Alicante to Cut €27 Million in Spending Despite Having €155 Million in the Bank

Municipal Intervention has identified a €27.2 million overspend in the City Council's spending rule for the last budgetary year. This increase in the balance of municipal expenses and revenues will necessitate equivalent cuts over the next two fiscal years (2025 and 2026) to comply with the law.

The regulations stipulate that municipalities must at least maintain a balance between income and expenditure, ensuring investments are sustainable and do not incur perpetual future costs. These rules were implemented following the 2008-2011 financial crisis to prevent public administrations, particularly municipalities, from going bankrupt, as they are the first point of contact for citizens and face challenges in accessing debt markets like central governments.

Over time, municipalities have cleared much of their debts (or all) and have full coffers due to restrictions on spending. In Alicante's case, according to Finance Councillor Toni Gallego, there are €155 million in Treasury surpluses.

The municipal budget liquidation report for 2024 "confirms" that Alicante City Council has "budgetary stability; a surplus of over €17 million from the difference between income and expenditure in 2024, and unused borrowing capacity of over €100 million." However, it has exceeded the spending cap set by fiscal rules.

Ana Barceló, spokesperson for the Socialist Municipal Group, criticised the situation as a result of "the chaotic economic management of Barcala's government team," stating that "the consequences will be borne by the people of Alicante, who continue to see projects addressing long-standing deficiencies remain unexecuted."

However, the Finance Councillor blames the "stranglehold" imposed by the central Government on municipalities. "We demand the removal of the yoke on local entities' economies, which are the most financially sound, and urge the central Government to stop suffocating municipalities by not allowing us to invest our citizens' money," Toni Gallego asserts.