Paris (AFP)

By announcing Friday "a massive support plan" of 4.5 billion euros for communities, including 2.7 billion euros to departments, the government hopes to mitigate the consequences of an economic and social crisis whose scale will strain local finances.

It was necessary to respond to the urgency for the communities, placed "in a difficult situation", explained Prime Minister Edouard Philippe, and asking for visibility, between an expected drop in revenues and increasing expenses.

This "scissor effect" is even more significant for the departments, because of their skills in social matters (payment of active solidarity income, social assistance for children, etc.).

In this very degraded context - 7.5 billion euros in revenue losses for communities as a whole, according to the report of the deputy (LREM) Jean-René Cazeneuve - the largest envelope logically falls to the departments, received Friday afternoon in Matignon. Namely 2.7 billion euros, in the form of advances spread over three years and intended to compensate for the collapse of "transfer duties for consideration" (DMTO), that is to say the tax paid to each real estate transaction.

Part of the sum will be released after the vote on the third amending finance law, presented in mid-June. Then the government will make "adjustments", while Matignon hopes for a "catch-up" effect in view of "signs that say the slowdown" in the real estate market "would not be lasting".

In the morning, Mr. Philippe announced 1.75 billion euros in aid to municipalities and inter-municipal authorities.

This includes a mechanism for offsetting tax revenue (in particular corporate property tax, tourist tax) and "state" revenue (parking fees, etc.), up to "approximately 750 million euros" which must relate to between 12,000 and 14,000 municipalities.

This sum covers part of the losses caused by the epidemic, estimated at around 3.2 billion euros. It will be calculated individually, compared to an average of revenue over three years (2017, 2018, 2019) in order to smooth the variations, said Philippe, after a meeting with the representatives of the associations of mayors at Matignon.

"We make a guaranteed safety net for budgets, taking into account the real losses which are fully compensated," added to AFP the Minister of Territorial Cohesion Jacqueline Gourault.

- "In the right direction" -

"We are going to have new discussions with local authorities for the 2021 finance bill," said Ms. Gourault.

These announcements "are going in the right direction" reacted together Cities of France and the Association of small towns of France, while calling to specify certain terms or go further in compensation.

Due to a specific tax system, the overseas municipalities will benefit from a separate envelope, of 110 million euros, intended to compensate in particular for the fall in the collection of dock dues, announced at the end of day Edouard Philippe. The overseas regions should recover "40 to 50 million euros" in guarantees.

The head of government also announced that he would endow "an additional billion euros" a fund (the endowment to support local investment) to support the "green" investments of municipalities. "This is also an amount never seen, massive," insisted Mr. Philippe.

In addition, the Prime Minister confirmed that the expenses related to the coronavirus would be isolated in a specific appendix in the budgets of the communes, which would have three years to absorb them.

Feeling "excluded" from this package, the Regions slammed the door Friday of a meeting with the government on the economic recovery plan, citing a "feeling of humiliation and wasted time". Matignon reminds in return that the Regions, whose losses are estimated at 900 million euros, have seen their VAT receipts guaranteed via a dedicated fund.

© 2020 AFP