“We are leaving the latest updated forecasts to our successors so that they can act. One thing is certain, there is a red alert for local authorities.” A few days before Michel Barnier’s appointment to Matignon, an advisor to Gabriel Attal confided to L’Express his concerns about the poor performance of local finances. The same day, the resigning minister Bruno Le Maire sent a letter to the general rapporteurs and the chairs of the Finance Committees of the National Assembly and the Senate in which he expressed alarm at the drift in local authority spending which “could alone degrade the 2024 accounts by 16 billion euros.” If the scenario is confirmed, the budgetary trajectory of the Attal government would be jeopardized.
A recent Treasury note estimates that the public deficit could land at 5.6% of GDP this year, instead of the targeted 5.1%. This is partly due to the deficit in the public balance of local authorities, but also to lower than expected state tax revenues. When called into question, the “territories” are defending themselves. “It is unlikely that a minister would point out our responsibility,” says François Sauvadet, incredulous, president of the Côte-d’Or Departmental Council and the Association of French Departments. “I have been drawing the government’s attention for months, but it has remained indifferent to my warnings. It took the Court of Auditors publishing a report for it to listen,” regrets the former minister. According to him, 30% of departments are in a situation of near-bankruptcy, due to “the explosion of social spending and a drop in their resources.”
“This is unprecedented”
Fears intensified at the beginning of August, after the publication by the Directorate General of Public Finances of its traditional note on the monthly accounting situation of local authorities. This document reports that their revenues are increasing less quickly than their operating expenses over a year, causing a significant drop in gross savings (-11% in July). As for investment expenses, financed by borrowing, they increased by 13%.
“Objectively, we have never seen such a deterioration,” commented Bercy, which predicts that the deficit of local authorities could double and reach 0.8% of GDP by the end of the year. “There is indeed an increase in expenditure, which is linked to the economic situation, acknowledges Philippe Laurent, the vice-president of the Association of Mayors of France. And the elected officials do not want to reduce the level of service.” The mayor of Sceaux nevertheless tempers the government’s warning: the financial situation is, according to him, “absolutely not dramatic”: “If the communities decide to stop investing, we will continue to operate. But our infrastructure will continue to deteriorate: water, roads, public buildings…”
The limits of decentralization
Could this be an attempt at diversion on the part of Bercy, while the State is far from being exempt from all reproach in terms of management of public finances? “There is nevertheless a paradox in targeting local authorities to justify the deterioration of the accounts… The State is asking more and more of them, while at the same time ordering them to make financial efforts”, recalls Xavier Cabannes, professor of public law at the University of Paris Cité. “A lot of this spending results from new obligations that the government and Parliament have placed on local authorities in recent years: environment, early childhood, transport, security, technical standards, etc.”, adds his colleague from the University of Lille, Aurélien Baudu.
In addition, in 2023, the deficit of local public administrations only accounted for around 6% of the public deficit, compared to more than 90% for that of the State. “The slippage of one contributes to the slippage of the other, there is no point in passing the buck. The State cannot regulate everything. Nevertheless, decentralization has reached a certain number of limits”, believes MP Éric Woerth, author of a report on the issue in June. A few months ago, Bruno Le Maire had already urged local authorities to make savings. “Bercy had one hope: that the decree canceling 10 billion euros of credits would send a signal of constraint to return to controlled budget management. It did not work”, says a ministerial advisor. Will the new government be able to put an end to this dialogue of the deaf?
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