Abstract
After the introduction of the 2001 constitutional reform, the federalism debate has been increasingly captured by economic constraints and financial intergovernmental relations. The allocation of powers and the design of intergovernmental relations in the area of fiscal and financial matters are pivotal for the very existence of every federal system. Nevertheless, in Italy ‘fiscal federalism’ has monopolized every aspect of the federalizing process. While the 2001 reform intended to comprehensively address the institutional design of a (quasi-)federal State, afterwards political attention was paid predominantly to the financial dimension. This is all the more so since the outbreak of the economic and financial crisis, which has exacerbated the situation, due to the poor conditions the Italian system of public finance was facing.
With this in mind, the chapter concentrates on the impact of the 2001 constitutional reform on the ‘financial constitution’ and its later implementation in 2009 (by means of law 42/2009 and the following enactment decrees), paying exclusive attention to the subnational level of government (i.e., the regions).
After a preliminary introduction on the system into force prior to 2001 (par. 1), the constitutional principles of the ‘financial constitution’ are investigated (par. 2). This is done going through the landmark judgments of the constitutional Court in their evolution over time.
Later on, an overview of the implementing regulations (law 42/2009 and the related enactment decrees) is also provided (par. 3). Due to the undetermined nature of the constitutional model, the analysis of these legal acts is essential for the understanding of the 2001 reform and its impact on the system of financing of ordinary regions. As a matter of fact, the constitutional framework consists of a few general provisions, mentioning only the basic fundamental principles of financial and fiscal relations. Beside these, the set in motion of system remains the responsibility of the legislator, in theory, and of the government, in practice.
The examination of the legal framework provides for a partial insight only. The grinding economic crisis, the stringent EU constraints to national finances, the rocketed spread (that made interests on State’s debts more expensive than in the past) and the financial markets’ pressures have indirectly impacted both sub-national budgets and autonomy. In challenging the constitutional guarantees of autonomy, they result in a counter-wave of re-centralization. As of 2010 the national Government has approved several measures aiming to rationalize public finance. The main driver has been the emergency and the efforts have predominantly targeted the balancing of the budget. Against this background, the impact of the economic crisis on the ‘regional system of financing to-be’ is the object of investigation (par. 4), having particular regard to the case-law of the constitutional Court, prior and after the constitutional entrenchment of the principle of balanced budget in 2012.
The asymmetrical design of Italian regionalism is particularly evident when it comes to financial relations and related agreements. Each special region has a different system of powers and of financing due to bilateral negotiations with the central level of government. As such, par. 5 is devoted to a brief overview of the financial regime of special regions, giving evidence of the impact exerted by the reform and the crisis.
To conclude, par. 6 investigates the way forward of fiscal federalism in Italy, in order to identify the possible solutions (if any) out of the deadlock the Italian regional/federal system is currently facing.