Research Areas

This study responds to the need of the Valencian Regional Government (VG) to analyze in detail the regional funding system reports presented by each regional government at the request of the Ministry of Finance and Public Administration. These assessments are of interest to the VG for two reasons: 1) to know how other regions perceive the funding system which poses serious problems for the Valencian region; 2) to explore how the other autonomous communities could receive a Valencian proposal for a new model capable of solving the problems. So as to facilitate an ordered and summarized approach of the large content in the reports by the different regions, the study is based on a systematization of the analysis in the given reports, focusing on the most relevant aspects. For this purpose, the study examines problems of funding in relation to five main areas:

• Sufficiency and vertical levelling, dealing with matters related to the distribution of competences and resources among the Central Administration and the autonomous communities, the prioritization of basic public services, the protection of their funding and sharing of the deficit among levels of government
• Equity and the horizontal levelling, considering issues related to the differences in resources among the regions, the assessment of needs and the calculation of the adjusted population, the differences in service provision and in the funding models, and the symmetrical or asymmetrical distribution of the deficit
• Autonomy, fiscal co-responsibility and fiscal capacity, analyzing how assigned taxes and shares in state revenue operate, the stability of income and tax management
• Application of the system and management of the model, with the problems of down payments, liquidations, the dynamics of resources and expenditures and the complexity observed in the functioning of the model
• Institutional loyalty and issues related to bilateral or multilateral relations.