 euros, according to Fedea’s calculations, up from the baseline 2,555 euros in the regional financing system. Catalonia’s share in this expanded pool increases to 103.2 points (above the national average of 100). However, the influx of extraordinary resources did not rescue Andalusia, Murcia, Valencia, and Castilla-La Mancha from continuing underfunding.