The fragile upturn in local authority finances

At the end of July, the executive was pulled by the sleeve. While the amending finance bill did not include any compensation measures for local authorities – called upon to support the triple increase in civil servants’ salaries, the active solidarity income (RSA) and energy prices – the parliamentarians exerted sufficient pressure so that the text, finally adopted on August 4, provides for an exceptional allocation of 430 million euros for the municipalities, 120 million for the departments, and 18 million for the regions.

Three weeks earlier, on July 12, a report from the Court of Auditors nevertheless underlined the spectacular improvement in local finances. Due to the increase in tax revenue caused by the economic recovery, but also state support, the operating income of municipalities and intermunicipalities increased by 4.3% between 2020 and 2021. The departments, for their part, have benefited from the explosion of transfer duties for consideration, the part of the notary fees which is due to them in the event of a real estate transaction: they grew by 27%, or 3 billion euros, while the expenses linked to the RSA, that the departments finance for half, fell by 0.1%.

Consequently, “the gross savings of local authorities have reached a higher level than before the crisis [sanitaire], and local investment has increased again”according to the Court, which notes however “the persistence of disparities” between communities, which “justify a strengthening of solidarity (…) and the search for a better distribution of resources”.

Some communities therefore have money, which they have set aside; but, according to their elected officials, the gesture made by the State in the amending finance bill was necessary. The director general of the Association of Mayors of France (AMF), Eric Verlhac, underlines that the woolen stockings of the municipalities represent – as during the financial crisis of 2008 – only a “precautionary savings” caused by the health crisis, which complicated the installation of the municipal teams elected in June 2020 and postponed their projects. the “investment peak” is yet to come, according to him, and the funds saved “are already marked, the municipalities are not going to hoard”.

Envelope inflated to 430 million euros

In addition, “there has never been such heterogeneity” in the financial capacities of local executives, adds Christine Pirès Beaune (Socialist Party), deputy and secretary of the finance committee of the National Assembly. It takes for example Riom-Limagne and Volcans (Puy-de-Dôme), where it is based: among the 31 municipalities of the agglomeration, the savings rates “range from 0% to 25%”. The elected official is one of the linchpins of the mechanism for targeting state aid to the most fragile communities, developed after the government narrowly avoided the vote on an amendment by which it should have compensated all of the salary increases for civil servants – amounting to 1.13 billion euros.

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