La Línea owes banks €100 million and fell behind in salary payments to municipality employees over the summer.

La Línea owes banks €100 million and fell behind in salary payments to municipality employees over the summer. About 10,000 of its 65,000 inhabitants are unemployed, compared with 4,000 jobless five years ago.

“The boom years created jobs, but when the building craze suddenly ended, there was no obvious way to channel all these people into other activities,” Mr. Sánchez said. “We’re now told by Madrid that we cannot take on more debt, but that puts a city like ours in an impossible situation.”

In Jerez de la Frontera, a municipality known for its wine and flamenco, the debt pile has reached €670 million, or about $883 million. The economic slowdown has also cut Jerez’s tax revenue to €11 million last year from €41 million in 2008. “I’m running a war economy,” said Jerez’s mayor, Pilar Sánchez.

The dire financial prospects for such mayors are increasingly at odds with the view from Madrid, where the government of José Luis Rodríguez Zapatero has managed to improve investor confidence by reducing the central government’s deficit — down 42 percent in the first eight months of this year.

In contrast, some analysts and politicians warn that deficit levels in regions like Andalusia could worsen in coming months ahead of pivotal regional elections as local politicians display more generosity to sway voters. The electoral battle is expected to be intense in Andalusia, where the center-right Popular Party is aiming for a historic victory next May on the back of voters’ resentment over the downturn. Andalusia has been under Socialist control since Spain returned to democracy in the 1970s.

“Any mayor who cannot present some exciting new projects to the voters next May will face a very ugly situation,” said José Blas Fernández, a senior council member in the city hall of Cádiz, another Andalusian city that swung to a deficit last year. “The debt consequences of this political game will naturally only appear later.”

Meanwhile, Alejandro Sánchez, the mayor of La Línea, who represents the Popular Party, is also fighting to restore confidence in city hall politics after taking office last October, when his predecessor was ousted following a financial scandal involving a supplier of medical equipment to the city. He said the toll charge, expected to be €5 per vehicle crossing, was not an attempt to discriminate against Gibraltar but a savvy way of offsetting the pollution and traffic congestion caused by six million vehicles driving through La Línea every year.

“I don’t care whether drivers go to Gibraltar or not,” Mr. Sánchez said, “but I do care about making life better in La Línea.”

But José Blanco, transport and development minister, has vowed to take legal action against any such toll, arguing that it was beyond a mayor’s powers to charge for usage of a national road.

“For the first time in the dispute over Gibraltar,” Mr. Sánchez said, “the Spanish government is on the side of the British, which is even more paradoxical since this is exactly the kind of issue that should be left to local authorities if devolution is to mean anything in this country.”

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