Alcudia, where the town hall has almost 90 million euros sitting in a bank.

Alcudia, where the town hall has almost 90 million euros sitting in a bank.

16-07-2020

The national finance ministry is seeking to negotiate an agreement with the Spanish Federation of Municipalities and Provinces (FEMP) which would mean town halls making loans to the Spanish government. These loans would be the cash that town halls have deposited in banks and which they are unable to spend because the so-called Ley Montoro has yet to be repealed. This law, an austerity measure introduced by the Partido Popular government, placed restrictions on town hall spending. As a consequence, most town halls have budget surpluses - the cash that is in the bank - which can't be used.

In exchange for the loans, the finance ministry is proposing that a total of 5,000 million euros is made available to town halls in the form of "non-financial income", which means direct investment in specific areas of town hall responsibility, such as sustainable mobility and care facilities for the elderly. This financing would cover the current year and 2021, and while it would - in effect - be a part repayment of the loan, it is understood that all the money lent to the government would not be repaid for ten years.

The finance ministry's proposal was leaked on Wednesday. This followed statements in Congress by Jaume Asens of En Comú Podem (a Podemos coalition in Catalonia). Asens observed that municipalities "will become the state bank".

In the Balearics, the president of the Felib town halls' federation, Antoni Salas, says that if this proposal is true, "we will be making a disguised loan, when what we have been asking for is the repeal or relaxation of the spending regulations". The leak came from the Efe news agency, and Salas adds that the FEMP has informed him that it is not "the final text" of the proposal.

No mayor in the Balearics is currently on the FEMP executive committee, so the islands' town halls don't have direct involvement in the negotiations. The proposal has yet to be submitted to the territorial committee, of which Salas and the mayors of Campos and Inca are members. Salas wants to think "that it is not true". "We will wait to see the definitive proposal, but if it is true, it is pretty much unacceptable."

Miquel Oliver, the mayor of Manacor, is confident that the draft proposal will be "completely rectified". "Each town hall should be able to use its surplus as it deems necessary. To the fiscal plunder that the islands are currently suffering would be added the kidnapping by the state of large parts of municipal savings."

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