Tuesday, August 23, 2011

The problem isn’t just in Bigastro

It is very easy to be led into thinking that yours is the only town that is facing financial ruin.

The truth is that many councils, following the May elections and a change of power are realising that they face a mountain of debt. Indeed, the Federation for Municipalities and Provinces estimates that 40 per cent of Spain's local governments are in serious economic trouble. Many but not all were socialist led and so the blame is put at Mr Zapatera’s socialist government for allowing the situation to arise.

Backed by seemingly limitless credit, town councils embarked on lavish spending sprees before the 2008 financial crisis, buying voters' affections by building brand new theatres, dance schools, and astro-turf football pitches in even the smallest of villages.

But now the party is over, the debts must be paid, and Spain's 8,115 municipalities are waking up with a colossal post-boom hangover.

Take the case of Moia where the mayor, Dionís Guiteras says, “we are broke”. "We managed to pay the council staff on July 31, but I don't know if we will be able to on August 31. We haven't got any money to pay the electricity company, so maybe the street lights will go out. All of our buildings could be for sale."

In a bleak warning to residents, Mr Guiteras even prophesied that, unless Moia's residents rapidly adopted money-saving measures, the town would not be able to bury their dead. "We cannot keep our heads in the sand," he said.

Moia, with a population of 5,800, owes €25 million – almost 400 per cent of its annual budget.

The money is owed to everyone from banks to office suppliers, local businesses and even musicians for the fiestas – some of whom have been waiting for payment since 2005.

The town is unable to refinance its debt, owing to the scale of the problem, nor can it raise taxes as these are already at national limits. Mr Guiteras fears the crisis could even spell the end of the ayuntamiento itself, with consequences for democracy in rural Spain.

"That's what I meant about not being able to bury the dead," he said. "We need to change our way of thinking and acting, or else the consequences really will be the bankruptcy of the ayuntamiento.

"Do we really need a dance school, a music school? Is it essential? Can we share facilities?”

The mayor says that they have cut  politician's salaries by 65 per cent, and turned off the lights illuminating the church. They are going through everything, shaving off costs wherever they can.

“Police will be soon driving around in smaller, cheaper cars,” Mr Guiteras added.  Even the chair upon which he sits in his office could be sold. The stunning town hall itself - an early 18th century mansion, built on top of the hill by a wealthy local businessman – could also go under the hammer.

"Why not? In the past, people used to sweep their own doorsteps when it snowed. But now, they wait for 'Papa Ayuntamiento' to come along and do it for them. We need to change this mentality."

Despite Mr Guiteras's crusading zeal, not all of Moia's problems can be solved with a change in mentality.

Indeed, a few minutes walk away form the town hall lies a €6 million reminder of the scale of the problem. Behind locked steel barriers is a brand new town medical centre, gathering dust since completion over a year ago. Piles of sand are left on the terrace, and broken glass scatters the forecourt.

The previous mayor built the centre, plus a three-storey underground car park, but upon completion the financial problems remained, and the property has been locked up ever since.

Several hundred miles south, near Murcia, police in Moratalla have been told to walk rather than use their patrol cars. The vehicles would not be much use, anyway, as the town's two petrol stations are owed €120,000 in town hall fuel bills and refuse to fill up municipal cars. The 120 council workers were finally paid last week, after a three month delay, but Moratalla's list of angry creditors goes on and on - the council owes local businesses €9 million in unpaid bills.

All that will sound very familiar to the people in Bigastro where we too have an auditorium, a sports centre and a new multi-storey car park built by the high spending socialist council during the boom years.  Like the health centre in  Moia, the car park in Bigastro remains closed.

The global recession is always blamed for all this but the fact is that Spain would have faced these problems anyway.

For one thing, builders thought there was a never ending queue of people waiting to buy properties here at the ever increasing prices that they charged. That myth has well and truly exploded and house prices have sunk down to the level that they should have been at anyway. Those of us who bought during the boom years got caught out and are seeing our house values plummet. Those who bought at the end of the boom came of even worse having made staged payments for part completed properties that they could not move into. The builders may be licking their wounds but they still have homes to go to and a lifestyle that many would be envious of. 

As Sr Guiteras concludes, "the problem is that Spain in many ways is still a Third World country – we joke that Africa begins when you cross the Pyrenees. We should have been living within our means, renting houses, driving old cars, developing slowly and securely. But we went crazy."

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