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also influenced by the ACs' sharp increase in budgetary needs, as closing the
system implied transferring health policy to ten of the seventeen ACs that had
not yet assumed this responsibility. 26 This transfer had huge budgetary impli-
cations (Urbanos and Utrilla 2001 ), and required an increase in the amount
of revenues under regional governments' control. This situation triggered the
reform of 2001, and a significant increase in levels of regional fiscal autonomy
vis-`a-vis the central government. Indeed, as captured by Table 7.3 , the level
of AC dependence on direct transfers from the central government drops from
70%in2001 to 47%in2002.
Interestingly, the reform was unanimously accepted by the representatives
of all ACs, including all the socialist strongholds that had opted out of the 1997
system. There are two reasons for this unanimity. First, the reform increases
both the levels of fiscal autonomy and the total revenues available to all ACs.
To secure the agreement, the central government transferred enough funds to
ensure that no region was financially worse off in the new system (Le on 2009 :
73-74). This, in turn, created strong financial incentives for socialists ACs to
support the system and, as a result, caused much intraparty debate.
The bargaining process leading up to the 2001 reform reflects the second
factor undermining the centripetal nature of the system of representation. As
decentralization unfolds, so does the balance of power between political elites
at different levels of government (Amat, Jurado and Le on 2010 ;Leon-Alfonso
2007 ). Over time, decentralization alters party organizations by undermining
the effective power of national leaders: the electoral center of gravity shifts.
Regional elites become more salient, and their electoral needs more pressing,
thereby altering the workings of the system of representation and limiting the
ability of national elites to establish policy positions. 27 Indeed, by 2001,the
ability of socialist party national leaders to impose a particular policy position
upon their regional counterparts had declined significantly.
Rather than trying to block the reform as part of their opposition strategy,
national leaders of the Socialist Party became part of the lobbying effort to
maximize the resources obtained by those regions entering the new system. 28
Zapatero, the socialist leader at the time, became a coordinator among regional
executives in an effort to maximize the amount of compensation received in
exchange for their joining the new system and accepting the decentralization
of health policy.
Once again, the passing of the reform required the transfer of additional
resources to the regional financing system so that all participants in the “com-
mon system” improved their fiscal capacity relative to the previous cycle.
26 These AC are: Asturias, Aragon, Baleares, Cantabria, Castilla y Leon, Castilla-La Mancha,
Extremadura, La Rioja, Madrid, and Murcia.
27
For empirical evidence on these transformations and their implications for political competition
inthecaseofSpainseeBartomeous( 2003 ); Heller ( 2002 ); and Van Houten ( 2009 ).
28
Jordi Sevilla, PSOE representative during the bargaining process, was particularly focused on
“compensation” to those Andalucia, Extremadura, and Castill-La Mancha for the losses they
incurred by opting out of the 1997 reform (El Pais, 05/06/2001).
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