Local authorities in a better financial situation than before Covid

Local authorities in a better financial situation than before Covid

The first inventory for 2022 highlights a generally well-oriented trajectory for local authorities. “Despite the inflationary context, 2022 is a positive year for our local finances. As with 2021, communities have benefited from a context of sustained economic recovery,” writes Jean-Rene Cazeneuve , the General Rapporteur (Renaissance) of the Budget at the National Assembly, in a note based on figures from the General Directorate of Public Finance. “The effects of the Covid crisis are now largely dissipated”, he underlines.

The main indicators are thus better than in 2019. This is the case for gross savings – which is used to finance investments and the repayment of loans -, up 5.9% last year, to 38, 7 billion euros, or 4.5 billion more than in 2019. Cash is also still at its highest, at 57.2 billion euros (+1%).

Dynamism of tax revenues

“It’s a good surprise and good news”, insists with “Echos” the deputy of Gers, who does not fail to slip that “some local elected officials had planned the worst”. The fact remains that “some local authorities are in difficult situations” while 6,000 municipalities show negative net savings (gross savings minus debt repayments).

Taken globally, the different levels of communities (local block, departments, regions) “benefit from these good annual results”, underlines Jean-René Cazeneuve. The person who chaired the Delegation to local authorities of the Assembly, under the previous legislature, sees in this in particular the combined effect of the “efforts” of local elected officials, support measures taken by the State and economic dynamics.

As expected, local authorities saw their real operating expenses increase “quite significantly” in 2022 (+4.5%, i.e. 8 billion more than in 2021), with inflation, the explosion of energy prices and the various salary measures, including the revaluation of the index point for civil servants. But their actual operating revenue increased more (+4.8%, or +10.2 billion euros), “an increase greater than what was expected for this financial year”. This is mainly due to the dynamism of tax revenues (+5%).

For 2023, the elected representatives of the municipal block can already count on nearly 4 billion in additional tax revenue due to the 7.6% revaluation of rental values, which serve in particular as a basis for calculating property tax. , emphasizes Jean-René Cazeneuve. This will not prevent several large cities, such as Paris, Lyon or Grenoble, from sharply raise property tax rates This year.

The majority deputy also highlights the fact that the abolition in two years of the contribution on added value (CVAE) for the municipal block and the departments “will not reduce [leurs] resources “. “The compensation by a fraction of dynamic VAT in 2023 will be approximately 12% higher than the amount of CVAE collected in 2022”, he indicates. VAT revenue, which now represents a significant share of local authority revenue, is also expected to increase by 5.1% in 2023.

Among the points of vigilance, “the year 2023 could mark a drop in revenue” from transfer duties for consideration (DMTO), the famous “notary fees” collected by the departments and, to a lesser extent, by the municipalities on real estate transactions, notes Jean-René Cazeneuve.

“Even if inflation is expected to slow in the second half of the year and if gas and electricity prices are down, operating expenses should increase significantly in 2023 [effet année pleine et renouvellement de contrats d’énergie, NDLR] “, he also anticipates. Due to the increase in bank rates, the cost of works and uncertainties related to the context, “the actual amount of investments remains unpredictable”, he also notes. In 2022, local authority investment increased by 5.6%.

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