Autonomy and equity in the new funding system for autonomous regions in Spain

The core of the paper focuses on assessing the new funding system for the autonomous regions in Spain (approved in July 2009) taking into account the problems that derive from the design and the running of the previous system and according to the main principles of a decentralization funding scheme: autonomy and equity. Once the pending problems have been identified, we make an effort to explain the new model through the description and articulation of its basic elements. Likewise, an initial estimation of the resource allocation in the first year of implementation (2009) is also presented as a complement of the previous explanation. From our viewpoint, the new model achieves significant improvements in terms of both principles (autonomy and equity), although some of the weaknesses of the previous model remain unresolved and new problems also arise. As a result, we cannot provide a favourable judgement about the current funding system. Moreover, it must be pointed out that the reform does not fulfil the requirements in terms of transparency and the consolidation of public finance, given that it is the most complex and expensive model (the Central government assumes a significant part of the fall in regional revenues) in the entire Autonomous regions’ trajectory. Finally, it is worth noting the surprising lack of commitment in terms of effective corresponsibility and budgeting consolidation in regional governments, which can be explained an agreement reached in a period of economic crisis that clearly affect the public revenues.