Mercedes Garcia, the director of a residency for severely mentally disabled adults, has a crisis in her kitchen.

Two caterers have been supplying and preparing food for the centre's 46 patients for free for almost a year; the other 18 recently decided they'd had it and refused to provide further service without payment up front.

The residency has been running on fumes for months because the local government, squeezed by austerity measures to combat the euro zone debt crisis, has not paid its share of expenses.

All of the residents here will need 24-hour care from cradle to grave, but our carers can't continue their own lives if we don't pay them, an exhausted-looking Garcia told Reuters in February. Her caregivers earn 800 euros (667.7 pounds) a month, just above minimum wage and not enough to tide them over when their paycheques are delayed.

One caregiver ran out in tears in the middle of a reporter's visit, after three months without pay.

Similar crises are playing out all across Spain: street cleaners, nurses, teachers and job trainers are struggling to get by as cash-strapped local authorities withhold wages.

Garcia told Reuters she is hopeful the money to pay the centre's 81 workers will start to flow again soon, but she has not been given a straight answer on the financial future from officials in Spain's central Castilla-La Mancha region, where her institution is located.

The local government denies funding has been definitively cut, and the public-private Fuente Agria Foundation for the mentally disabled, which shoulders some of the centre's cost, has been told repeatedly the money is on its way. But as each deadline passes without funds, the situation grows increasingly desperate.

Social service providers across the country describe the same limbo as they wait for the central government to detail austerity measures in a 2012 budget to be presented on March 30.

As a consequence, the safety net for the most vulnerable Spaniards, including the disabled and infirm, the aged, the addicted, the homeless and the abused, is starting to fray.

Spain's jobless rate is a massive 23 percent and the economy is entering its second recession in three years. More than a quarter of the Spanish population is below - or at risk of slipping below - the poverty line, and that ratio is far higher in Extremadura on the Portuguese border, and in Murcia on the coast.

Between 2009 and 2010 over a million more Spaniards moved to close to what the European Union defines as at risk of poverty or social exclusion, accounting for 58 percent of the rise in at-risk populations across the entire European Union.

SHRINKING BUDGETS

In Madrid, Spain's capital and biggest city, cost-cutting has hit social services such as the Anti-Drug Agency, which has had to close 11 of its 18 half-way houses.

Luis Palacios, a middle-class entrepreneur who credits the agency with his recovery from cocaine addiction after he and his property business went off the rails, recently attended a meeting by former employees and patients to organize a protest against the cuts.

These resources are necessary and they work, said Palacios, 36. If you cut the number of attention centres, sadly many people won't get the quality of care that I've had.

Spain spends more, in terms of gross domestic product, on social services such as health, pensions and unemployment benefits than developed nations on average, according to the Organisation for Economic Cooperation and Development (OECD).

The economic crisis means the need for aid is rising while the money in the pot for aid is shrinking.

In more than 1.5 million Spanish households, not one family member has a job. Almost half of adults under 25 are unemployed. Close to a third of the 17-nation euro zone's jobless live in Spain.

Spain's economy grew at an average rate of 3.7 percent from 2001-2007, higher than the rest of the euro single currency union formed 13 years ago, but a lot of the expansion came from unfettered overbuilding in tourist areas on the coast, and in suburbs around big cities.

The collapse of the property boom left hundreds of thousands of low-skilled labourers out of jobs and mired in debt while the economic slump, which has lasted almost five years and is far from over, has left many more destitute.

In our refuges there are new arrivals who can't pay their rent or their mortgages or provide food for their children. Caritas gives some emergency funds, but the authorities aren't paying their part, said Amador Casquero, coordinator for international Catholic relief agency Caritas in the Castilla-La Mancha region.

Newspapers routinely report closures at soup kitchens, shelters for battered women and retirement homes.

Spain's 17 autonomous regions are laden with around 30 billion euros in deficit -- 3 percent of the country's economic output -- after indulging in superfluous airports, art centres and high rises during the decade-long boom of cheap financing.

The new, conservative central government, elected in November, has introduced harsh sanctions for regions that do not make deep spending cuts, part of a drive to prove to international debt markets that Spain is not a risky investment.

In normal times, governments or service providers could turn to banks to payroll temporary fixes, but nervous bankers have turned off the credit tap in an effort to rebuild portfolios battered by the property fiasco.

A well-functioning financial system will provide the necessary liquidity, and the issue of paying providers is just about the interest and the number of days we have to pay each provider. We don't have that at all right now, Andreu Mas-Colell, finance minister in Catalonia, Spain's wealthiest region, told Reuters.

His region in northern Spain has seen a wave of protests after cutting the education budget 12 percent over two years, slashing civil servant wages and forcing patients to pay some way toward their national health service prescription medicine.

The problem has worsened to the point that the central government recently announced emergency loans for local governments to meet back payments to suppliers and contractors. Local media estimate up to 50 billion euros in unpaid bills, including 6.3 billion in unpaid medical supplies for hospitals.

The plan has already run into controversy. The government suggested that companies wanting to be paid quickly under the plan should accept a discount. FCC, which provides garbage services, street cleaning and park maintenance to 3,449 Spanish cities, immediately said it wants every euro of the 2.1 billion it is owed.

STATE DEPENDENCE

On a recent winter day, hundreds of people in the town of Puertollano marched through the cold to protest the funding problems at Fuente Agria Foundation, which cares for 300 mentally disabled people in several facilities including Garcia's.

Naomi Lozano, whose daughter needs special care because she has a rare nervous system disorder called Sturge-Weber syndrome, marched with other Fuente Agria clients and with carers and suppliers forced to work for free.

Lozano's daughter attends a day care centre run by the foundation, which is financed by donations, families who use its facilities and the regional government.

Without the special school, Lozano said, she would have to quit work and, in a textbook example of a poverty trap, would lose benefits she can only claim if she has a job.

The foundation's school is the only reason I can work. Without it, we have nothing, she shouts over the din of the protesters' whistles, her daughter clutching her arm and grinning broadly at the noise around her.

The march blocked traffic on Puertollano's central boulevard and drew hundreds of passionate participants but was barely covered by media of any kind - just another protest by another subsection of society.

Casto Sanchez, a teacher who heads the group of families that supports the foundation, said some of the money the government owes them from 2011 is starting to filter through. But the 2012 budget has still not been approved.

Two or three times a month we call the authorities and they say they have every intention of signing the budget and they don't wish to make cuts. They were going to sign January 31. Now they're saying next week. We've heard it all before, he said.

The Fuente Agria Foundation is one of several organizations in Castilla La-Mancha that together employ 20,000 people to care for over 9,000 mentally disabled clients. All of them are having trouble paying staff.

Across Spain, the story is the same.

The Spanish arm of the European Anti-Poverty Network (EAPN), which has 14 member groups including the Spanish Red Cross and Caritas, says the government owes its members over 450 million euros.

Some are either closing or close to closing. They just can't continue without the funds, said Carlos Susias, the group's head in Spain.

(Additional reporting by Rodrigo de Miguel and Nigel Davies; Editing by Fiona Ortiz and Sonya Hepinstall)