Funding Sources for Spanish Autonomous Communities
Funding Sources for Autonomous Communities
Compensation Fund Transfers
The purpose of the Compensation Fund is to correct interterritorial economic imbalances and implement the principle of solidarity. The fund is intended solely for investment costs.
The size of the fund is obtained by applying a percentage of public investment, defined as all expenditure included in the General State Budget for new civil investments. The resulting amount is weighted by the relative population of the beneficiary Autonomous Community compared to the total population and further weighted by the index obtained by dividing the average national income of the CCAA by the national average income. It is earmarked for investment projects that promote wealth creation in the recipient territory.
Beneficiaries are the Autonomous Communities designated in the Budget Law.
Compensation Fund Distribution Criteria
- Relative population
- Migration balance
- Unemployment
- Surface area
- Population scattering
Once distributed, the amounts are corrected with the inverse of the income per capita of each territory, including insular territories.
Supplementary Fund
The Supplementary Fund is endowed annually for each CCAA with an amount equal to 33.33% of their respective Compensation Fund.
Other State Budget Allocations
The State Budget provides for the allocation of resources to the Autonomous Communities specifically appropriated for this purpose, intended to ensure a minimum level in the delivery of transferred public services. The State guarantees a minimum level of basic public services, including education and healthcare, throughout the territory (Equalization Fund).
Revenues from Assets and Private Sources
This funding source, governed by the LOFCA, consists of yields accruing from their property and income from inheritances, bequests, or donations.
Proceeds from Credit Operations
This source of funding consists of the issuance of securities by the Autonomous Communities. Article 14 of the LOFCA distinguishes:
- Operations of credit to cover temporary cash needs (less than 1 year amortisation).
- Long-term credit transactions exceeding 1 year.
These must satisfy two conditions:
- Be used exclusively for capital expenditures, and
- The annual amount of depreciation and interest should be less than 25% of current revenues of the CCAA.
Regional Laws on Social Services Funding
References to the specific financing laws for Social Services (SSSS) in the Autonomous Communities are scarce.
The Murcia SSSS Act stipulates that the SSSS system is funded from the General Budget of the CCAA, budgets of local entities, and any financial contribution that might arise. The same terms are stated in the SSSS Acts of Asturias and La Rioja, the Social Assistance Act of Euskadi, the Law on Social Action of Cantabria, and the Canary Islands SSSS Act. In the case of the Canary Islands and Euskadi, the system is also funded from the overall budget for provinces and Town Councils respectively.
The Madrid SSSS Act establishes, in addition to the above, grants, donations, and other voluntary contributions. These sources of funding are, in addition to contributions from private entities to maintain their centers integrated into the system, outlined in the Law on Social Action and SSSS of Castilla y León.
Legislative Decree 17/1994 of the Generalitat de Catalunya states that the Department responsible for assistance and SSSS and the Catalan Institute of Assistance fund benefits with the resources that may be required by the Government under the budgets pertaining to social services and benefits, resources outside the SSSS allocated by the Government from their budgets, revenue stipulated in current regulations, subsidies, and other voluntary contributions from public entities, private entities, and individuals.
From the standpoint of expense, the laws make special reference to the financing of Local Administration and social initiatives and the need for budgetary allocations for their own jurisdiction. Some of these laws state that the budget is determined at least by a certain percentage; for example, the Laws on Action of the Balearic Islands, SSSS in Castilla-La Mancha, and Navarre stipulate it will be 6% of the expenditures of the Autonomous Community budget.
The budget allocation for SSSS in Castilla y León is to undergo an annual increase above the average increase of all Ministries, and the Valencian Community Law stipulates that in their budgets and Local Government budgets, an allocation to finance Social Services will be achieved gradually.