“Everyone at the same table.” This is how Alberto Núñez Feijóo’s PP wants to negotiate the reform of regional financing that the Government wants to address in the current legislature and, before that, the budget distribution for 2024. This was explained by Feijóo’s parliamentary spokesperson and right-hand man, Miguel Tellado, last Tuesday in a press conference in which he accused the Government of “distributing the cake secretly to give a bigger piece to the independentists and harm the rest.” But that “rest”, the barons of the right, are also going to negotiate bilaterally with the Executive.
This has been expressed by different regional presidents of the PP in recent weeks, both publicly and privately. Some have already requested bilateral meetings with the President of the Government, Pedro Sánchez. Others hope to sit down with the vice president and Minister of Finance, María Jesús Montero, to address the debt forgiveness that has been opened after the PSOE agreement with the Catalan independentists for the investiture. And there are those who, like the Andalusian Juan Manuel Moreno, demand transfers similar to those that are being negotiated with Catalonia, such as the Cercanías service, against the criteria expressed by their party.
The profile of Moreno, who has already closed agreements as relevant as that of Doñana, contrasts with that of other PP leaders, including its national leader, reluctant to any type of pact with the Government. Not even for the General Council of the Judiciary, as Brussels demands.
“What I am not going to do is lose resources,” summed up this week a PP baron in command when talking about the regional debt. “Another thing is how it is done,” he clarified. “I’m not going to forgive a single euro,” said another. Everyone verbally rejects bilateral negotiations, but some have already asked the President of the Government by letter for a meeting to address this and other issues. And Montero has also begun to call his peers for the start of 2024.
The coalition government knows that regional financing can break the apparent unity of action that exists within the PP. Montero will pilot a triple negotiation: the preparation of the 2024 General Budgets, the reduction of regional debt as a result of the PSOE agreements with Junts and ERC and the general reform of the financial framework of the regional governments, designed before the great crisis of a decade ago, still with José Luis Rodríguez Zapatero in Moncloa.
The first point to measure how the relationship between the central government and the regional governments may proceed, and the discrepancies that may arise between the barons of the PP and the Feijóo leadership, is the budget process, which begins with the vote on the so-called path of stability. That is, the level of debt that is allowed to the different administrations of the State.
The Congress and Senate have to vote on the deficit objectives of the government and autonomous communities. And the PP is considering a veto in the Senate, where it has an absolute majority. The Government warns that rejection would cause the communities to have fewer economic resources: 0% instead of the planned 0.1%. “They would be stones on their own roof, it would make no sense,” defended Montero. But at this point the PP is monolithic, but because a 0.1% deficit for the autonomous communities is a meager amount, almost ridiculous, according to those affected themselves.
As elDiario.es has calculated with data from 2023, that tenth would mean 230 million for Madrid on a budget that exceeds 25,000 million. Or 160 million euros for Andalusia, which manages accounts of 40,000 million. Or 37 million for Aragón, 63 for Galicia, 58 for Castilla y León, 32 for Murcia, etc.
The general thesis defended by the PP leaders is to vote against the path of stability. The Government could resort to making the Budgets to the path previously approved and accepted by the EU (each year the forecasts for the next triennium are voted on). And those from Feijóo could show strength and reproach the Executive for not wanting to negotiate or allow more resources for the communities. This has already happened. The PP communities voted in the Fiscal and Financial Policy Council against this deficit objective. Spain plans to meet a 3% deficit next year. The crux of the issue is how it is distributed between administrations. According to the plan approved by the Government, the central administration keeps 2.7%, the communities with 0.1% and Social Security with 0.2%.
The councilors demanded from Montero that this distribution be more beneficial for them, despite the fact that some communities have already prepared their accounts for next year with that 0.1% reference that they have now rejected. In the PP they respond that they cannot assume that the Government will stay “27 times longer.” The Treasury responds that the central administration assumes most of the deficit cut from 2023 (3.9%) to 2024 (3%). Of those nine tenths less, the central administration assumes four tenths, Social Security three and the communities, two. The difference is that in recent years non-mandatory reference rates were used and now they must be met due to the return of fiscal rules to Europe.
The autonomies are also going to receive a large amount of resources, the Treasury reminds. More than ever until now: 154,000 million euros in 2024, 15% more than in 2023. An amount that corresponds to payments on account based on the collection expected for this year and the settlement of 2022, when income exceeded the forecast.
The new financing
Everyone who has something to say about public budgets in Spain believes that the financing system must be reformed, but few believe that it can be done. Or not in the short term. In fact, it is one of the three issues that the President of the Government wants to discuss with the opposition leader in a meeting that remains undated.
This being the case, the melon of a bilateral negotiation has been opened that the PP rejects outright, but not in the different autonomous governments, even though they are in the hands of the PP and Vox. “There is no negotiation between parties, but between institutions,” said the PP parliamentary spokesperson this week. “With everyone at the same table, not unilaterally with those who gave you the votes,” said Tellado.
In Feijóo’s PP they use the matter to attack Pedro Sánchez’s investiture agreement and consider that the negotiation is another “bargaining chip with their partners.” After saying that a “joint meeting” must take place, Tellado pointed out that “the communities have autonomy” to negotiate and that “autonomous governments are not run from Genoa.”
In the Treasury they believe that sooner or later the discrepancies that may arise between the national PP and the barons will be revealed. This same week, the Valencian president, Carlos Mazón, shared a forum with his Madrid counterpart, Isabel Díaz Ayuso. “The different territories have our own personality, our own configuration, our own characteristics,” she acknowledged. “It is evident, and I send you greetings from here, that Alfonso Fernández Mañueco [presidente de Castilla y León] will talk about the specific weight and cost that dispersion, or emptied Spain, actually has. And it is evident that I will talk about the specific weight that the population concept has and, above all, overpopulated Spain,” he added.
He is not the only baron who assumes in the budget negotiation that the communities they lead will not present a common front. Regions such as Aragón, Galicia or the aforementioned Castilla y León bring to the table problems related to depopulation or the high age of many of their inhabitants. Madrid, Andalusia or the Valencian Community itself think about the number of people who live in these regions.
After his meeting with the Treasury councilors, most of them from the PP, Montero anticipated that it will be difficult to reach an agreement that all communities accept.
The minister, promoted to vice president, told the territories that they must get out of a “maximum position” in order to reach an agreement. Montero will maintain this multilateral path but, in any case, he recalled that this reform does not require a favorable vote from the Fiscal and Financial Policy Council, but from the Cortes Generales (Congress and Senate), and with an absolute majority that the coalition Government has. within his reach if he maintains the support of the investiture.
Montero placed the ball in the court of the national PP, above the barons. The vice president pointed out that negotiations should be negotiated between parties, in that meeting that Pedro Sánchez and Alberto Núñez Feijóo have pending. “If the territories do not move towards a position of general interest, in the end it will be the political parties that will have to opt for the model that is best for the country as a whole,” Montero insisted.
An idea opposite to that proposed by the PP, which does not want to assume that negotiating role, aware that, yes or yes, there will be territories that are not satisfied with the final result.
The third side of the triangle is that of debt relief. The investiture agreement between the PSOE and ERC included this mechanism for community debt. Of all of them, both those who went to the Autonomous Liquidity Fund (FLA) during the crisis, and those who did not.
The first reaction of Feijóo’s PP was to attack this measure that allowed Sánchez to be re-elected for a third term. But in Genoa, led by those who until a year ago presided over an autonomous community, they know that it can provide significant economic relief in the cost of debt, especially in territories such as the Valencian Community.
In reality, all governments have debt, either with the State or with the market. Mazón is the second most indebted region in Spain, with almost 60,000 million. Madrid is around 40,000 million euros. Both were in favor of the cuts this week in a joint talk sponsored by the large Valencian employers’ association.
The different administrations are facing a debate of which the main details are still unknown: the amount and how it will be calculated. There are aspects that are known. The 20% that will apply to Catalonia will not be the percentage for all, since the Treasury considers that it would be unfair for some territories. Nor will all the debt be estimated, but rather that which occurred during the last financial crisis. An objective calculation system that the Government has not yet specified will be applied to this debt. There is no calendar either. The equation used, the Ministry points out, will be the same for everyone. In the PP they fear a bankruptcy of their unity of action.