"In the Balearic Islands, we're burdened with an unbearable public deficit, regardless of who governs here or in Madrid," states Jordi Mora, president of the small and medium-sized businesses of Mallorca (PIMEM), bluntly. This statement encapsulates the frustration of being the second-largest contributor to the central government and receiving the least, second only to Madrid, and seeing that things won't change much with the new funding model. Despite business skepticism, Mora has also said recently that pessimism is a mistake because "this proposal provides more resources and will improve public services, and opens the door to bilateral negotiations. Therefore, the Balearic government can still improve it." But while the fine print of the central government's proposal is still pending, business leaders are quite clear that, even if Madrid distributes more millions, the balance between contributions and receipts will be against the interests of the islanders. "It's hard to imagine this changing in the short term. We'll continue paying far more than we receive," says Toni Garí, an industrial entrepreneur and member of the manufacturers' association Construïm. Business owners in the Balearic Islands have been warning for years that the regional financing system doesn't reflect the economic reality of an island territory. Now, with negotiations for a new model underway, the business sector is once again focusing on a problem they consider structural: the Balearic Islands contribute significantly to the central government, but don't receive enough resources to compensate for the additional costs of operating in a fragmented territory disconnected from the mainland.

The regional financing system has been outdated for 14 years: a model that disadvantages the Balearic Islands, the second-largest contributor of resources per capita but the tenth-largest recipient. Now, the Spanish government has put forward a new proposal. What do we know, and how might it affect the Balearic Islands?

The proposed new regional financing model presented this Friday by the First Vice President of the Government and Minister of Finance, María Jesús Montero, would increase the Balearic Islands' annual funding by €412 million compared to the current system. At a press conference, the Government Delegate in the Islands, Alfonso Rodríguez, explained that this new system would place the archipelago above the average in adjusted per capita funding, compared to the current model where it falls below the average.