The Independent Authority for Fiscal Responsibility (AIReF) has today published the Supplementary Report on the Individual Evaluation of Large Local Governments (LGs) for 2026, following the publication on October 29th of the Report on the Main Lines of the Budgets of the General Government (GG). For the sub-sector as a whole, AIReF forecasts a surplus of 0.3% in 2025 and 0.2% in 2026.
AIReF emphasises that the current context of institutional uncertainty hinders fiscal supervision, as the proposed budgetary stability and debt targets have not yet been set, nor has the Report on the Situation of the Spanish Economy been published, which sets the reference rates for the expenditure rule. As a result, the rate of 3.3% would be maintained for 2026. Nor has any progress been made in adapting the national fiscal framework to the new European framework.
The report individually analyses the 25 large LGs: the 17 city councils with more than 250,000 inhabitants, the Provincial Councils of Barcelona, Valencia and Seville, the Island Councils of Tenerife and Mallorca and the Provincial Councils of Araba/Álava, Gipuzkoa and Bizkaia. For this group, AIReF projects a surplus of nearly 5% of their revenue in 2026, compared with the 5.6% estimated for 2025, maintaining a positive fiscal balance for all entities that have submitted information. These forecasts are consistent with those for the sub-sector as a whole.
The group’s eligible expenditure in 2025 is expected to grow below the 3.2% limit, although three city councils (Murcia, Palma, and Cordoba) are projected to exceed it by a wide margin. AIReF had already issued specific recommendations in July and requested the Ministry of Finance to apply the correction mechanisms provided for in the Organic Law on Budgetary Stability. Despite the compliance commitments, AIReF continues to estimate growth rates above the limit and will therefore carry out specific monitoring of these entities.
Regarding the expenditure rule for 2026, all LGs that have submitted information are expected to comply with the 3.3% rate, except for the Provincial Council of Valencia, which is due to the implementation of several investment plans. AIReF has not made its own estimates for this rule for 2026 due to the limited information available at this stage of the budget cycle.
Lastly, these entities estimate that primary expenditure will grow by more than 2% in 2026, once adjusted for the Recovery, Transformation and Resilience Plan (RTRP) funds and the expected non-executed expenditure. Growth will be uneven: city councils will increase their expenditure by around 4%, while provincial councils and similar bodies will reduce it by more than 5%. In terms of tax revenue, large city councils forecast an increase of around 2% in 2026, following growth of 7% in 2025, driven by the introduction of the Urban Solid Waste Tax.
