PRESS RELEASE
15 December 2020
PUBLIC FINANCES AND ACCOUNTS
LOCAL PUBLIC FINANCES IN 2020
Pamphlets 2 and 3
In order to ensure that the French National Assembly is better informed, since
2019, the Cour des Comptes has presented its annual report on local public
finances in two parts.
Pamphlet 1, focusing on the financial position in 2019, was published in June
2020. Pamphlets 2 and 3, published jointly, focusing on the impact
of the health crisis on local finances, with a review of local public management
in particular, including, this year, a review on how establishing
métropoles
(metropolitan administrative entities) has gone.
Working side-by-side with the central government in response to the health
crisis, local public authorities will experience huge changes in their financial
positions in 2020. Even though it seemed only moderate at first glance, the crisis
will have a hugely unequal effect across different types of local public authorities
and will increase inequalities.
In addition, the review on how establishing the 21
métropoles
examined in the
report has gone gives a hardly convincing picture. Their creation has not yet had
the desired structural effects in terms of pooling, transferring jurisdictions and
influencing.
The highly unequal impact of the health crisis on local public
authorities (pamphlet 2)
The public authorities in the municipal block are expected to experience a significant
reduction in their savings in 2020. In particular, this change is due to an interruption in
the revenue dynamic to which some public authorities are particularly exposed, such
as tourist-heavy
communes
(municipalities) and transport authorities, for example. In
addition, this situation has been brought about by
proactive measures aiming to ensure
that services continue and that the population, economic and social fabrics are
supported. These factors have led the central government to propose a partial
compensation mechanism covering revenue losses. However, uncertainties over
future financial margins are threatening their inclusion in a new investment cycle.
Départements
’ financial vulnerabilities are also expected to worsen. The rise in their
social welfare expenditure as a result of the deteriorating economic situation and the
roll-out of emergency measures, has come hand in hand with a fall in their operating
revenue, affecting transfer duties in particular. Against this backdrop, the central
government has established an advances mechanism to cover specific revenues.
While summer projections were expecting an overall fall in savings of 45% in 2020,
this scenario seems to be pessimistic, however, even though the resurgence of the
health crisis has added to the uncertainty at the end of the financial year.
Finally, moderate proportions of revenues from regions should be assigned. Regions
have provided a very wide range of support to the hardest hit economic sectors,
meaning that their investment expenditure should remain at high levels. As a result,
they are expected to increasingly resort to debt. The method agreement signed
between the central government and regions on 30 July 2020 should provide structural
reinforcement for their resources from 2021 and help step up their efforts as part of the
national recovery plan.
The establishment of urban areas: objectives have only been
partially achieved at this stage (pamphlet 3)
Métropoles
are the most resounding example of the movement to recognise an inter-
municipal system, driven by four successive legal acts since 2010. While it is too early
to draw definitive conclusions from how establishing them has gone, this progress
report suggests that the objectives set out by legislators have only been partially
achieved for the 21
métropoles
(excluding Grand Paris) covered in this report.
Five years after this specific legal status was established for the majority of the
métropoles
, it has yet to have a real structuring effect. No significant progress has been
made as regards the pooling of services, which continues to depend on the local
political balance. The adoption of
métropole
status has led to limited changes to the
jurisdictions exercised, within a generally unchanged geographic area. Finally, the
establishment of
métropoles
has paradoxically gone hand in hand with promoting the
central role of mayors in setting out inter-
commune
policies.
As a result,
métropoles
have been slow to take full flight, even though an ever-
increasing number of partnerships with nearby public authorities and local areas have
been developed.
At the start of the health crisis, these public bodies were generally financially healthy,
thanks to their dynamic tax bases, despite the moderate fall in their funding. The
reforms to local taxation and the consequences of the Covid-19 epidemic are now
generating uncertainty over whether they will be able to maintain their financial
trajectory and invest in infrastructure projects for their local areas and their residents.
Read the report
PRESS CONTACTS:
Ted Marx
Director of communication
T
+33 (0)1 42 98 55 62
ted.marx@ccomptes.fr
Etienne Chantoin
Press Relations
T
+33 (0)1 42 98 59 45
etienne.chantoin@ccomptes.fr
@Courdescomptes
ccomptes
Cour des comptes