In good health, communities invited to contribute to the recovery of public accounts

2023-07-04 18:03:27

Posted Jul 4, 2023, 6:03 PM

The overview is reassuring. According to the Court of Auditors, the financial situation of local authorities at the end of 2022 was “particularly favorable”. Major criterion of assessment, gross savings (the balance between revenue and operating expenses) increased by 3.9% last year, to 43 billion euros.

With in particular VAT receipts up sharply by 9.2% under the effect of inflation and also very dynamic property tax receipts, local authority receipts increased by around 5%, to 243.7 billion. The trend was almost the same for operating expenses, which amounted to 200.7 billion. In particular, local authorities had to deal with a greater increase than in previous years in personnel expenditure (+5.2%), due to the unfreezing of the index point and categorical measures for category C agents, while inflation weighed on their purchases of goods and services (+9%).

Significant disparities

Their investment expenditure continued to grow (+6.8%, to 68.2 billion), but the surge in inflation “reduced the volume of work carried out for the same amount of expenditure”. While financial debt increased “slightly” to 185.8 billion euros, the sector’s debt ratio improved a little further. At the end of 2022, it amounted to 4.3 years of gross savings, compared to 4.4 in 2021.

There remain “significant disparities in situations” within each category of local authorities. At the end of December, 14% of municipalities (ie 4,737 of them) and 8% of intermunicipalities had negative savings after loan repayments. However, this is less than in 2019, before the health crisis. Financial magistrates point to the fragility of “many” overseas communities.

For the Court, the generally “healthy” financial situation of the sector must “allow communities to invest and contribute to the recovery of public accounts”. According to her, “the heightened sensitivity of [leur] financial situation to the effects of the economic situation invites them to strengthen the mechanisms for smoothing out cyclical variations in their revenue, in order to prevent the State from being called upon to intervene in the event of a deterioration in the economic situation”.

The subject had already been put on the table by Bruno Le Maire, the Minister of Economy and Finance, during the Public Finance Conference in June. He had then evoked “the principle of a” mechanism of self-insurance of the receipts “of the communities, making it possible to put in reserve the surpluses for more difficult years.

For the Court, the question should also be asked “of the allocation to communities alone or of the distribution with the State of the dynamics of VAT receipts which have replaced local taxes since 2021 (housing tax on residences and contribution on the added value of companies)”, knowing that VAT receipts are again dynamic this year. “This point is very debatable”, reacts Intercommunalités de France in its response to the report.