In the 2008 budget, which was the first year of the crisis, there was a drop in estimated revenue of just over one million euros. That meant that funding had to be applied for (worth EUR 1,065,127.54) to cover the hole this deficit generated. That loan was provided by the central government (RD 5/2009) and was linked to a sanitation plan to restore economic sustainability.
But economic sustainability was not achieved in Oliva. Therefore, in March 2012 the Town was forced to apply for a second grant, and was left with a debt of 2.6 million that was owed to suppliers (2,631,879.41 euros). This second grant from the central government (RDL 4/2012) was also linked to an adjustment plan, which was drawn up by Chelo Escrivá in March 2012.
A Plan which focused mainly on the raising of the IBI (council tax) during the period 2012-2022 (an increase of 28 million euros in total), a measure that was disproportionate and had to be adjusted in October 2013.
From 2007-2011 Hacienda hid “toxic debt”
We are not joking, Oliva had “undisclosed debts”. There were hidden debts, and hidden situations that actually worsened as time passed because they were not resolved.
The dreadful case of Martí De Veses farm. In July 2008, the Town was told they owed € 865,776.46 to Martí De Veses family. According to the law, they should have paid that amount by January 2009, but they did not. Years passed with nobody acknowledging this debt and it was generating € 34,600 interest annualy. And when the Town Council showed their debts in the budgets of the years 2009, 2010 and 2011 there was never any mention of Martí de Veses.
“It is very dangerous to make an alarmist statement by highlighting what we don’t have”
Over time, Salvador Fuster recognized (in the plenary session of 22nd December 2014) that the decision not to pay (the decision that no one made) was completely irresponsible, the decision that ‘no one’ took, has cost the people of the town more than 150,000 euros in interest on arrears.
And this debt was not settled by the Town Hall using the first rescue grant (RD 5/2009) or with the second (RDL 4/2012). Another example of the lack of transparency of municipal management. The debt was not tackled until 2013. But this is not where the hidden debts end. Also due for payment was the contract with the FCC (Fomento Construcciones y Contratas) for rubbish collection… this had gone unpaid since 2003. Yes, for 10 years. So we shouldn’t be surprised that the debt increased by 647,000 euros.
These unpaid debts not only resulted in destroying the budget for 2013. But also, yet again, had generated 200,000 euros in interest for late payments. But none of this was pointed out in any budgets prior to 2011 nor in the two grants. It was an “undisclosed debt” a time bomb that exploded in 2013 and had to be dealt with by David Gonzalez the mayor at that time.
The debts incurred by the Town were effectively a time bomb that exploded in 2013