Just before the summer break, on 1st July 2008 the Councillor of Finance, Vicente Chorro, explained the municipal budgets for 2008 to the Agenda 21 forum. First, he explained why it had taken so long for the accounts to be approved.
Because of the Catastrazo Xàbia is in an anomalous situation. The “Audiencia Nacional” has not yet made a pronouncement following the judgement of the High Court of Valencia that the catastral values are invalid. The property tax (IBI) is based on this document, and at the same time this is the main source of revenue for the municipality (14 of the 35 million total income). The amount will vary substantially depending upon the final decision of the Audiencia Nacional.
However the precarious economic situation of the sports and social associations that rely on a municipal subsidy is beginning to become unsustainable. Therefore it was decided to approve the budget, despite not knowing what the final result of the Catastrazo will be.
In this regard, the mayor of Xàbia, Eduardo Monfort, announced that he had sent a letter to the relevant authorities, making them responsible for any negative impact on the municipal budget caused by the delay of the final judgement.
35 million euros
The budget of Xàbia is about 35 million euros (35.041.245,48 €), which is the sum of revenue as well as expenses. Of this amount, 30.3 million is for recurrent expenditure and 4.7 for capital expenditures. He also drew attention to the spending on personnel, some 13 million euros reflecting an increase of almost seven hundred thousand on the previous year. Without accurate information on how much money would be collected through IBI, the estimated total revenue was based on known past payments and income trends in recent years.
In the 2007 municipal budget amounted to 38.5 million euros, but in 2006 it was was 36 million.
Although last year the partial suspension of the General Plan was in force, and therefore licensing revenue had decreased, the peak in the budget was because they had to include 9.5 million in expenses for works of the Historic Center. In 2008 this amount has fallen to 2.4 million euros, but on the other hand current account spending had increased by 2.5 million.
Chorro explained that expenditure for capital investments is a bit "like the Letter to the Three Kings."
While other items under other headings are annual, and appear in investments which can be rolled over from one year to the next until the investment is made. Section 6 expenditure includes the auditorium, expansion of the museum or the increase of the money intended to improve the condition of Arenal- a condition that Nueva Javea made to approve the budget. Thus, to compare municipal budgets of different years, one should study them without taking into account the costs for capital investments.
Licenses for building work and the rubbish collection tax
The tax revenues from licenses and urban construction have fallen progressively since 2001. In that year almost 4.8 million euros were received between the two sources, while for 2008 some 2.2 million euros is estimated.
With regard to income from the rubbish collection tax around 2 million euros is levied. However, the Contractor's service costs the municipal coffers 4 million euros, which is in addition to the 1.9 million in expenses for transfers and treatment of waste and cleaning of roads and beaches . It would be possible to pass some of these expense onto rates (collection, transfer and treatment of solid waste), but not the cleaning of beaches and roads. Now more than ever, this gap poses a problem.
It would be logical to raise the rate to taxpayers, to one comparable to that of other regional municipalities which have an average household quota of 100 €, while in Xàbia huoseholds pay just over 70 €. However, political coalitions and the unpopularity of the plan have discouraged the increase.
Betting on Services
Since the current government took office, it has made clear that it would wager on enhancing services and improving the infrastructure of the municipality. The 2006 budget had been adopted shortly after the censure motion, so it was already prepared when they (Centrist Bloc and PSPV coalition) entered government .
In 2007, the municipal accounts were rather an attempt to adjust the Council's budget to declining revenues in the construction sector. In 2008 they are finally able to define a series of investments aimed at improving roads, street lighting, parks and gardens, sanitation and beaches, etc., but on the other hand, they have had to earmark 1.6 million euros for the rubbish collection service, the annuities for the revision of General Town Plan and the construction of the Day Center.
There is still scope for debt
The council has 27 million euros of working capital (which depends on repayment of outstanding bank loans), of which 18.5 million have been dragging on over the last two fiscal years, and correspond to annuities for works of the conservatory, on the Old Town’s ring roads and car parks, and on municipal items. However, Xàbia is still within the limits of its borrowing capacity.
The technician Joan Valles, explained that the law allows a certain amount of indebtedness, which is calculated taking into account two limits, 110% of regular resources (35 million) and the net saving (3 million euros). Applying the corresponding equation, it appears that Xàbia currently can make a maximum additional borrowing of nearly 8 million. In other words, you might ask, for example, a loan within this figure, since there is margin to pay an annuity of up to 3 million.
New sources of funding
After the decline in construction, the council must find new sources of funding, but it does not intend to increase revenue based on fines.
One way to increase revenue is to create income from the municipal heritage. But those assets that are linked to public services, such as the Casa de Cultura, museums or roads, cannot be sold, mortgaged or even used as a bank guarantee. But land assets, on the other hand, can be recouped.
Xàbia has ceded ground for the construction of Low Cost (Social) housing (VPOs), and the council wants to ask Conselleria to change the classification of land destined for VPOs away from urban centres (on land for extensive development, ie villas) to patromonial land, which would provide some return on it.
Cost control
In recent years the Fiestas have been an important part of the municipal budget.
So now it is no coincidence that the councillor of Finance is the same as that of Fiestas, "I will never receive any awards from the festeros", confesses Vicente Chorro, who aims to spend no more than 1 million euros on feasts, which would mean a reduction of 600 thousand euros over the previous year. The Councillor appreciated the effort and understanding of the Fiesta committees.
There are more subtle but effective ways to lower expenses which may include a more efficient management in the workplace. For example, centralizing the purchase of office equipment or using air conditioning at a temperature no less than 24 ° C. Two actions that were suggested by members of the Agenda21 Forum. Unfortunately these proposals from the public were not even considered interesting by the Councillor for Finance, who seemed more focused on measures on a wider scale.
Participatory Budgets
The councillor for Finance, who replied to all the questions from the audience, also explained that because of the tight situation, it had not been possible to create participatory budgets this year, but pledged to carry out those investments which the Forum had considered more urgent, such as the auditorium and nursery in the Port. He also promissed that next year the citizens will be able to participate in Capital investment.
You can download a presentation of the budgets of 2008 on the Agenda 21 website of the municipality, in the downloads section. http://ajxabia.com/descargas.php?apa_id=96
The PDF file is called "Presupuestos 2008"
The next meeting of the Agenda21 forum will be held on Tuesday September 16 at 8.00pm in the House of Culture.
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The municipal budget is divided into a series of headings: On the expenditure side are:
1, Staff: Salaries of council staff.
2, Goods and Services: normal spending of councillors
3, Expenses: that which is paid in interest to banks for loans.
4, Current transfers: that which is paid to clubs and associations, through agreements, including scholarships, awards, etc.
6, Investment Interests: corresponds to the inventory costs of the council (from computers to work on the museum).
7, Transfers of capital: money that is given to associations (4), but for investment, such as works on the Convent of the Agustinas, and also part of the aid to the third world.
8, Financial Assets: relates to the acquisition of financial assets (Xàbia has no such expenses of this type).
9, Financial Liabilities: that which is paid of capital for loan requests.
While revenues are divided into:
1, Direct Taxes: IBI, vehicle taxes, etc., although the IBI involves a total of 14.7 million to 18 million under this heading.
2, Indirect taxes: taxes on buildings, installations and works.
3, Fees and other income: for waste collection, building licensing, land use, market taxes, default interests,…
4, Current transfers: that which are received from the central and autonomous agencies; Fees collected from the State add up to apriximately 6.1 million.
5, Capital Income: income from interests on deposits of current accounts, and from concessions (chiringuitos, rental of municipal property, etc.).
6, Disposal of Investment Interests: sale of municipal land plots.
7, Capital transfers: transfers from, say, Ministry, the State or the EU; investment works such as the expansion of the Museum and the Casa de Cultura; subsidies.
8, Financial Assets: sale of assets
9, Financial Liabilities: Financing via loans.
From Xabia al Dia Un presupeusto de 35 milliones...
