Adjusted budgetary outturn
The adjusted budget result forms part of the settlement statement of the budget and is the difference between the collection rights that have been settled during the year and the payment obligations recognized in the same period. Therefore, it is a magnitude that reflects the surplus or deficit of the exercise of the City. The budgetary outturn has to be adjusted with the obligations being funded from the general cash surplus and the year-to-date financing deviations from the financing costs, as these circumstances distort the budgetary outcome. When the adjusted budget result for the year is negative, we are faced with a financial situation that has to be analyzed and -if needed- corrected, since this balance shows the incapacity of the rights recognized in the exercise to meet its obligations and, therefore, a breach of the principle of budgetary stability.
Average payment period
The Average Payment Period (PMP) indicator measures the time period that elapses since the delivery of the goods or the provision of the services borne by the supplier and the material payment of the transaction. According to current regulations, this period can not exceed 30 days.
Economic data from the initially approved budget plus-minus the budgetary changes made during the year.
Cash surplus for general expenses
The cash surplus for general expenses is part of the settlement statement of the budget and is the sum of the receivables (from the same year and the previous year) plus cash, minus receivables (from the same year and the previous). It shows the financial situation of the City Council at the end of the year. It is an accounting statement that provides cumulative data for the year that is closed and of the previous ones. If it is positive and the necessary provisions have been made, it constitutes a source of financing for greater budgetary expenses. The cash surplus has to be calculated taking into account the reduction of receivables that are considered difficult or impossible to collect.
Expediture: what is it spent for?
The programme classification of the expenditure budget informs about the purpose and objectives to be achieved with the credits: what is the spending for.
Budget expenditures are classified according to three different classifications:
- Institutional: who makes the expenditure.
- By programs, which reports on what is spent for, i.e., the purpose of the expenditure.
- Economic, which informs about what is spent, the economic nature of spending.
Expenditure: how is it spent?
The economic classification of the expenditure budget informs of how it is spent. The appropriations in the expenditure budget are ordered according to their economic nature, distinguishing between appropriations for current operations, such as expenditure necessary for the operation of public services (personnel costs and goods and services), loans for capital operations (such as real investment expenditures) and loans for financial operations (such as repayments of loans received by local entities).
Expenditure policies are defined in Ministerial Order EHA/419/2014 of March 14, which modifies Ministerial Order EHA/3565/2008 of December 3. The Madrid City Council and its Autonomous Bodies budget the expenditures according to programs. In view of the purpose and the objectives that they intend to carry out, these programs can be grouped by expenditure policies that include all municipal competition expenses, allowing the comparison with other local entities, since this classification is identical for all the local corporations.
Expenditure: who spent it?
The institutional classification of the expenditure budget informs of the organic unit of the City that manages the expenditure, that is, the Area, District or Autonomous Organism responsible for its execution.
Amount corresponding to the recognized spending obligations by the City Council and its Autonomous Organizations to third parties.
The Expenditures Rule establishes a spending ceiling for the budget of public administrations. The current regulations establish that the computable expenditure of the City Council budget can not exceed the reference rate of the medium-term gross domestic product (GDP) of the Spanish economy, being possible to overcome it only in the event that this excess is compensated by increases in permanent income.
Financially sustainable investments (IFS)
The Organic Law 2/2012, of April 27, of Budgetary Stability and Financial Sustainability, establishes that the Local Entities that have budget surplus or surplus of positive treasury, and that have not surpassed the limits of debt that they have authorized, will be able to destine their surplus budget to investments that have to do with sustainable actions.
Investments are considered sustainable in the following program groups: sewage, domestic water supply, collection, disposal and treatment of waste, public lighting, protection and improvement of the environment, improvement of agricultural structures and production systems, industry , energy, trade, information and tourism promotion, passenger transport, transport infrastructure, water resources, scientific, technical and applied research, information society, knowledge management, security and public order, traffic and parking management, civil protection, service of prevention and extinction of fires, public roads, parks and gardens, primary social assistance, creation of educational centers of infant and primary education, operation of educational centers of infant and primary education and special education, libraries and archives, cultural facilities and museums, protection of historic-artistic heritage, sports facilities, roads, neighborhood roads and heritage management, which may include those applied to the rehabilitation, repair and improvement of infrastructures and properties owned by the local entity affected by public service including the adaptation actions of infrastructures that allow universal accessibility for people with disabilities and the elderly. Excludes both investments with a useful life of less than five years and those that refer to furniture and fixtures, unless they are used to provide services associated with the groups of programs described above. Investments in vehicles are also excluded, unless they are used to provide public services for the collection, disposal and treatment of waste, security and public order, civil protection, fire prevention and extinction, and passenger transport.
As of 2018, the IFSs authorized and not finalized in one fiscal year can be incorporated in the following year, financed with the remaining treasury, that is, they can be executed in two years. The IFSs are enabled in the budget through budget modifications (supplements and extraordinary credits) that require the same procedures as the approval of the general budget, so the processing period is long and as a consequence the execution of the expenditure is lower.
The number and amount of IFSs approved in recent years on the initial investment budget is very high, hence the degree of implementation of these have a strong impact on the overall execution of the investment chapter and over the total budget.
The capacity or need for funding of a City Hall is measured as the difference between non-financial income and non-financial expenses. When the result is positive (financing capacity), it indicates that the entity has financing capacity or non-financial budget surplus. On the other hand, if the result is negative, it indicates that the entity needs financing, that is, that it has to resort to borrowing.
Investments by District
This section includes both the investments that are budgeted and managed directly by the Districts, as well as those that are budgeted and managed by other Government Areas and Autonomous Bodies, with a direct impact on the corresponding Districts.
Motor vehicle tax
The tax on vehicles with mechanical traction (IVTM) is a direct tax on the ownership of vehicles suitable for use on public roads. This tax has to be paid annually by vehicle owners. The management of this tax is entirely municipal.
The magnitude of the net saving is an indicator of the financial situation of the local entity, its capacity to attend at maturity the financial burden of its indebtedness. It is calculated as follows: sum of income corresponding to taxes, public fees and charges, current transfers and capital income, minus expenses related to personnel, current assets, services and current transfers (expenses not covered by the Cash surplus for general expenses). This result has to be subtracted from the theoretical amortization annuity corresponding to the long-term loans and the guarantees to third parties still pending repayment. Positive net saving is a source of financing for non-financial capital expenditures.
These are investments that do not result in a direct benefit for the Districts, such as, for example, the provision of administrative services.
The outstanding debt is the total pending debt that the City currently has from long-term loans with financial institutions and guarantees, that is, it is the capital pending amortization plus generated interest.
Public fees and prices
When the City Council carries out activities that particularly benefit or interest citizens, it may require public fees or prices. Also, a fee will be required when special use of public roads takes place in favor of an individual. Typical examples of activities for which a fee is required are the collection of garbage, the granting of an urban permit or a dedicated parking entrance. The person who benefits from the public domain or from a service or activity carried out by the City Council has to pay the fee. It is the City that determines by the tax ordinances the amount of the tax. The difference between a fee and a public price is that the fee is established for services only provided by the City Council (e.g. dedicated parking entrances), and the public price is used for those services that can also be provided by a private company (e.g. tickets to sports facilities, kindergartens, etc.).
Real estate tax
The IBI is a municipal tax, direct, real, objective, periodic and compulsory, which taxes the value of real estate. The owners, usufructuaries or concessionaires of any real property or property (floor, garage, store, house, office, etc...) are obliged to pay this tax. The management of this tax is shared by the municipality and the State Tax Administration.
The income budget can be classified according to the following classifications:
- Economic classification, which presents the information according to the economic nature of the budgetary rights.
- Institutional classification, classifying revenues according to the internal structure of the local entity.
Amount corresponding to the collection rights by the City and its Autonomous Organizations.
These are investments that affect several Districts and it is not possible to quantify the concrete incidence in each of them, either because they are services that impact the entire city or because they physically affect more than one District.
When the City Council performs public works or establishes services from which the citizen obtains a benefit or increases the value of his assets, special contributions may be required.
Tax on economic activities
The IAE is a direct, real and obligatory tax, which taxes the performance of any type of economic activity, whether it is exercised by a natural or legal person. Those companies or entities that have obtained a net business figure equal to or greater than one million euros during the penultimate year have to pay this tax. The management of this tax is shared by the municipality and the State Tax Administration.
Tax on the increase of the value of urban land
The IIVTNU is a direct tax on the increase of value that a land has experienced while a person has owned a flat, parking lot, storage room, premises, land, etc. The tax is paid by the person selling a flat, garage, store room, shop, house, etc., because of the increase in value that the land has experienced while it has been owned. In case of inheritance or donation, it is the new owner who has to pay the tax. The management of this tax is entirely municipal.
Tax over constructions, installations and works
The ICIO is a municipal tax that a City Council can demand if it has previously approved it in the corresponding fiscal Ordinance. The ICIO must be paid for the realization within the municipal term of any construction, work or installation for which it is necessary to obtain an urbanistic license or to present a responsible declaration or a previous communication. The management of this tax is entirely municipal.
The municipal budget
The budget of a City Council is a document approved by the Plenary which specifies the expenses that will be realized during the year and the expected income during the same period. All local entities are required to approve their budget for the year in the last quarter of the previous year. In this way, on January 1 of each year they must have their budget approved. However, if at the beginning of the year they had not approved the budget, the regulations establish that the previous year's budget is automatically extended.
Individuals or legal entities that maintain a relationship with the City Council, be it through contracts, agreements, etc. The expenses of municipal personnel or the grants and subsidies received by natural persons are not included.
Recognized obligations recorded at December 31 of each year, of all the spending chapters of the budget of the Madrid City Council (Government Areas and Districts) and Autonomous Bodies, from the year 2011 until the last financial year. They correspond fundamentally to the works, services, agreements and subsidies made by third-party legal entities. The data of third-party individuals refer to professionals who have performed work or services for the different Areas of Government, Districts and Autonomous Bodies of the City of Madrid. Neither the remuneration received by the staff of the City Council and the Autonomous Bodies, nor the subsidies, transfers, prizes, etc. received by natural persons are included, in compliance with Regulation (EU) 2016/679 of the European Parliament and of the Council, of April 27, 2016, regarding the protection of natural persons with regard to the processing of personal data and the free circulation of these data. This information is updated annually once the budget is settled.