In a pair of rulings, the Fourth Section of the Administrative-Legal Chamber of the Superior Court of Justice of the Valencian Community has upheld two appeals filed by the Alicante Provincial Council against the agreements of the regional council that approved the basic funding sector plans under the Municipal Cooperation Fund for the 2023 and 2024 fiscal years. The decisions affirm that the allocations tied to these plans must be evaluated under constitutional and statutory parameters, emphasizing alignment with the Valencian Statute of Autonomy and the equal application of funding criteria across municipalities within the region.
The judges base their reasoning on the 124/2023 ruling issued by the Constitutional Court, which declared null the provisions of Article 7 of Valencian Law 5/2021. That statute, which governs the funding mechanism in question, was found to set objective criteria for resource distribution that infringe the Autonomy Statute. The court underscores that any financing scheme must adhere to the framework established by the Statute, and deviations from those precepts cannot stand as valid allocations.
Specifically, the court notes a breach of Article 64.3 of the Autonomy Statute, which mandates that the Municipal Cooperation Fund of the Valencian Community be created using the same criteria as the national fund. The interpreted violation stems from different criteria applied to the contributions by the Valencian government and the various provincial departments, which did not follow the statutory requirements laid down by an Organic Law and thus rendered the allocations legally suspect.
According to the magistrates, the method used to determine the contributions attributed to the Valencian Government and the provincial councils was not only divergent from the accepted framework but also did not reflect the obligations imposed by the Autonomy Statute. This discrepancy, they conclude, invalidates the distributions because they were conducted according to parameters that are legally prohibited, undermining the fairness and consistency expected in the allocation of public funds.
Beyond the misalignment with the required criteria, the Court identifies an additional ground for annulment. It concerns the analytic method employed by the Fund for assessing and contributing resources, which the court considers erroneous. The method failed to account for non monetary or in-kind aid received from municipalities, a factor that should influence the calculation of each entity’s financial responsibility and benefit within the fund. This omission, the court asserts, compromises the accuracy and legitimacy of the overall distribution model.
The rulings thus reaffirm the principle that intergovernmental funding must be governed by objective, statutorily defined criteria that reflect the equity and proportionality expected of public finance instruments. They illustrate the ongoing legal scrutiny applied to funding mechanisms, particularly those that involve multiple levels of regional government and shared responsibilities for municipal welfare and service delivery. The decisions also signal to future iterations of the fund that any deviation from the Statute, or the inclusion of non-compliant criteria, risks invalidation and potential remand to reconstitute the funding framework in compliance with constitutional standards.
In practical terms, the decisions mean that the Alicante Diputación’s challenge to the financing plans has been successful, and the regional council may need to revisit how the funds are allocated among municipalities for the 2023 and 2024 cycles. The court’s emphasis on equal criteria and statutory alignment serves as a reminder to regional authorities across Spain that revenue-sharing arrangements must be built on transparent, legally sound methodologies. This is essential for maintaining trust among municipalities and ensuring that all local governments receive funding in a way that reflects lawful, observable standards rather than discretionary or ad hoc calculations.