The 2017 Spanish State General Budget Law

SPECIAL REPORT

Madrid, September 2016

Barcelona • Bogota • Buenos Aires • Havana • Lima • Lisbon • Madrid • Mexico City • Miami • New York City • Panama City • Quito • Rio de Janeiro • Sao Paulo Santiago • Santo Domingo • Washington, DC THE 2017 SPANISH STATE GENERAL BUDGET LAW

1. INTRODUCTION

The state general budget law is the legislative initiative the 1. INTRODUCTION government uses to set its annual priorities. Its negotiation and 2. WHEN WILL THERE BE approval determine executive policies, which impact both the A NEW GOVERNMENT? population and the various economic and social sectors that have 3. WHAT IS THE EXPENDITURE CEILING? begun to make their own contributions. This report analyzes the 4. WHEN WILL THE procedure and anticipated implementation schedule for the state BUDGETS BE APPROVED? general budget law in 2017. 5. WHAT WILL THE NEGOTIATION BE LIKE? CONTEXT

The Spanish Congress that emerged from the June 26 elections is extremely fragmented. No political force holds a majority big enough to form a government or approve initiatives on its own.

Thus, negotiations and pacts between different parliamentary forces will be a constant in the coming months, providing an opportunity for civil society to participate in the elaboration of laws.

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2. WHEN WILL THERE BE The government should A NEW GOVERNMENT? submit its draft budget to the European Commission before This question is reflected in Oct. 15 in order to confirm the the intense debate between initiative complies with the political parties seeking to European Union’s stability and form a government. Following growth pact. this week's investiture debates, in which Mariano Rajoy will Experts do not envision a new “The European probably not be able to obtain Spanish government being able Commission will push the support necessary to form to submit a budget before this a government, the negotiating date. The campaigns for the for the formation of a period, which could last until Basque and Galician elections, government in Spain” Oct. 31, 2016, begins. which will take place Sept. 25, will further delay negotiations In the event the parties are between the political parties. not able to reach a majority agreement by then, elections Facing the impossibility of will be convened Dec. 25. Most budget submission by the experts agree the parties will required date, the European do everything they can to Commission will push for the avoid a third election, reaching formation of a government some sort of agreement in the in Spain. The need to present last days or hours before the the expenditure ceiling and deadline to form a government. budgets is one of the main However, PSOE is considering arguments that will be used in introducing an initiative to the investiture sessions, which reform the electoral law so, in may take place in coming case there is a third election, it weeks. will be held Dec. 18 instead of Christmas Day. 3. WHAT IS THE Most analysts also agree EXPENDITURE CEILING? that, regardless of the new government’s configuration, it Before negotiating the general will rule in minority, having to budget law, the government negotiate all of its initiatives should approve the upper limit with the parliament. The of non-financial expenditures first challenge for the elected for the public administration. government will be the The government’s presidential approval of the state general economic office and ministry budget law for 2017. of finance will lead the proposal.

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The so-called expenditure 4. WHEN WILL THE ceiling is defined by organic law BUDGETS BE APPROVED? 2/2012 of budget stability and financial sustainability, dating Processing the state general from April 27, and its goal is to budget law usually takes prevent one-off revenues from about three months after the jeopardizing the public sector’s government has submitted it. budget stability and financial sustainability. Once the expenditure ceiling is set, the ministry of finance, The expenditure ceiling can be along with the deputy state approved by the incumbent secretaries for the different government with a simple ministries, develops the majority vote in Congress, as budget proposal presented in long as its urgency is justified. Congress. However, this scenario is not expected due to the wear the As with all legislative incumbent government may initiatives, after the initiative’s suffer if it does not court the presentation in Congress parliamentary majorities needed comes a process in which for its approval. hearings are requested and held, amendments introduced and debated, a report put together and a ruling reached, all based on the text previously approved by the Parliament’s budget committee.

Figure 1. State General Budget schedule This ruling is later debated at the Congress’ and Senate’s PRESENTATION November 15 plenary sessions before it is REQUESTS FOR HEARINGS by November 15 officially approved in Congress. PUBLICATION November 17 If a government has been DEADLINE FOR AMENDMENTS December 2 formed in the days leading HEARINGS November 28 to December 2 up to the deadline to avoid DEBATES December 14 and 15 new elections, the budget’s DEADLINE TO SUBMIT AMENDMENTS December 16 submission is expected by mid- PRESENTATION REPORT December 20 November. COMMISSION’S RULING December 27 COMMISSION’S RULING APPROVAL The main political parties January 10 to 12 IN CONGRESS have already elaborated their DATE ANTICIPATED BY THE SENATE February 14 to 16 proposed budgets, so it would FOR ITS APPROVAL be one of the first measures a BUDGET’S FINAL APPROVAL week starting February 20 government resulting from the

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past few weeks of negotiations • Grupo Parlamentario Popular: would be presenting. The 134 process could conclude by March 2017. • Grupo Parlamentario Socialista: 84

5. WHAT WILL THE • Grupo Parlamentario NEGOTIATION BE LIKE? Confederal de Unidos Podemos- En Comú Podem-En Marea: 67 The Spanish Congress is composed of 350 deputies, • Grupo Parlamentario organized as follows: Ciudadanos: 32

• Grupo Parlamentario de Esquerra Republicana: 9

• Grupo Parlamentario Vasco: 5

• Grupo Parlamentario Mixto: 19 Figure 2. The Spanish Congress of Deputies distribution »» Partit Demòcrata Català: 8

»» Compromís: 4

»» EH Bildu: 2 84 » 67 » Unión del Pueblo Navarro: 2

134 32 »» Coalición Canaria: 1

»» Nueva Canarias: 1

»» Foro Asturias: 1

134 Grupo Parlamentario Popular 5 Grupo Parlamentario Vasco The general budget law can be approved by a simple 84 Grupo Parlamentario Socialista 19 Grupo Parlamentario Mixto majority, which means having 8 Partit Democrata Catala Grupo Parlamentario Confederal de 67 4 Compromis more votes in favor than Unidos Podemos-En Comú Podem-En Marea 2 EH Bildu against would be enough 2 Union del Pueblo Navarro 32 Grupo Parlamentario Ciudadanos 1 Coalicion Canaria for the government to have 1 Nueva Canarias it approved, as long as a 9 Grupo Parlamentario de Esquerra Republicana 1 Foro Asturias parliamentary group abstains.

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“The Parliament’s Therefore, the government society to contribute to the —probably in minority— final configuration of the fragmentation is that may emerge after the general budget law. an opportunity negotiations of the past few for different weeks must agree on the During the process, the political groups general budget law with Parliament becomes the various political parties. epicenter of the Spanish and civil society to political debate, involving contribute to the final Only an agreement on the negotiations between parties, configuration of the budgets between PP and PSOE, participation of civil society which has been ruled out by representatives who will general budget law” the latter, would avoid the share their opinions before implication of at least three parliamentary groups and parliamentary forces in the involvement of public affairs negotiation. experts, who will help stakeholders understand how The Parliament’s fragmentation to handle a negotiation of this is an opportunity for different nature. political groups and civil

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Authors Joan Navarro is Partner and Vice-Chairman of Public Affairs at LLORENTE & CUENCA. Sociologist and PDG from IESE, Joan is an expert in communication, electoral strategy and public affairs. From 2004 to 2007 he was director of the Office of the Minister of Public Administration and in 2010 was recognized as one of the 100 most influential magazine El País Semanal. He is a member of the Spanish chapter of Strategic and Competitive Intelligence Professional (SCIP) and the newspaper El País. [email protected]

Cristóbal Herrera is Manager of Public Affairs Area at LLORENTE & CUENCA Spain. He is a graduate in Political Studies in the Universidad Complutense of Madrid, specialization in Public Affairs in the University of Hull and Master’s Degree in International Trade in CESMA- Business School. In LLORENTE & CUENCA, his main task is to coordinate intelligence and political analysis activities. He has over 5 years’ experience working for parliamentary groups in the Spanish Parliament. [email protected]

Nacho Corredor is consultant of Public Affairs Area at LLORENTE & CUENCA Spain. Political scientist from the University Pompeu Fabra of Barcelona and specialist in business ethics and transparency. He collaborates with media such as El Periodico de Catalunya, RAC1, Cadena SER, Catalunya Ràdio and Televisión Española. He is coordinator of the Foro Más Democracia, an organization that seeks to influence the parties to improve their democratic functioning. He has founded several organizations as deba-t.org and bridgingbcn dedicated to fostering relations between politics and civil society. [email protected]

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