The Court of Auditors, responsible for identifying savings avenues to bring the public deficit back into line with Europe, released a shock measure on Wednesday October 2: restoring the workforce of local authorities to their 2010 level, which would be equivalent to a reduction of 100,000 jobs.
“Personnel expenses, which represent a quarter of community expenses, are experiencing sustained growth, mainly driven by the ‘municipal bloc'”, namely the municipalities and intermunicipalities, observes the Court in a report, at a time when France’s public deficit is expected to exceed 6% of GDP in 2024. “While the workforce has increased significantly until recently, despite the absence of new transfers of skills, controlling their development is a central issue”, emphasize the magistrates.
The Sages of rue Cambon specify that the “increase in numbers (since 2011) mainly concerned intermunicipalities”, which developed over this period, and “was not offset by an equivalent drop in the municipalities”. They recommend a “gradual return of the workforce of communities”, which employ around 2 million people, “to their level of the early 2010s”, i.e. a “reduction of 100,000 jobs”, which would save 4.1 billion euros per year from 2030.
This potentially explosive proposal, whose motivations are contested by associations of local elected officials, echoes that of Emmanuel Macron who in 2017 planned to eliminate 120,000 positions in the public service. “Territorial staff cannot be reduced to an accounting question,” said the president of the Association of Mayors of France (AMF) David Lisnard in his written response, recalling that intermunicipalities “are entrusted with skills which are not always previously exercised by the municipalities”.
The magistrates of the Court of Auditors defend a “pooling scheme” between the different levels of local authorities which “must make it possible to make public services function better”. In its outlook for 2024, the Court estimates the increase in community operating expenses at +5.4% over the first eight months of the year. In addition to personnel, they are driven by purchases of goods and services boosted by inflation, as well as by social spending linked to the increase in precariousness. Investment spending is also accelerating due to the “municipal electoral cycle”, which logically sees the projects voted on at the start of the mandate succeed.
“Skid”
However, not all communities are in good health, the report recognizes. As in 2023, municipalities and intermunicipalities are doing well, but this is less the case for the regions, and even less so for the departments, largely weighed down by the fall in transfer taxes for valuable consideration (DMTO) levied on real estate transactions.
On the revenue side, those of VAT, which replaces the housing tax on main residences, will not be as good as hoped, so that the financial trajectory of communities “is slipping more and more” compared to what was predicted by the public finance programming law 2023-2027, warns the Court.
“Brutal” proposals
While Prime Minister Michel Barnier wishes to reduce the public deficit below 3% of GDP by 2029, the Court is imagining avenues for “participation” by communities, recalling that the latter represented 17.8% of public spending in 2023. The report recommends “massifying and pooling purchases” between communities, a potential source of 5 billion euros in savings per year, and refocusing their investments on the ecological transition.
Rather than regulating expenditure, which communities are firmly opposed to in the name of the constitutional principle of free administration, magistrates are counting on a “slowdown in the evolution of revenue”. This could involve the end of “the indexation of cadastral rental values of property taxes to inflation” or “the capping of part of the VAT dynamic”, the primary revenue for communities. “We cannot subscribe to a proposal consisting in inducing […] a scissors effect in the budget of communities”, responded the president of Urban France Johanna Rolland. The AMF denounced the “brutality of these proposals”, which would lead according to it “to an unprecedented weakening of the capacity to act of the municipal block”.