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23 November 2021
Issue 2
To improve the provision of information to Parliament, since 2019 the Court has presented
its annual report on local government finances in two stages. Issue 1, published last June,
focused on the financial situation in 2020, following a year marked by the pandemic and its
social and economic consequences. This second issue focuses on the situation and prospects
for local government finances in 2021, and on one aspect of local government management:
this year, local government investment by the municipal block. This survey is based in large
part on the analysis of all the management accounts of the municipalities and
intermunicipal authorities for cooperation between local authorities (EPCI), as well as on
the reports by the regional and territorial chambers of accounts concerning 49
municipalities and 56 EPCIs.
A favourable growth outlook, despite continued uncertainties regarding the pandemic
In 2020, the pandemic led to a deterioration in local government authorities
financial situation,
justifying the implementation by central government of targeted measures, mainly intended to offset
their loss of revenue. The continuation of the pandemic into 2021 led general government to extend
measures to support the economy, while fostering the upturn through the implementation of the
recovery plan. 2021 also saw the introduction of the local taxation reform
following the abolition of
the housing tax. Following the pandemic, it was supplemented by a stimulus component concerning
production taxes. As a result, all levels of local government saw substantial changes to their tax
revenues. The replacement of the housing tax (for EPCIs) and the property tax on constructed
properties (for the departments) reinforces the loss of a tax connection with local areas. The same
observation applies to the regions, which no longer have resources directly linked to local economic
activity. However, local government
s situation should improve in 2021, including stability in financial
transfers from central government in a like-for-like perimeter. The national recovery strategy, which is
part of the
France Relance
plan, includes the allocation of €10.5 billion to local government. This
central government support for recovery comes alongside a new process for contracting with local
government, through recovery and ecological transition contracts (CRTE), of an inter-municipal scope,
and departmental and regional recovery agreements. The globalisation and multiyear ambition of this
approach faces several risks linked in particular to the interconnection between the various contracts
and the persistence of ministerial calls for projects.
The outlook for the reliability of local accounts
Alongside these major changes to local finances, the process of enhancing accounting quality is
continuing. Two initiatives under way, which will bring the local government sector closer to the rules
that apply to the entire public sector, should contribute to this: firstly, the Court of Accounts, in
conjunction with the regional and territorial chambers of accounts, is experimenting with the
certification of the accounts of 25 volunteer entities. Following a first interim review carried out in
June 2019, an experimental certification of the accounts is under way based on four models:
certification, specific certificates, limited examination and the presentation of accounts.
Secondly, the alignment with the entire public sector
s management rules has led to an experiment
with the single financial account, which by 2024 is intended to replace the management account
produced by the accountant and the administrative account produced by the authorising officer. The
implementation of this project should more clearly form part of a process of simplifying local accounts
by ensuring the quality of the information provided.
Investment by the municipal block
The management theme addressed this year, namely investment by municipalities and their groups, is
an extremely important subject insofar as the municipal block is the number one public investor (37%
of net acquisitions of non-financial assets), ahead of central government and its operators (33%).
The Court has observed that the variations in the 2014-
2019 mandate cycle (€192.7 billion in
cumulative capital expenditure) were more pronounced than previously, and that territorial
differences persist: capital expenditure per capita is lower among agglomerations of 20,000 to 50,000
inhabitants, and higher among metropolitan areas with more than 300,000 inhabitants
investment is growing the fastest.
Despite the sizeable investments made by the municipalities and their groups, the financial
information available on their investment choices is insufficient, despite being essential for steering
the implementation of territorial strategies. The same applies to the assessment of the largest
investment projects, both
the fact.
In this report, the subject of local investment is tackled from an assets-based approach: the
conservation and upkeep of these assets requires sufficient efforts in terms of maintenance and
renewal. Progress has certainly been observed in terms of maintenance and monitoring degradation
risks, for example concerning the conservation of engineering structures (tunnels, bridges) and water
and sanitation networks (water treatment plants). However, renewal requirements are likely to
accelerate over the next decade and give rise to
grey debt
weighing on local government to renew
its assets and ensure the level of service provided to the population. Conversely, certain investment
choices (aquatic centres, roads or car parks) are still often disproportionate given local government
financial resources and residents
Read the report
Emmanuel Kessler
Head of Communications
01 42 98 55 62
Julie Poissier
Head of press relations
01 42 98 97 43
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