The Tenerife Cabildo will hold an extraordinary session this Wednesday, 11 June, with the main objective of approving (which is expected to happen as the CC-PP government group holds an absolute majority) the adjustment plan, technically called the Economic and Financial Plan 2025-26. This plan had to be developed in haste by the island administration after breaching the spending rule in managing its consolidated Budget for 2024 (which includes the Tenerife Cabildo, autonomous bodies, and dependent and affiliated public entities consolidated in terms of National Accounting).
This extraordinary session begins at 12:00 pm and includes, besides the aforementioned content, the presentation and consideration of the Economic and Financial Plan 2025-2026, as well as the acknowledgement of the resignation letter from insular councillor Pedro Martín Domínguez of the PSOE.
The deviation detected in last year’s budget management, for 2024, relates to a partial failure in meeting the obligations established in the Organic Law 2/2012, of Budgetary Stability and Financial Sustainability; in this case, as the Cabildo did not adhere to the limits of the spending rule, something that should have been done following this high-ranking state and community-connected norm, which regained its validity on 1 January 2024, after suspending its application during the covid years (2020-2023) within the European Union (EU). The Tenerife Cabildo is not the only island administration of the seven in the Canaries that has failed to comply with this requirement.
In the first full year of budget management by the current island Executive (within the 2019-23 mandate), it is noted that the computable expenditure for 2024 in the mentioned Corporation reached 917.9 million euros, according to the report of the General Intervention of that same Administration, although it should only have reached, at most, 800.5 million, in application of the spending rule regulated by the aforementioned organic law. This discrepancy is almost 15% (14.7%) over the existing legal limit, the already mentioned maximum amount of 800.5 million.
Article 12 of the mentioned organic law requires local entities, including the island councils, that the variation of the computable expenditure does not exceed the medium-term GDP growth reference rate of the Spanish economy. This rate stands at 2.6% for 2024, which applies to the computable expenditure from the 2023 budget settlement (previous year), and will be 2.7% for 2025 and 2.8% for 2026.
That financial discrepancy in the Tenerife Cabildo mandates the presentation and approval by the Cabildo of an Economic and Financial Plan (PEF), commonly known as an adjustment plan, which is expected to be achieved in the session this Wednesday. The PEF is devised to rebalance accounts during this year, 2025, and the next, 2026, with an aim to adhere again to the spending rule.
Regarding this adjustment plan, the Island Directorate of Finance has submitted its PEF 2025-26 proposal, which will be debated in the aforementioned session. The report states that “no extraordinary measures need to be adopted for compliance with the spending rule as its compliance is anticipated with the normal execution of the approved budgets” henceforth, with implementations arising from the 2025 and 2026 exercises.
As stated in the PEF draft, “to advance towards greater efficiency in economic-budgetary management”, the proposal “envisages adopting two actions: a) as a measure without economic quantification, (…) the commitment to using new or greater revenues (not arising from other public administrations) and the cash surplus for general expenses exclusively within the margin that ensures compliance with the spending rule”, precisely what was not applied in 2024, and b) “as a measure with economic quantification, (…) the early repayment of the debt derived from the agreement between the Tenerife Island Council and the State-owned Commercial Company Aguas de las Cuencas España, SA (Acuaes) for implementing and operating sanitation and purification actions in Tenerife. The early repayment would occur in the two annual exercises of the PEF application as follows: in 2025, 33.6 million euros, and in 2026, 24 million, both amounts in round figures.
The PSOE raises the alarm
The main opposition party in the Tenerife Cabildo, the PSOE, identifies “excessive use of the cash surplus in general expenses” as the main cause for breaching the spending rule, which was “intensive” and “is considered imprudent as it was an extraordinary and non-structural resource, and the additional limits to contain its negative impact were not applied”.
Furthermore, the same political formation asserts, through its spokesperson in the Cabildo, Aarón Afonso, that “it is particularly serious that during the 2024 budget execution, the Authorise platform of the Ministry of Finance was warning in its quarterly execution balances of the risk of a spending rule breach in this Corporation and, despite those alerts, the Tenerife Island Council continued to authorise and execute spending funded with the cash surplus without then adopting sufficient corrective measures”.
“It is evident – concludes Afonso – that this action calls into question the prudence and fiscal responsibility in the budgetary decisions of the current political leaders of the Tenerife Island Council”, the Government formed by CC and PP.
