The Governance Structure of Local Government Finances in Spain

Abstract

Local governance has important economic dimensions and is related to the ability to raise revenue or receive transfers from central or regional governments. This dimension is also influenced by the impositions of local economic actors (business organizations or trade unions) on political decision-making processes stemming from the imperatives of capital accumulation, the control of expenditure by central audit bodies, and, more generally, the constraints on public spending determined by the macroeconomic policies of European and central national powers. In this context, local financing is a key element of local governance since local public policies and the provision of goods and services to citizens largely depend on the financial resources available. In Spain, local governments’ financial sufficiency depends largely on central government and Autonomous Community governments. On the other hand, the heterogeneity of Spanish local governments means that, depending on the territory, there are different financing systems. For all these reasons, this chapter analyses the different financing systems with their structures and instruments and ascertains to what extent these systems also lead to differences in governance systems.