Saturday, November 19, 2011

Robbing Peter to pay Paul

The former mayor of Bigastro, Raúl Valerio Medina, admitted yesterday that they did use the money from Plan E to pay for other council expenses notably the wages for council workers and taxes that were due. He says that this does not mean that he is guilty of embezzlement and that it is not his party’s fault that the new council are faced with paying back the entire grant to the Government.

Medina went on to say that he made it clear to the new mayor that there were outstanding debts to contractors which needed to be paid before the end of the year. Further more he said that the council have received 72,000 Euros for education which he claims has been diverted to pay for the work on a parking lot. In addition the council will have received 300,000 Euros in SUMA advances.

I recall that, in the days before ordinary people had bank accounts and cheque books, my mother used to have a tin with compartments labelled gas, electricity, food etc. In each she would place an appropriate sum of money every week to pay for these things. There might have been times when she was tempted to borrow from one compartment to pay for something else but she never did because she knew the consequences. For example, if she borrowed from the gas compartment to pay for a new pair of shoes  there would be insufficient funds for the gas bill when it came.  

When I was responsible for the £3.5m budget at Anfield school we worked to the same principal that my mother adopted. The funds were compartmentalised in our accounting software so that we could not borrow from one area to pay for another. There was a deputy head teacher at the school who thought we should be more creative and would overspend on, for example, supply teachers.  Fortunately, I planned for a budget surplus each year to account for this so our books always balanced.

From what we now read, it seems that local councils in Spain take a more cavalier attitude to accounting. The principal seems to be to pay only what you have to from whatever source of money you have, then later you worry about those things that you should have paid with the money in hand. Is it any wonder that  towns like ours are in such a financial mess.

PS There is no doubt that the article in the newspaper, just two day before the general election, was aimed at drawing voters away from the socialist party. I feel sure that the council have every intention of paying the contractors on time from whatever resources are to hand and thus avoid being forced  to repay the Plan E money to the government. You can accuse the council of many things but they are certainly not stupid!

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