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A report analyzes the inter-territorial leveling mechanisms to be considered in the new Spanish regional funding model

The document has been published by RIFDE with Francisco Pérez, Ivie Research Director, as co-author

The newly released publication by RIFDE, La nivelación interterritorial y la estimación de las necesidades de gasto, examines key aspects of inter-territorial leveling which should be considered in the upcoming negotiation process of the new Spanish regional funding model. The report, co-authored by Ivie Research Director, Francisco Pérez, gives an in-depth review of the leveling mechanisms that have been used during the last three decades to achieve an equal economic development across the Spanish regions. In addition, it gives some suggestions that could be useful for the forthcoming reform of the regional financing system and details the mains results gathered from a survey directed to one hundred experts on this topic.

The final version of the document has been enriched with the suggestions and ideas shared by participants at a special meeting organized by RIFDE on November 29th in Santiago de Compostela.

The publication reveals the main problems related to differences in funding caused by this leveling mechanism in terms of number of inhabitants or adjusted population, as well as the redistribution it produces which tends to be the source of grievances and demands.

The report summarizes the added challenges that have worsened the problem of regional funding, such as the impact of the economic crisis, which has led to a decrease in tax revenues and an increase in regional debt.

Within this context, the RIFDE report raises the need for the upcoming regional financing system to give solutions to the complex outlook of leveling and to clarify some issues such as:

1. To determine how to include the foral communities (Navarre and Basque Country) in the inter-territorial funding leveling mechanism
2. To clarify the role of the Canary Islands
3. To decide which is better for the Spanish system, full or partial leveling
4. To determine if limits should be placed on the redistribution or if, on the contrary, the strict concept of the Statute of Autonomy of Catalonia should remain
5. To determine if limits should be placed on the redistribution and what should be done with the so-called “standstill clause”
6. To discuss the improvement in calculating the per capita expenditure needs (known as “adjusted inhabitants”)
7. To ensure certain stability in the leveling mechanism based on objective and explicit criteria