BarcelonaBarcelona City Council maintained high levels of public spending in 2020, while Madrid City Council continued the debt relief process begun a decade ago, according to official data recently released by the Independent Authority for Fiscal Responsibility (Airef).
The two cities have “a special treatment that makes them different”, explains Albert Carreras, Professor of Economics at UPF and Secretary General of Economy of the Generalitat between 2013 and 2016. The two municipalities are the only ones in the A state with more than a million inhabitants, although Barcelona has been around 1.5 million for years, while the Spanish capital also maintains a stable population of 3.2 million, twice as many as Barcelona. That is why they are also the only two municipalities in Spain with a municipal charter, so the treatment of Barcelona, from a fiscal point of view, is almost “co-capital”, according to Carreras.
Also, compared to other Catalan municipalities, Barcelona operates “in another league” – says Carreras -, with much higher per capita income and the ability to make policies that other administrations make other administrations, such as county councils , provincial councils or the Generalitat itself.
The expenditure of Barcelona City Council has been higher than that of Madrid for years, a trend that was maintained in 2020, when, in accordance with the execution of the budgets of the two cities, the City Council of Ada Colau spent 1,636 euros per inhabitant, higher than the 1,375 of the council of José Luis Martínez-Almeida.
The differences have several reasons. On the one hand, there is a question of political priorities for the municipal government. For example, social spending and in areas such as health or education are higher than in Madrid.
On the other hand, there are the competencies that each city council has. For example, the Barcelona transport company, TMB, is managed by the Barcelona Metropolitan Authority, a supramunicipal body that is financed with contributions from the city councils that are part of it, including the one in Barcelona. On the other hand, the Madrid City Council does not have to spend on the metro, as the company that manages it is autonomously owned. Finally, the capital effect must be taken into account, which means that in Madrid some of the facilities –especially cultural infrastructures, such as museums or theaters– are managed by the State, while in Barcelona the municipal participation is higher.
All this would explain, in part, that Barcelona receives more transfers from the state. The Spanish government gives “very large subsidies” to cover the costs of public transport, explains Carreras, so that Barcelona receives them directly and in the case of Madrid would go to the regional government. In addition, in 2020, Madrid received 525 euros per inhabitant from state transfers, well below Barcelona’s 723 euros. This fact also allows Barcelona City Council to maintain less fiscal pressure than Madrid City Council.
Madrid is delinquent
What most differentiates the two municipalities is the debt. For years, the Madrid City Council has been reducing its level of indebtedness at a remarkable rate, an effort that Barcelona must not make. In 2010 the Catalan capital owed more than 700 euros per inhabitant and has been reduced to the current 485 euros. Madrid, on the other hand, closed 2020 at 585 euros, but came from 2,298 euros per inhabitant of debt in 2012.
