Local governments are sensitive about their finances, so the government is treading cautiously. As the meeting of the High Council of Local Public Finances approaches on April 9th, the Minister Delegate for Territorial Communities assured on April 5th that “everyone must be in solidarity,” but the idea is not to impose coercive measures on local elected officials. This involves asking them if they are aware of the state of the country’s finances, if they are willing to be involved, and how they would like to be involved.
The tone is conciliatory, but the government remains steadfast: everyone will contribute to fixing the country’s accounts. In early March, the Minister of Economy told senators that local authorities cannot blame the state for everything, as their increasing expenses are often offset by the state. Local authorities have already faced budget restrictions from 2014 to 2022, resulting in a reduction of €71 billion in government grants, as reported by the Association of Mayors of France. In addition, their expenses increase due to external constraints such as state-mandated increases in civil servant numbers or inflation.
Local authorities refuse to be financially squeezed, as they are required to vote on balanced budgets and do not contribute to the country’s public deficit. On the majority side, recognizing that local authorities are good managers, it is noted that they have emerged from crises with incredibly healthy accounts and even have €35 billion in reserves. However, with limited room to maneuver, the government must be careful not to alienate local elected officials, who are crucial investors in their communities. Any cuts they implement could lead to reduced investment and employment opportunities.
With everything on the table during the upcoming meeting, it is crucial for the government to consider the implications of their decisions on local authorities. By engaging in dialogue with local officials and taking into account their financial constraints and importance as investors, the government can work towards a collaborative solution that benefits both parties. Ultimately, finding a balanced approach that addresses the challenges faced by local authorities while also contributing to the country’s financial recovery will be essential for sustainable economic growth and stability.
