Valencian towns on verge of bankruptcy

ABOUT 15 per cent of the municipalities in Valencia are under a serious risk of going bankrupt, warned the President of the Valencian Federation of Municipalities and Provinces, Elena Bastidas.

Many already have trouble paying their staff payrolls.

It is estimated that Valencia’s local authorities owe around €3 billion in loans to banks, according to the Bank of Spain’s latest estimates.

In addition to this must be added the €391 million to be repaid to central government in respect of advances owed from 2008 and 2009, and more than €2 billion in loans to suppliers.

Staff costs constitute 70 per cent of the authorities budgets, and it is here where the most immediate effects of the crisis are being felt, with 60,000 employees in the firing line.

One small Castellon town in the Alto Palencia, has the highest debt per capita; in total, €3,396 for each of its 816 inhabitants, according to the Ministry of Finance and the National Institute of Statistics.

Despite its modest population, the town has a municipal auditorium to house concerts, and before the last election, began construction of a municipal sports centre, the implementation of which languished after the election in which the PP retained its majority.

Padel tennis fever, though beneficial in its health effects in encouraging the population to keep fit, nevertheless has drained public resources.

Large cities spent millions on the sport. Castellon spent €737,000 on the construction of the complex, Castalia padel. Benidorm, which is now suffering problems to pay electricity bills and postal services, spent €960,000 in a football field in its Foietes district.

Denia, meanwhile, spent €786,120 on a sports centre. In both cases funds were drawn from central governments ‘Plan E’ , which encouraged the local authorities to spend from the fund dedicated to such schemes.

La Nucia has one of the most modern sports facilities in Europe, which stretches across 100,000 square metres and has cost €30 million since 2003.

Half of which has been paid for by the town.

The ‘crown jewel’ in the entire complex is a covered sports pavilion of 5,000 square metres, representing an investment of €8.4 million.

No town has declared itself bankrupt as yet. It will be a first, if indeed it can happen, and no one knows what the consequences might be: for the workers, the suppliers, and the banks who are owed so much money.

The future is untried ground.