The financial situation of local authorities should improve in 2021

The second fascicle of the report of the Court of Auditors on local finances, published Tuesday, November 23, somewhat rectifies the conclusions of the first volume, made public at the end of June. The latter concluded with a warning, stressing that “The continuation of the health and economic crisis in 2021 and the expected contribution of the local public sector to the recovery plan imply paying attention to the most vulnerable communities, some of the consequences of the 2020 crisis having been postponed or prolonged”.

Ultimately, “Despite the continuing health crisis, the financial situation of local authorities should improve in 2021, with stable financial transfers from the State on a like-for-like basis, new exceptional measures to support or extend existing measures and favorable prospects for local and economic taxation ”, report the financial magistrates. An observation that contrasts singularly with the remarks repeated in recent days during the congress of the Association of Mayors of France.

After a year 2020 which shook all the economic and financial foundations – but, in this regard, local finances were significantly less affected than those of the State or the social sphere -, the report of the Court of Auditors confirms that the financial situation of local authorities should see a further improvement in 2021. State transfers increased by 1.2 billion euros compared to the previous year, out of a total amount of 115 billion euros. Tax products are on the rise: they should grow by 3.7% in 2021 and will continue in 2022, with a revaluation of the bases which should reach, and even exceed, 3%.

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Fear of the return of the clouds

The expected decrease in the income from the contribution on the added value of companies is expected to be less than expected. The surge in transfer rights for payment offers the departments a comfortable – but uncertain – mattress. The fraction of national VAT which, in addition to the regions, the departments, the metropolis of Lyon, the inter-municipal authorities and the City of Paris, now collects, is experiencing a favorable dynamic. As a result, the level of local government deposit accounts at the Treasury amounted to nearly 55 billion euros at the end of September, or 11 billion more than in 2020 at the same time. And investment spending by all categories of communities is on the rise: + 7.9% for municipalities, + 11.2% for inter-municipal authorities, + 16.1% for departments and + 9.9% for municipalities. regions.

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