Deficit: communities refuse to contribute

Europe 1 with AFP // Photo credits: Ian LANGSDON / POOL / AFP 3:31 p.m., March 26, 2024

Local authorities have "no reason to be called upon" to make up the State's deficit, the Association of Mayors of France (AMF) reacted on Tuesday after the announcement by INSEE of a deficit to 5.5% of GDP in 2023, far from the expected 4.9%. “We weigh 'zero' in the public deficit since according to the figures, we were in surplus of 4.8 billion euros in 2022, that is to say that not only do communities not weigh on the deficit, but they mitigate it and to my knowledge the municipalities contribute to reducing the public deficit in 2023", declared André Laignel, first deputy vice-president of the AMF.

For 2023, the deficit of local public administrations, which represent 20% of public spending, increased by 8.9 billion euros, according to INSEE. In particular, "the sharp decline in transfer taxes for valuable consideration - commonly called "notary fees" - allocated to municipalities and departments after several years of great dynamism and the acceleration of operating and investment expenses". But this category only imperfectly reflects the situation of the communities, because it includes in particular the Société des Grands Projets (formerly Société du Grand Paris) or even Ile-de-France Mobilités.

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“We have already participated a lot in financial solidarity”

Concerning the debt, which decreased less than expected in 2023 (110.6% compared to 109.7% expected), "we represent less than 10% of the public debt and it is us who pay it, it costs absolutely nothing to the State", added André Laignel, also president of the local finance committee. According to him, "the cumulative drop in the overall operating allocation (the main State allocation to communities, editor's note) in constant euros has represented an effort of 70 billion euros since 2014". 

“We have already participated a lot in financial solidarity, so we have no reason to be involved in a clear budgetary slippage which is the sole responsibility of the State,” he lambasted on behalf of the AMF, estimating that the gradual abolition of the housing tax and the contribution on business value added (CVAE) “cost the State 35 billion euros”. Questioned on RTL on Tuesday, the Minister of the Economy Bruno Le Maire said he was opposed to any tax increase to bring the French public deficit below 3%, its objective for 2027.

On the other hand, he called for a “collective awareness of the need to make choices in all our public spending”, citing local authorities in particular. “I remind you that the Constitution provides that the administration of local authorities is free. The State must stop considering communities as subcontractors and their budget as adjustment variables,” replied André Laignel. A high local public finance council, created in September to streamline the often tense exchanges between the State and associations of elected officials, is due to meet next week.

“It is not a question of constraining local public finances and local authorities” but of “looking with them at exactly where savings are possible”, explained Bruno Le Maire on Tuesday during a press point, calling on them to implement “freely” implements these savings measures.