A new era has begun for local budgets in Spain: the government has officially authorized municipalities and autonomous communities to use their 2024 budget surplus to finance long-term projects. Cities and regions can now invest surplus funds in housing development, infrastructure modernization, and other key initiatives without fear of spending restrictions over the next three years.
The decision was made at a meeting of the Council of Ministers, where a special royal decree was approved. The document grants access to additional resources that had previously been frozen in municipal accounts. According to Prime Minister Pedro Sánchez, this move will speed up the implementation of projects that have long been delayed due to bureaucratic obstacles and strict budget rules.
New opportunities
According to the new rules, funds accumulated in 2024 can be invested during 2025, 2026, and 2027. This applies not only to the construction and renovation of housing but also to the modernization of water supply systems, sewage, street lighting, transport hubs, educational institutions, and social support facilities. Authorities emphasize that priority will be given to projects that can deliver tangible benefits to residents and improve the quality of urban life.
Special attention is given to environmental initiatives. Autonomous communities have been granted the right to invest in projects that help combat climate change, improve energy efficiency, and reduce future utility costs. This may include installing solar panels, implementing modern heating and lighting systems, and developing digital infrastructure.
Flexible conditions
A key feature of the new regulations is the relaxation of project completion deadlines. If a project cannot be finished by the end of 2026, it may be continued into the following year using remaining funds, but only within the 2024 surplus limits. The main requirement is that work must begin no later than December 31, 2026.
To be eligible to use the surplus, municipalities and regions must adhere to supplier payment deadlines—no more than 30 days, as required by the anti-debt law. This rule aims to prevent new debts from accumulating and to ensure financial discipline at the local level.
Who benefits from this
Above all, the main beneficiaries of these reforms will be those regions that have managed to generate significant budget surpluses in recent years. They will now have the opportunity to implement long-planned projects without needing to coordinate every step with central authorities. Priority areas include the construction of affordable housing, modernization of utilities, development of transportation infrastructure, and the introduction of innovative technologies in urban management.
Experts note that this measure could stimulate local economic growth and make municipalities more attractive to investors and new residents. However, there is a possibility that the distribution of funds will spark disputes among regions, especially if some are unable to take advantage of the new opportunities due to a lack of surplus.
Political context
The adoption of the decree was the result of political agreements between the government and representatives of Junts per Catalunya. This move is seen as an attempt to strengthen cooperation between Madrid and Catalonia, as well as a demonstration of readiness for dialogue on the issue of regional budget autonomy.
At the same time, opposition forces have already voiced concerns that easing fiscal policy could lead to inefficient spending and increased regional imbalances. Authorities, for their part, assure that strict oversight of the surplus’s targeted use will be maintained, and all projects will undergo mandatory vetting to ensure compliance with sustainable development criteria.
If you didn’t know, Pedro Sánchez has served as Spain’s prime minister since 2018 and has repeatedly advocated for expanding the financial powers of the regions. His government has been actively implementing reforms aimed at decentralizing governance and increasing the autonomy of municipalities. In recent years, Sánchez has managed to reach a number of compromises with Catalan politicians, which has helped ease tensions between Madrid and Barcelona and accelerate the adoption of decisions crucial for the country.
