Local communities show a “very favorable” state of health

Posted on July 12, 2022 at 6:15 am

The photograph shows a beautiful overall image. The Court of Auditors confirms “the very favorable financial situation” of local entities at the end of 2021. This improved “very strongly” last year, although individual situations are heterogeneous, the institution underlines in the first part of its report on local public finances, released on Tuesday.

The level of gross savings, one of the main indicators to judge the financial health of local authorities, reached an “unprecedented level”, with 41.4 billion euros. The self-financing capacity of the sector -which had fallen in 2020- thus exceeds its levels prior to the health crisis by 2,400 million euros. The “strong increase” (+5.1%) in real operating income is above all “the dynamism of tax income linked to the economic recovery”. This is particularly the case for the departments, which earned €3 billion in revenue from transfer rights for consideration (DMTO) more than in 2020 in real estate transactions .

“Dynamic” staff costs

Real operating expenses of local authorities also increased more (+2.6%, after +1.3% with constant scope in 2020), but less than income. The Court of Auditors points to a “dynamic” personnel expenditure, which increased by 2.8% (compared to +1.1% in 2020) “in a context of staff reduction in the territorial public service”. And this, while “the categorical measures in 2021 have been, however, limited”. The increase is more pronounced on the side of inter-municipalities (+7.1% in two years) and regions (+5.6%).

“This marked improvement in the financial situation of local authorities, partly as a result of cyclical factors, should not exempt them from efforts to control their spending,” the rue Cambon magistrates warned last week in their report. on the situation and perspectives of public finances.

Investment spending also increased last year, in an “atypical way in the second year of the electoral cycle”, says the Court of Auditors in its report on local public finances. A movement that “results, at least in part” from the delay of projects that could not be executed in 2020 and that “also testifies to the investment effort made by local authorities in a context of recovery in economic activity.”

“uncertain” weather

In these circumstances, according to the Majors, “the principle of a contribution from the local public sector to the recovery of public finances seems legitimate in view of its financial situation”. However, the subject was not mentioned in general policy speech by Elisabeth Borne last week, while Emmanuel Macron had promised during the campaign that he would ask local authorities for a new budget effort. During its first five years, the financial contracts called “Cahors” had framed the progression of the operating expenses of 321 large communities (municipalities, inter-municipalities, departments and regions), before their last year of execution was suspended in 2020 at the beginning of the health crisis.

The Court of Auditors outlines several possible ways. More « The choice of a reconduction of an objective of encadrement des pennses de fonctionnement implicarait de lever les différes reencontrées dans mise en oeuvre des contrats de Cahors, dans a different context de celui que prevalait en 2017 », insists-t -she. Among the other possible levers, he mentions “the use of a criterion based on self-financing”, “the setting of a debt ratio”, “the definition of an objective for the evolution of the annual need for financing” and “the expected reduction in the time of certain income”.

In any case, he warns, “the terms of this contribution will be framed in an uncertain economic context”, due to high inflation.

Annotate

The Court of Accounts will launch its first “citizen-based checks”, announced its first president, Pierre Moscovici. They will be able to intervene in six areas, in particular tax evasion by individuals or the use by the State of private consulting companies.

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