Professor Gaston Jèze wrote in 1922 that “the budget is essentially a political act”. Instrument of state sovereignty, translates a political vision and must guarantee the sustainability of its debt. The LOLF, born before the euro, does not cover all public administration accounts, but only those of the State. While waiting for the great LOLF, which will deal with all public accounts, the Government would be well advised to conceive the budget as a political act that commits all administrations, hence the need to consult them, as it does for all the ministries. . . In any case, no ministry of local authorities can bind them, except to ignore the principle of the constitutional value of free administration. Hence the need to invite the representative bodies of said communities to the negotiation table.
Although distinct, the finances of the State and the communities (like those of social security) are necessarily interdependent.
In a context where the alarm is sounding in front of the deterioration of our public finances, the cohesion between all the actors is decisive.
It is also surprising that this consultation was not organized as soon as the stability program was drawn up, which should define the trajectory of the finances of each of the administrations for the next five years.
The consequences of the health crisis and the current context urgently require us to regain control of our public finances.
Public finances have been the blind spot of the 2022 presidential campaign. They are now at the heart of the news and more uncertain after the legislative elections that have reshaped the French political landscape.
Having made the legitimate choice of policy “whatever the cost” during the health crisis, the Government must take over the country’s accounts in the context of the war in Ukraine, tensions in the raw materials market, disruption of chains of value, threats to growth and inflation.
The forecasts of the stability program were considered very optimistic and the Court of Auditors for its part sounded the alarm about the country’s financial situation. She indicated an increase in net spending of 37.1 billion euros (1). The increase in spending has thrown us into the death spiral of debt. In the first quarter of 2022, public debt increased by 88.8 billion euros to reach 114.5% of GDP, which corresponds to a total for all APUs of 2,091.8 billion euros. (2). Correspondingly, some public spending increases with inflation. About 10% of the interest paid by the State is indexed to the variation in prices.
The Minister of Economy promised that the Government would have as a red line “not to increase the taxes or the debt”. The President of the Republic has committed to bringing the deficit below 3% in 2027. The stability program therefore foresees a deficit of 5% of GDP in 2022 to reach 2.9% in 2027. But at the same time, the central European center. Bank for its part announced on July 21, 2022 an increase in interest rates of 0.5 points. Coupled with election promises, this new situation puts an additional burden on the shoulders of the government.
However, local authorities saw an improvement in their financial situation in 2021
Decentralization laws, and the implementation of most public policies from the local level, have led to making local finances an essential component of public finances. The management of the resources of the local authorities remains however constrained between the relative freedom they are given and a great dependence on the State, the sole master of the subsidies and which decides on the contours of its fiscal revenues.
The health crisis has also increased this dependence after the inevitable state interventionism. The sum of the actions entrusted to the local authority needs to be supported. State financial assistance increased by 5.6% after two years of near stability (3).
Local finances, due to their size in public finances, represent a strategic issue, hence the need to give them great strength to guarantee the sustainability of our economy.
The recent report of the Court of Accounts (4), like that of the Observatory of local public finances and local management, present a positive financial situation for local authorities in 2021. The reasons are multiple: the recovery of economic activity in 2021, measures of support in 2020 and 2021, “safety net” systems. , payment of an annual deposit, completed if necessary at the beginning of the following year. The 2021 financial year is characterized by a 2.4% increase in operating expenses offset by a 5% increase in operating income.
However, the review of local taxation started in 2020, with the gradual abolition of the housing tax on the main residence, and continued in particular with the announcement of the definitive abolition of the CVAE for the 2023, has profoundly destabilized local taxation and changed distribution. of income between communities. These very controversial choices to dismantle local taxation have contributed to fueling the concern of local authorities regarding their financial performance.
The recovery of public finances depends on the ability of the State to build a consensus with the local authorities
If it wants to reach the goal of a deficit of 2.9% in 2027, the Executive must draw a medium-term trajectory based on transparent data, specifying the means that will be useful for this purpose.
The stability program consists of this exercise. But let it be clear, after having made the choice of optimism, the forecasts will have great difficulty to realize. The Minister of Economy considers that these forecasts are based on the expected success of the reforms undertaken during this five-year period, including the total abolition of the CVAE, and also on an ideal of growth and full employment. These data are subject to severe uncertainty.
In its stability program, the Government foresees the association of local authorities in the effort to reduce public finances. without consulting them. The Court of Auditors also calls for a greater involvement of the communities to face the challenges that our public finances pose to us.
But the lack of prior consultation raises fears that the discussions between the Executive and the elected associations in the context of the drafting of the financial law for 2023 will inevitably be stormy. Despite the good results for 2021, the Association of Mayors of France predicts a “particularly worrying period for local authorities”, fueled by the impact of inflation in energy and food.
If local authorities are required to participate in the recovery of public finances, this contribution must always be called in proportion to their respective capacities. However, this kind of solidarity cannot be conceived unilaterally. It must be built in a new paradigm of determination and conduct of public policies carried out by the local authority, both on behalf of the State and on its own account.
The construction of the finance project for 2023 should therefore be the occasion for this meeting between the central State and the local public sector to reach a consensus, without which the control of expenses will not be achieved. In the first place, a first contradiction must be removed, the State cannot at the same time request a reduction in expenses and impose new ones every month. A local expenditure control plan must therefore include the new expenditure imposed by the central level. Otherwise, the moral contract would be leonine.
The time has come to open this dialogue, we hope that it will take shape in the coming weeks.
The current situation of the country’s finances requires us to propose realistic solutions for our fellow citizens by establishing coherent and sincere solutions.
It calls for solidarity between all public administrations nourished by dialogue and mutual respect to achieve the only goal that counts: recovery!