The Independent Authority for Fiscal Responsibility (AIReF) has recommended to Council of Tenerife that avoid new spending increases or decreases in income of a structural nature and without permanent financing being guaranteed, since in 2022 its computable expense increased by more than 40%.
In the Complementary Report on the individual evaluation of the Budgets for 2023 of the Local Corporations (CCLL), AIReF has issued a new recommendation to eleven entities, including the Cabildo de Tenerife, so that they analyze the increases registered since 2019 and avoid new increases in expenses or income drops of a structural nature whose permanent financing is not guaranteed.
The municipalities of Alicante, Madrid, Palma, Valladolid and Vigo, the Provincial Council of Bizkaia, the Consell de Mallorca and the Cabildo de Tenerife are the entities that have increased their computable spending in 2022 above the average for the group of local corporations, more than 9%.
And, especially, the increase in computable spending in the Cabildo de Tenerife stands out, of more than 40% last year, when it was 13% in 2021.
This Supplementary Report on the individual evaluation of the Budgets for 2023 of the Local Corporations completes the evaluation of the local subsector included in the Report on the set of Public Administrations with an individual analysis and as a group of the 24 largest local entities.
In said Report, AIReF issues two recommendations addressed to the eleven CCLLs that have registered the largest increases in spending in recent years so that they analyze the increases registered since 2019 and avoid new increases in expenses or decreases in income of a structural nature whose permanent financing is not available. guaranteed. This analysis must be sent to AIReF.
AIReF points out that the average growth of computable spending in this group in 2022 was higher than 9%, a figure that is unprecedented in previous years and occurs after an increase of more than 7% in 2021.
These increases are mainly due to the expansion of current spending. Between 2019 and 2022, a period in which fiscal rules have been suspended, the computable spending of large local corporations has grown by 23%.
AIReF points out that the maintenance in 2023 of these growth rates of computable spending would imply a deterioration of the balance of large local corporations and a risk to sustainability.
In addition, remember that the specific recommendation for Spain of the European Council establishes quantitative limits to the growth of current primary spending.
AIReF includes in the report the estimates of the expected closure in 2023 for large local corporations once the positive effect of the negative settlement of the financing system for the year 2020 and its compensation have been filtered out.
The objective is to show the results that depend on the management of the corporation itself, under homogeneous conditions with other years, since large corporations have had a negative impact of 700 million in 2022 and will have a positive impact of more than 500 million in 2023.
According to AIReF forecasts for 2023, the 24 large local corporations, without the effect of the liquidation of 2020, will register a surplus of 1% of their income.
These forecasts worsen those included in the lines report last October, mainly as a result of the end of 2022 (2% surplus).
They are very close to those communicated by the local corporations themselves and consistent with what is foreseen at the subsector level.
From 2018 to 2022, this group of large local corporations has reduced its surplus, in homogeneous terms, by almost 80% (around 1.8 billion), a percentage that would rise to 90% if AIReF forecasts for 2023 are included.
This reduction has occurred unevenly by entities so that, from 2018 to 2023, the municipalities of Las Palmas de Gran Canaria, Madrid, and Valencia and the Diputación de Sevilla have reduced their surpluses by more than 10 points over their income.
Regarding debt, in 2023 the large local corporations will have a debt of 39% of their current income on average.
