The reform of autonomous financing returns to the center of the political agenda. The Ministry of Finance has summoned the Fiscal and Financial Policy Council (CPFF) for next Friday, September 4 with the aim of putting its proposal to a vote and unlocking a model that has been pending renewal since 2014. The meeting was supposed to be held in July, but was postponed at the request of the communities governed by the PP.
The reform does not simply consist of handing out more money. It changes which taxes are distributed, how much each territory needs is calculated, and what mechanisms are used to compensate for the differences between communities. The Ministry estimates that by 2027 the system would distribute 224.507 billion and would contribute 20.975 billion additional compared to maintaining the current model. The project is still not approved: after the CPFF it would have to go through the Council of Ministers and subsequently through the Cortes, where its parliamentary viability is not guaranteed.
More income tax and more VAT for the communities
One of the most important changes affects taxes. Currently, communities receive 50% of the income tax and 50% of the VAT. The proposal raises the autonomous participation to 55% of the income tax and 56.5% of the VAT, which, according to the Ministry, would mean nearly 16.000 billion additional in tax capacity during 2027. Figures such as Wealth, the tax on bank deposits, certain gaming activities, and the tax on waste deposits in landfills would also enter the system.
The Government also wants to introduce a voluntary mechanism linked to the VAT generated by SMEs. A community where the relative weight of VAT declared by small and medium-sized enterprises is higher than its consumption index could receive an additional transfer. Along with this, a "shared box" system is proposed so that certain tax revenues reach the autonomous communities more quickly and reduce the current gap between advance payments and final settlements.
Adjusted population changes: age, students, unemployment, and depopulation
The other major battle is in the so-called adjusted population, which does not simply count how many inhabitants each autonomy has. It tries to calculate how much it costs to provide healthcare, education, and social services based on the characteristics of its population.
The proposal reserves a 38% of the calculation for health needs, now differentiating 20 age groups; 30% for the general population; 17% for those under 18 years old and another 3.5% for university population and student mobility. Those over 65 years old account for 7% and the unemployed without benefits, 1.5%. Surface area, dispersion, insularity, and a new fixed cost indicator designed for sparsely populated territories are also included.
The latest draft also adds a correction for the communities that lose population, taking as a reference the maximum of their adjusted population from the previous three years. The intention is to prevent a demographic decline from immediately reducing their resources when hospitals, schools, or public services cannot decrease their costs at the same pace.
What each community would receive
The figures initially published by the Treasury allow us to see who is the main beneficiary. They are government estimates for 2027 regarding what each territory would receive while maintaining the current system and may be subject to modifications during the negotiation before the final approval.
Andalusia: 4.846 billion. It is the largest beneficiary in absolute euros and seeks to correct its funding per inhabitant.
Catalonia: 4.686 billion. It is one of the big winners and the model incorporates elements related to ordinality and greater fiscal autonomy.
Valencian Community: 3.669 billion. It starts from one of the lowest positions in funding per inhabitant and demands a structural correction of its underfunding.
Madrid: 2.555 billion. It would increase its resources, although its high fiscal capacity also makes it a reference for leveling mechanisms.
Castilla-La Mancha: 1.248 billion. It would obtain more funds, but its government rejects the current design and demands greater equality in the distribution.
Murcia: 1.188 billion. One of the historically worst-funded autonomous communities; it would have a significant improvement.
Aragon: 629 million. It demands that territory, dispersion, and the cost of providing services weigh more.
Canary Islands: 611 million in the initial design. Subsequent negotiations have improved its position and the Canary government already estimates the annual increase linked to the global agreement at around 1.3 billion.
Galicia: 587 million. Population aging and territorial dispersion are its main demands.
Balearic Islands: 412 million. It seeks to ensure that insularity and its high tax capacity are correctly reflected.
Castilla y León: 271 million. Considers the weight of surface, dispersion, and depopulation insufficient.
Asturias: 248 million. Its Government considers the figure insufficient and currently rejects the proposal.
La Rioja: 25 million. The small size and fixed costs are decisive for its position.
Cantabria: Hacienda proposes complementary mechanisms, including about 46 million linked to the Interterritorial Compensation Fund.
Extremadura: The Government proposes approximately 216 million additional through complementary mechanisms.
Basque Country and Navarra do not form part of the common regime system, as they have their own foral models of agreement and economic convention. Ceuta and Melilla also have specific treatment.
Catalonia: 4,686 million and the controversy of ordinality
Catalonia constitutes the main political focus of the reform. The Generalitat estimates that it would receive 4,686 million additional, an increase of 13.35%, and argues that the system would allow for the first time the application of the principle of ordinality based on adjusted population: Catalonia would maintain the third position as a contributing community and would also move to occupy the third in receiving resources according to that indicator.
The ordinality aims to prevent a community that occupies a certain position due to fiscal capacity from ending up much lower after redistribution. It is precisely one of the elements that generates the most rejection in other autonomies. Castilla-La Mancha believes it can introduce unequal treatment, while Asturias has set ordinality as one of its red lines.
Valencia and Murcia: the communities seeking to escape underfunding
The Comunitat Valenciana and Murcia start from the lowest positions of the current system. According to the latest settled data analyzed by Fedea, both were around 94.6% of the average normative financing per adjusted inhabitant, while territories like Cantabria widely exceeded the average.
That is why the reform has a particularly important impact for both. Hacienda initially estimates 3,669 million additional for the Comunitat Valenciana and 1,188 million for Murcia. However, the Valencian Government maintains its political opposition to the procedure followed and accuses the Executive of having started from a prior agreement with Catalonia.
Andalusia would earn more money than any other community
In absolute terms, the biggest beneficiary would be Andalusia, with an additional 4.846 billion, even slightly above Catalonia. Its high population and current funding per inhabitant explain a good part of the result.
The Government argues that the new leveling mechanism is designed precisely to reduce differences. Its proposal guarantees that the communities reach at least 75% of the average resources per inhabitant adjusted based on their tax capacity and adds a state contribution of about 19 billion to bring closer the territories that are furthest from those with more resources. The Treasury estimates that the distance between the best and worst funded community would go from about 1,500 euros per adjusted inhabitant to approximately 700 after all corrections.
Galicia, Castilla y León, and Asturias want more weight for the territory
The aging communities and those with a high population dispersion maintain another front. Galicia, Castilla y León, and Asturias argue that attending to an aging population spread across thousands of small nuclei increases the costs of hospitals, schools, health transport, or social services.
The new system increases the detail of the population's age and creates an indicator of fixed costs, but area and dispersion continue to have a relatively reduced weight: 1.6% and 0.5%, respectively. Asturias has already announced that it will vote against if there are no significant modifications and considers the 248 million that corresponds to it in the initial estimate to be insufficient.
Canarias changes position and will support the model
Canarias is one of the few communities that has moved from initial skepticism to support. After negotiating with the Treasury, the Government of Fernando Clavijo has announced that it will support the reform after obtaining guarantees that the resources linked to the Economic and Fiscal Regime (REF) will not be counted as ordinary funding. The Canary Executive now estimates that the set of agreements could yield approximately 1.3 billion additional per year, a figure higher than the 611 million from the first simulation published in January.
This evolution also demonstrates that the initial table should not be interpreted as the definitive result: the Treasury is keeping negotiations open on specific aspects of each territory.
A climate fund of 1 billion
The project also incorporates a climate fund of about 1 billion euros. Two-thirds would be reserved for the communities of the Mediterranean coast, considered especially exposed to sea warming and extreme weather phenomena, while the remaining third would be distributed among other territories according to adjusted population.
This allocation particularly benefits Mediterranean autonomous communities such as Catalonia, Comunitat Valenciana, Murcia, Andalucía, and Balearic Islands, although it represents a small fraction of the overall system.
No one will lose money, according to the status quo clause
To make the transition politically more viable, the Treasury introduces a status quo clause: no community should start the new model receiving less money than with the previous system. The State would contribute around 400 million to cover these compensations, especially relevant in Cantabria and Extremadura.
This mechanism avoids immediate losses, but it has also received technical criticisms. Fedea warns that indefinitely maintaining these compensations may perpetuate the inherited positions of the previous model and hinder the distribution from truly approaching the objective criteria established by the new formula.
Debt forgiveness is another distinct reform
The financing debate coincides with the processing of the partial forgiveness of autonomous debt, but they are two different issues. The project on debt would allow the State to assume up to 83.252 billion euros currently borne by the communities under the common regime; the financing reform, on the other hand, determines how revenues will be distributed each year in the future.
A community can, therefore, benefit from a potential debt reduction while simultaneously discussing how much it receives with the new system.
On September 4, first decisive vote
The next step will come this Friday. The Treasury intends for the CPFF to approve the proposal on September 4 to subsequently elevate it to the Council of Ministers. Catalonia and the Canary Islands have expressed a favorable position, while the communities governed by the PP maintain strong objections and governments such as those of Asturias or Castilla-La Mancha also currently reject the design.
Overcoming the CPFF will not resolve the issue. The reform then requires legal changes and its final approval in Congress is not guaranteed. The Government aims for the new system to come into effect on January 1, 2027, but to achieve this it must resolve a discussion that faces very different territorial interests: the underfunded communities want to regain ground, the most aging ones demand that the cost of depopulation be valued, and those with greater fiscal capacity seek that solidarity does not excessively alter their position.
In short, the reform distributes more money, but the real battle is in how it is decided who needs more and how far the redistribution among territories should go.