The debate on regional financing has once again been placed at the center of territorial analysis. It does so after more than a decade without applying the five-year review of the Permanent Technical Evaluation Committee, provided for in the regulations to submit possible modification proposals to the Fiscal and Financial Policy Council. The favorable evolution of the system’s resources after the end of the financial crisis – with an average annual growth of 4.5% in regional income and very dynamic post-pandemic behavior – has contributed to postponing the always complex negotiation of a reform recognized as necessary. Although the viability of the Treasury proposal is still not clear, the scheme introduces elements that would allow some structural anomalies to be corrected. The most relevant would be the progress towards greater convergence in financing results per adjusted inhabitant, given that the current model maintains significant differences between communities. The proposed leveling mechanisms would make it possible to mitigate persistent inequalities and increase homogeneity in the final results. However, open issues remain that will condition the negotiation. Among them, the definition of the regulatory collection of transferred taxes. The current differences between estimated regulatory collection and actual collection could generate relevant divergences between territories if they are not addressed with technical precision. The experience accumulated in previous reforms shows that negotiating processes tend to be prolonged and give rise to adjustments with diverse beneficiaries. On this occasion, the reduced weight of the adjusted population places the focus of the negotiation on the intensity of the leveling and the design of the additional funds. On the other hand, the future negotiation should not be separated from the debt forgiveness process, currently underway, which would partially alleviate the pressure on regional spending. Debt interest is outside the computable expenditure subject to the expenditure rule, which constitutes the operational basis of the new community fiscal framework after its recent reform. In this context, the Medium-Term Fiscal Program requires respect for the established primary spending paths and concludes in 2027, precisely the year in which the autonomous communities would begin to perceive the positive impact of the new financing model and the liquidation of the system still in force. That same year, the Central Administration will face a more demanding scenario for its public accounts. In addition to the obligations derived from the new fiscal framework, there will be increasing pressures on spending, including the need to sustainably increase investment in defense and the impact of demographic changes on the pension system. A context that will condition the State’s ability to maneuver precisely at the moment when it should accompany the reform of the regional financing system. Carmen López and Susana Borraz are professors at Afi Global Education.
