The financing scheme of the Spanish autonomous communities is evaluated by studying the relationship between community spending and income per capita. Using annual data for the period 1985-91 covering the fifteen communities under the common regime, we find a negative relationship between expenditures and income per capita for the ten low-responsibility communities and no relationship for the five high-responsibility communities. In most countries characterized by fiscal federalism richer reglons spend more on public servlces, thus these resulis may indicate that the communities do not have effective authority over spending. However, the portion of spending financed by own revenues and debt is postively related to income. We find no relationship between the financing scheme for the communities, including the redistributive grant known as FCI, and the growth of the regions. Differences across the communities in income per capita have not diminished during this period.

Keywords: autonomous communities, public expenditures, regional con-vergence, fiscal federalism, fiscal autonomy.