"It's not fair": the grievance that everyone sees but Moncloa agreed only with ERC to impose it on the rest

The Spanish government has faced mounting criticism over its handling of the autonomous communities' financing model, which critics argue has left regions like Valencia in a state of chronic underfunding. Despite promises made during the coalition government formed in 2023 by the PSOE and Sumar parties, no new financial framework has been implemented, nor has a temporary equalization fund been established to bridge the gap until reforms take effect. The current system, which expired in 2014, continues to shape resource distribution among regions, creating significant disparities according to experts. Francisco Pérez, director of research at the Institute of Economic Studies of Valencia (IVIE), stated that the existing situation is unjust and highlights the need for change. He emphasized that twelve years after the expiration of the previous model, the problem of inequality in resources persists. This issue was acknowledged in written commitments by both the PSOE and Sumar, which recognized the underfunding of certain autonomous communities, particularly Valencia. These commitments included assurances that public services would continue to be funded at the same level as the rest of Spain while the reform was delayed. However, the government led by Prime Minister Pedro Sánchez has not fulfilled these promises. Neither a new financing system nor a temporary equalization fund has been approved. The lack of progress on this front has sparked discontent within the PSOE itself, with some members questioning the government's priorities. The issue has also drawn criticism from the PP bloc, which argues that the current approach disproportionately benefits Catalonia. To understand the root of the controversy, one must look back to Catalonia. The Ministry of Finance, under the leadership of María Jesús Montero, proposed an alternative funding model that emerged from prior agreements between Sánchez and Oriol Junqueras, leader of ERC. The current minister of finance, Arcadi España, defends the new system, claiming it would provide additional funds of €21 billion by 2027. However, the PP reminds Spain that, as a former regional finance minister in Valencia, he had previously demanded urgent reform and a temporary equalization fund, now denied by the central government. José Antonio Rovira, the Popular Party’s finance advisor in Valencia, argues that the goal of the government has been to improve Catalonia more than other regions. He points out that Valencia faces unique challenges due to its outdated financing model. The region has had to manage the massive reconstruction costs following recent disasters, leading to increased debt without receiving non-repayable loans from the central government. This debt has further exacerbated the problem of underfunding. According to Rovira, Valencia is the community with the lowest income per capita under the current financing model. This means up to 80 percent of the region's debt can be directly attributed to underfunding. The region does not suffer from excessive spending but rather a lack of revenue that needs correction. As a result, Valencia's debt stands at around €64 billion, making it the highest relative to GDP in Spain and second-highest in absolute terms behind Catalonia. Rovira questions why Valencia has not broken away from the PP bloc to accept the additional €3,669 million it could gain through the new financing model. He suggests that the proposed model does not reach the average resource level required, and this shortfall is a critical concern for the region. The ongoing debate underscores the deep divisions over how resources should be allocated among Spain's autonomous communities, with Valencia at the center of the dispute.