Spain’s €21bn funding plan clears first hurdle

Spain’s proposed regional funding plan moves forward with almost €21,000 million extra for health, education, social services and housing. The Fiscal and Financial Policy Council backed it in Madrid on Friday, with support from Catalonia and the Canary Islands. Parliament still has the final say.

Finance Minister Arcadi España said the council had not debated a regional funding model for 17 years. The current system, he said, expired 12 years ago.

The proposal covers all autonomous communities and cities in Spain’s standard funding system. Joining would be voluntary, meaning regions could stay with the existing arrangement even if Congress passes the law. España said Andalucía would receive the largest share of the additional funding, while every community would improve its position.

How the money would be shared

Almost €21,000 million would come from an increased state contribution. The regional tax capacity and two balancing mechanisms between regions and between the state and regions would account for 99% of the funds distributed.

A further 1.4% would go to the voluntary IVA-Pymes mechanism and the Climate Fund. The plan also keeps the current baseline so that no region receives less than under the existing system.

A separate new fund is planned to reflect factors including tourism-driven floating populations, depopulation, forest areas and reindustrialisation. Its budget has not yet been fixed. The proposal also includes a €3,000 million Dynamism Fund for communities below the average.

Congress decides on a 2027 start

The proposal now goes to the Council of Ministers before reaching Congress as a bill. Political groups can seek changes and strike agreements during the parliamentary process.

The government wants the new system in force from 1 January 2027. España said that timetable depends on how Congress handles the legislation.

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Source: Europa Press / Mallorca.com