The Generalitat needed to reapply for debt from the State to cover the salary rise agreed at the national level and, in parallel, to extend this arrangement to Valencia Administration workers.
Yesterday DOGV published the Valencia Administration agreement, showing a loan of more than 140 million euros to cover a retroactive 1.5 percent increase in payroll through January 1, 2022. The plan calls for settling all outstanding debts on December 22, along with the final payslip of the year.
Recognizing that many regions did not have enough liquidity to implement the year end salary hike, the Government opened its financing tools to regional managers. As a result, the Generalitat again requested support from the Autonomous Liquidity Fund, commonly known as the FLA.
The FLA is a familiar instrument for Valencia’s government, a consequence of chronic underfunding that has made the autonomous community its most faithful client since the fund began in 2012.
Unless the trend shifts significantly, the symbolic figure of 100,000 million euros demanded from the State will be reached this year. Some of this funding helps avoid gaps in central government resources, but it comes with a price. While other regions could borrow on more favorable terms in the markets, the Generalitat must pay roughly 3 billion euros in interest.
According to DOGV, 108 million of the 140,885,768.45 euros requested from the liquidity fund will go directly to boosting the payroll of all Generalitat public employees, including those in the intermediary public sector. A little over 3.5 million will cover current expenses and 29.3 million will go to current transfers.
Thus, Generalitat officials will experience relief on December 22. Regardless of lottery luck, Valencian public employees will receive on that day the additional 1.5 percent salary increase approved by the Government months earlier, retroactive to January 1, 2022. Payroll, with the 1.5 percent increase, will be paid on the same day.
The Valencian Government is obligated to repeat this state agreement at the regional level, which means an extra cost of 140 million euros to the Valencian treasury, corresponding to about 340 million if the 2 percent increase signed at the start of the year is included in 2022 figures.
The salary rise caught the Ministry of Finance off guard and prompted a rapid review of regional budgets for 2023, leaving little room to maneuver to find the extra 140 million as the year wound down.
Extra up to 730 Euros
The law allows until March 2023 to pay the difference, but the Generalitat has pledged to settle the amount in December. In the end, the Treasury emphasized, it chose to make a substantial effort and to settle its debt with the authorities a few days early.
Calculations from the UGT-PV association suggest that the total debt from the 1.5 percent monthly increase since January could translate into Christmas bonuses of up to 733 euros for the highest rank officials (A1 category).