The Councilor of Finance, Alberto Reina, has reported that, despite the fact that this year the fiscal rules suspended since 2020 due to Covid have come back into force, the closing of the budget of the City Council for 2024 confirms that the financial situation is «reasonably good» and the breach of the spending rule is due to «a specific situation,» so «in the years 2025 and 2026 we will return without problems to the path of stability.»
The closing of the 2024 budget includes a positive treasury surplus of 6,513,936.00 euros, which with the application of fiscal rules can only be allocated to debt repayment. The financing need is 7,236,027.66 euros, the positive net savings is 1,131,020.21 euros, and the debt ratio, not including early amortizations, would be 62.4% at the end of 2025. The breach of the spending rule is 4,515,515.19 euros, an amount in which expenses exceed the limit set by the central government, as reported by the Albacete City Council in a press release.
The breach of fiscal rules makes it necessary to develop a Financial Economic Plan to return to the path of stability for two consecutive years. The councilor has recalled that «already in 2022, the budget approved by the previous government team started with a significant lack of credits for current expenses, which was mitigated by applying the treasury surplus to current expenses.»
«That budget technique did not contravene fiscal rules as they were suspended, but it meant addressing and consolidating expenses from the year with savings from previous years. This means that expenses were stabilized and the income needed to support them depended on future unconsolidated savings,» he explained.
In fact, in the approval report of the 2022 budget, the comptroller already estimated a meager 42,355.88 euros in financing capacity, the councilor explained. The «breach» of stability was confirmed in the closing of that budget with a financing need of 6,250,833.91 euros «and the spending rule was also not met in that approved budget.»
Reina recalls that «this risk of breaching the principle of budget stability in 2022 was already warned by this municipal group in the total amendment that we made regarding the budget for that year.»
The deficit incurred in 2022 «is the one we have been carrying until today.» «We have been able to contain it and its amount has not increased, even though we are providing more and better services to citizens, with a level of investment execution in 2024 higher than that achieved in 2022,» he pointed out.
Alberto Reina also noted that «in 2023 the City Council did not have a budget, as the previous PSOE-Citizens government team did not present a budget project.» «The budget prorogation was applied throughout 2023 in terms of credits and initial revenue estimates, which forced us to make a significant effort to adapt income and expense statements to a completely different reality. And all this in an economic scenario marked by high inflation, the increase in interest rates, and the increase in personnel expenses due to the application of state regulations.»
CRITICISM OF PSOE AND CITIZENS
The current situation, he asserts, «to a large extent» stems from the decision of the PSOE and Citizens government team to allocate the 2022 surpluses mainly to current expenses, more than 5.6 million euros, so the 2023 exercise started with 5.6 million euros less to meet the needs of the City Council.
Another factor that has contributed to the breach of fiscal rules is the increase in remuneration, 13.63% since December 2018. Over 38% of the annual budget is allocated to personnel expenses, so the increases approved by the central government greatly condition compliance with the spending rule as the amount of these increases cannot be adjusted in the application of that rule.
In 2024, the increase compared to the budgeted amount in 2022 (the last budget approved by the previous government team) was 6 million euros, a 10%, and in 2025 compared to 2024, almost two million.
Regarding revenues, the execution has been very close to the budgeted amount and similar to previous years. Only the Urban Land Value Increment Tax (capital gains tax) had a lower collection (5.2 million compared to the 10 million collected in 2023), but this is due to the implementation of new accounting and revenue management programs, which caused a delay in settlements of almost six months, but the City Council does not lose those collection rights and the settlements generated in 2024 will be allocated to the 2025 exercise.
In the Investments chapter, it is worth noting the «significant investment effort» of this government team, which has given an impetus to the city with a record level of investment execution. Projects worth over 51 million euros have been developed. In 2024, 25,747,540.75 euros were executed, 22.52% more than in 2022 and 88.45% more than in 2021.
On the other hand, transfers to Urvial amounting to four million euros, to complete the promotion of 88 public housing units, «have penalized us in the amount of the computable expenditure for the spending rule.»
In conclusion, the councilor has assured that «we are working to adapt to the new legal framework and develop the Financial Economic Plan that will return the City Council to the path of stability, without this resulting in any tax increases or cuts in the progress made in the social, cultural, and investment fields. The strength of the municipal accounts will always be compatible with the attention to the people who need it most, as we have demonstrated in the two budgets approved since we took office.»