Disorder in regional financing

The regional premier of Madrid, Ignacio González (PP), has decided to openly propose to his party the need for far-reaching reforms of the regional financing system. At the meeting of PP leaders a week ago, waves were made by the financing proposals of Alicia Sánchez-Camacho, the head of the PP in Catalonia. This week, however, González demanded that, within three months, the party reach an agreement on a new model of regional financing, and that this model “put an end to the injustices and inconsistencies” of the present one.

On Monday, in an attempt to placate this “revolt” of his party’s regional barons, Prime Minister Mariano Rajoy said that a revision of the system will take place in the course of 2014, after fiscal reforms have been implemented and “taking everyone into account.” Meanwhile, the party’s secretary general, María Dolores de Cospedal, added that changes in the financing system will come “when it is possible to do so — not in the middle of a crisis, but in a situation of growth.”

Madrid is one of the regions that contributes most to the country’s coffers, but recently it has seen its income reduced. As such, the interests of González have something in common with those of the Catalan premier, Artur Mas — although the latter wraps up his policy of cutbacks in the rhetoric of a crusade against the government of Spain. This said, González is quite right to demand that attention now be paid to the regional financing problem, without making the discussion conditional upon better economic times. If the law dictates that the model must be revised in 2014, then this is what should happen, and discussions with all the regions affected must begin as soon as possible. However, this discussion should not be confined to an internal meeting of the PP, but rather in the context of a conference of regional premiers, and in the Senate.

It is true that the depth of the crisis, the unsuspected scale of the Catalan independence drive, and the narrow margins within which the central government’s Finance Ministry must work, make the regional financing Sudoku a puzzle as difficult, or more so, than the one posed by the previous revision of the system. But this does not exempt the government from its duty of leading.

“Let it be”

The legal reasons — the law is there to be obeyed, after all — and the accounting figures in hand support the Madrid regional government’s case, as it calls on Rajoy and his finance minister not to put off this pending business any further with an unimaginative “let it be.”

González maintains that the Madrid region’s financing discriminates against Madrileños on a per capita basis, and points to the example of Catalonia to justify his argument. He should also, of course, take into account certain advantageous effects of the city being the capital, such as the revenue proceeding from major corporations that have their headquarters in Madrid. Together with these advantages, it is true that Madrid has expenses deriving from its role as the Spanish capital city, and that all these factors must be taken into account in this urgent debate.