- The municipal council - formed by the mayor and those responsible for each area of government - designs the budget, drafts it through the Department of Finance and presents it in plenary, which is the organ of maximum representation municipal politics.
- Once there, all councilors study it and suggest modifications. Finally it is put to a vote and approved.
The budget must be approved before December 31 of the previous year. That is, the 2016 budget has to be approved in December 2015, if not, it is automatically extended.
And how do you read?
All municipal budgets have the same structure, legally defined in Order EHA / 3565/2008 . The basic structure is simple: it is divided into income and expenses. That is, answers the questions Where does the money come from? (Income) and what is it spent on? (expenses).
Income
To begin with, income is divided according to its economic nature, ie where the money comes from and what "form" it has: If it is a bank credit, a municipal property that has been sold or a tax.
In 2024 were entered...
Expenses
How does the municipality use the money of all the neighbors? Expenses can be classified in two ways: from the functional point of view (what is spent) and economic (how it is spent).
The spending per capita was ...
Budget classification
Every budget has income and expenses. Income is classified in an economic way, which establishes its origin. Expenses, on the other hand, are functional and economical.
Types of income
João M. Gil.
The income is divided into nine sections and each of them in several subsections. These divisions allow to deepen to know the exact origin of each income.
For example: within Indirect Taxes are the specific Consumptions. And within the latter, are the taxes of alcohol or tobacco. In an official budget, the main sections are called chapters. And in turn, each chapter is divided into articles, concepts and subconceptions.
In Gobierto we have simplified it so that you only have to look for the name of each section.
Types of income
1 Current income
Taxes and fees collected by the municipality, or money that the state transfers to each municipality. They are the most common.
- Impuestos directos
- They tax the source of income, the fruits of heritage or an economic activity.
- Impuestos indirectos
- Some municipalities collect a part of the VAT and other special taxes.
- Transferencias corrientes
- Money that the city council receives from the State and the Autonomous Community.
- Tasas y otros ingresos
- Public prices and contributions for municipal benefits.
- Ingresos patrimoniales
- Property income of the municipality. They are the profits on goods that are not destined to public service.
2 Income from capital
They come from the sale of municipal properties such as plots or estates. They can also come from European funds.
- Enajenación de inversiones reales
- Sale of plots and rustic farms.
- Transferencias de capital
- Income of a non-tax nature intended to finance capital expenditures.
3 Financial income
They can be frozen bank deposits or loans granted by private entities, such as banks or insurers.
- Activos financieros
- Return of immobilized deposits or deposits.
- Pasivos financieros
- Credits requested from private entities.
Types of expense
Daniel Erler.
How does the municipality use the money of all the neighbors? Everything is detailed here. Expenses can be classified in two ways: from the functional point of view (what is spent) and economic (how it is spent). The amount of money is the same, but we see it from two angles.
Types of expense
1 Functional expenditure
It is the most explanatory: it tells us, for example, how much is spent on garbage collection or sports facilities. It is also known as expenditure item classification.
In an official budget is divided into areas, and these in turn in policies, groups and programs. This level of depth allows you to know in detail where the money goes.
- Deuda pública
- This item is intended to pay the debt accumulated by the municipality.
- Servicios públicos básicos
- This item covers the minimum and compulsory needs of a municipality.
- Actuaciones de protección y promoción social
- It is the money that goes to prevention and assistance. For example, the promotion of employment.
- Producción de bienes públicos de carácter preferente
- It affects services that improve the quality of life: health, education, culture and leisure.
- Actuaciones de carácter económico
- Herein lies what helps to develop the potential of different economic sectors.
- Actuaciones de carácter general
- Here the expenses of the city council and other public bodies are grouped together.
2 Economic spending
Indicates the nature of the expense. For example, "Staff costs", which includes the salaries of all staff members according to their category. It is similar to the economic classification of income.
In an official budget, the main sections are called chapters. And in turn, each chapter is divided into articles, concepts and subconceptions.
- Gastos de personal
- Salaries of civil servants, indemnities, contributions and pension plans for all contracted personnel.
- Gastos en bienes corrientes y servicios
- Supplies, materials and expenses of services or work done by contracted outsiders.
- Gastos financieros
- Payment of interest arising from financial operations.
- Transferencias corrientes
- Contributions to other entities or administrations (state, autonomous or private companies) to finance current operations.
- Fondo de contingencia y otros imprevistos
- These are funds that cover emergency situations and unforeseen expenses.
- Inversiones reales
- Creation of new equipment or infrastructures and acquisition of inventories.
- Transferencias de capital
- Payment of credits to finance capital operations, which have financed real investments.
- Activos financieros
- Acquisition of financial assets for the construction of deposits and sureties required.
- Pasivos financieros
- Payment of amortization of financial liabilities (such as debt).
How much does your municipality owe?
Rimbaud Grégoire.
The living debt of a municipality indicates what the council owes to banks and other financial institutions. It should not be confused with the total deficit of the municipality (the difference between income and expenditure).
Living debt only includes what is owed to financial institutions.
Some municipalities have greater indebtedness capacity than others. It is possible that one municipality has more debt than another, but if its economy is stronger, it will have more capacity to support and reduce it.
Budget execution
Approving a budget does not mean that it is written in stone. Throughout the year there are unforeseen events that change the amount or purpose of the expenses. These changes are noted in another document: budget execution .
In order to know if our city council has planned the accounts well, we only have to compare the budget and the execution: Have you spent more than budgeted, have you left money or adjusted to what is expected ?.
Sources
To prepare this guide we have taken as reference the official structure of a municipal budget, defined in Order EHA / 3565/2008 and we have been inspired by other documents such as Understanding a municipal budget and an introduction guide to municipal budgets .