Consell will ask the Government to transfer around $1,500 million a year to the Valencian Community to compensate for the autonomy’s underfunding until the system is fixed. The ultimate goal remains reform of the distribution model, but given the likelihood that this will not happen in the short term, Finance Minister Ruth Merino and a panel of finance experts yesterday agreed to take a pragmatic approach and “prioritise”. “Inclusion of a stabilization fund in the next General State Budget.
Yesterday, Carlos Mazón’s new Council convened the council of financing experts for the first time. The debate on reforming the system is at the forefront of national politics, and Merinos therefore asked experts to “refresh and update” the reports and data they had prepared in previous years, which confirmed these complaints about autonomy.
The councilor criticized the Government’s inaction and demanded “political will” to take the first step and present a reform proposal. Until this comes, Merino stated that Consell will “do his job” and therefore called on experts to update the current scenario and go to the next appointments with the ministry “with precise data”.
The first challenge will be the inclusion of the equalization fund, an instrument that the Valencian Community has applied for in recent years and whose approval will compensate for the fewer resources that the autonomy of the financing system receives. In fact, the investment agreement between PSOE and Sumar states in state accounts that “the Generalitat and the rest of the underfunded communities will be guaranteed the provision of public services at the same level as the rest of the State.”
The Treasury chief stressed that the inclusion of this leveling fund was “important”, as reforming the system was a “complex” challenge and a process “where you have to be brave” due to the difficulty of reaching agreement across all regions. It’s a matter of political will.
They are still on the table
Francisco Pérez, director of Ivie, pointed out that three issues that this group addressed in its 2017 report and which they now want to update are “still on the table: financing system reform, stabilization fund” and debt forgiveness. Pérez agrees with Merinos that the “simplest” thing is the stabilization fund, but the commission will also work on two other points.
No one wanted to predict how much this reduction would amount to in the Valencia case. The councilor attributed this to the lack of clarity on the conditions proposed by the Government for this reduction, which was negotiated with Catalonia, although it could be extended to all autonomies.
But the expert gave more clues. According to him, the calculations will take into account not only the combined effects of the reduction in income caused by the great crisis of 2008, which was agreed with Catalonia and which, in the case of Valencia, will require donations of about 10 billion euros. This would also include the relative underfunding of the Valencian Community.
The last leg that needs to be updated. Pérez said the estimate would be released “in the coming weeks”, although Ivie’s manager had estimated it at another 17 billion euros just a month ago. Total forgivable debt will be at least around 27 billion.