Tenerife Cabildo faces financial adjustment plan
The Cabildo of Tenerife will hold an extraordinary plenary session this Wednesday, June 11, with the main objective of approving the Economic and Financial Plan 2025-26. This adjustment plan has become necessary after the island administration failed to comply with spending rules in managing its consolidated budget in 2024. The CC-PP government group’s absolute majority makes approval highly likely.
The extraordinary plenary session begins at 12:00 noon and includes two main items: the presentation and consideration of the Economic and Financial Plan 2025-2026, and the acknowledgment of Pedro Martín Domínguez’s resignation from his post as Island Councillor for the PSOE.
Understanding the budget deviation
The deviation detected in 2024’s budget management relates to partial non-compliance with obligations established in Organic Law 2/2012 on Budgetary Stability and Financial Sustainability. The Cabildo failed to comply with spending rule limits after this high-ranking state regulation came back into force on January 1, 2024, following suspension during the COVID years (2020-2023) within the European Union.
Notably, the Cabildo of Tenerife is not the only island administration among the seven Canary Islands that has failed to comply with this requirement, highlighting a broader regional challenge in fiscal management.
Financial figures and legal requirements
In the first full year of budgetary management under the current Island Executive (within the 2019-23 mandate), computable expenditure for 2024 reached 917.9 million euros, according to the General Intervention report. However, applying the expenditure rule regulated by the organic law, this amount should not have exceeded 800.5 million euros at most.
This mismatch represents almost 15% (14.7%) above the existing legal ceiling. Article 12 of the organic law requires local authorities, including island councils, to ensure that variation in eligible expenditure does not exceed the reference medium-term GDP growth rate of the Spanish economy. This rate amounts to 2.6% for 2024, applied to the computable expenditure of 2023’s budget settlement, and will be 2.7% for 2025 and 2.8% for 2026.
The adjustment plan details
The financial gap requires presentation and approval of an Economic and Financial Plan (PEF), commonly known as an adjustment plan. The PEF is designed to rebalance accounts during 2025 and 2026, with hopes of returning to compliance with the spending rule.
The Island’s Finance Department has submitted its proposal for the 2025-26 EFP, indicating that “it is not necessary to adopt extraordinary measures to comply with the expenditure rule, as it is expected to be met with normal execution of approved budgets” for the 2025 and 2026 financial years.
Proposed measures for financial stability
With the goal of moving toward greater efficiency in economic-budgetary management, the proposal adopts two main actions. First, as a measure without economic quantification, there’s a commitment to use new or increased revenue (not from other public administrations) and cash surplus for general expenditure exclusively within margins that guarantee compliance with spending rules.
Second, as a measure with economic quantification, the plan includes early debt repayment derived from the agreement between the Cabildo Insular de Tenerife and Sociedad Mercantil Estatal Aguas de las Cuencas España, SA (Acuaes) for executing and operating sanitation and purification activities on Tenerife. Early repayment would occur over two years: 33.6 million euros in 2025 and 24 million euros in 2026.
Opposition criticism and concerns
The main opposition party in the Cabildo of Tenerife, the PSOE, identifies “excessive use of residual cash in general expenses” as the primary cause of non-compliance with spending rules. They describe this usage as “intensive” and “imprudent as it represents an extraordinary and non-structural resource,” noting that additional limits to contain negative impacts were not applied.
PSOE spokesman Aarón Afonso emphasizes the severity of the situation, stating that “during budget execution of the 2024 financial year, the Ministry of Finance’s Autoriza platform was warning in quarterly balances about execution risks of non-compliance with spending rules.” Despite these warnings, the Cabildo continued authorizing and executing expenditure financed with cash surplus without adopting sufficient corrective measures.
“It is clear that this action calls into question the prudence and fiscal responsibility in budgetary decision-making of current political leaders of the Cabildo Insular de Tenerife,” Afonso adds, referring to the government formed by CC and PP parties.
