Thursday, January 27

Over-financing allows the PP to pay tolls to the extreme right in Madrid

The government of the Community of Madrid chaired by the popular Isabel Díaz Ayuso has closed its budgets this week, public accounts that amount to more than 27,000 million euros and that grow 14% more than the previous year. A growth that is well above the state average and almost five points more than what the Generalitat’s budgets did, already expansive due to the injection of European funds and the incorporation of claims to alleviate the deficit of regional financing.

The Madrid accounts also contemplate a significant reduction in taxes, with significant reductions in the autonomous section of personal income tax and with the deactivation of own taxes. They are the result of an agreement reached with the extreme right of Vox, which with their votes has allowed the document to go ahead in exchange for a list of thirteen requirements that for the most part entail an increase in spending. Ayuso has been able to avoid some of the most ideological court requests of Vox and that suppose a persecution of certain groups (such as the repeal of LGTBI laws); it has taken on others (such as auditing unaccompanied foreign minors), although the main tolls paid are “social” items.

Thus, several of the thirteen points focus on social packages (Vox’s strategy to expand its electoral base in working-class sectors) to increase the endowment of the Palliative Care Plan, aid for pregnant adolescents, support for families with autistic members, financing of the first home or extension of free education in non-compulsory education. The latter is quantified at 65 million euros. The rest are not specified, but in any case it will mean an increase in spending. In the Valencian Community, the Vox group in the Cortes has followed the tactic of its colleagues in Madrid with 500 amendments that, among other issues, propose to advance in the gratuity of schools from 0 to 3 years.

Stretching Madrid’s public accounts has not, however, been a problem for the Madrid PP. The Community of Madrid, above the average in regional financing and with the advantage of its centripetal power to attract wealth from other autonomous regions (known as the capital effect), gives to reduce the tax burden on its taxpayers, but also to save the accounts of the hand of the extreme right.

The Community of Madrid has not seen the need, as it happens to the Valencian Community, to enable income items to support social expenses, but they have feet of clay since they are based on claims to the central Government that probably will not attend this exercise.

This is the case of the claim of the 1,325 million euros that the Botànic consigns each year and the new one incorporated in the 2022 budgets to claim the covid fund. This, in particular, was incorporated after a tug of war with the Conselleries de Compromís on the increase in spending. The Botànic had to resort to this formula to be able to support in the document the planned spending on social items.

Deficit and debt

The Consell is aware that if extraordinary compensatory resources do not arrive, its deficit will increase. The spending rules are suspended in 2022, as well as the deficit targets, but the Government asks to adjust them to 0.6%. The Generalitat, despite containment efforts, has not managed to meet the objectives and this year and the next, there will be a gap. Higher deficit, which ends in debt, and this in turn, weighs down the accounts. A problem that other communities do not have.

In fact, the difficulties to carry out the accounts and face the needs of social spending increased by the pandemic, is not an issue that affects only the Community. It is also a problem for other under-financed communities of the PP. Andalusia, like the Consell del Botànic, has also had to resort to the “fictitious” item of the covid fund, while the Government of Murcia, at the tail end of the financing next to the Valencian territory, has finally chosen to present a budget with more deficit than suggested by the Government. In fact, his first budget project involved cuts in several ministries. Finally, the Murcian government chose to modify the spending ceiling and increase the deficit target to 1%.

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