“We should not forget the social utility of local authority funding”

2024-09-23 05:00:11

EWhen he left the Ministry of Economy, Bruno Le Maire tried to remove himself from his responsibility for the increasing public deficit which, by the end of 2024, should reach 5.6% of the gross domestic product (GDP ). For this, he accused the local authorities of money laundering, saying without the necessary data that their expenses could increase by 16 billion in 2024. It hinders the local administration and makes them responsible for increasing the deficit of the public.

Remembering what the inclusion of regions in public finance really represents allows us to put this responsibility into perspective. In 2023, the city budget is divided between three actors:

– 43% for social security administrations (general hospitals, general and special plans, etc.);

– 39% for the State;

– 18% for local public administrations.

To finance the public budget in 2023, the regions generate a deficit of 5.3 billion euros while in 2021 and 2022, they are almost in balance. A deficit of 5.3 billion euros for local authorities must be compared to a deficit of 156.4 billion euros for the State. Between 2022 and 2023, the deficit of the State alone increased by 7.3 billion euros, an amount greater than the deficit of all local authorities.

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Regarding the debt, in 2023, that of the State represents 91.7% of GDP, and that of local administrations is 8.9% of GDP. Exactly, in 2023, of the 3,101 billion euros of public debt, of the regions there are around 250 billion and of the State, 2,513 billion. Why such a difference? The golden rule requires local governments to balance their operating budgets. Therefore, their debt only finances investment expenses. For its part, the State debt can finance operational and investment expenses without distinction.

Importance of public procurement

As for the State, sometimes we are sorry for the insufficient evaluation of the public policies of local authorities. The propriety of some of their expenses is sometimes questioned by local chambers, such as the Court of Auditors for the State. Everyone must show budget caution.

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Therefore, it is regrettable to undermine the performance of local authorities, to assume their poor management or to generalize isolated errors. Remember that their deficit is greater than before the reform in 1982. Then placed under the control of the State and giving some skills, however they have a deficit greater than 1% of GDP, compared to 0.35% of GDP in 2023.