Local communities have approached the health crisis with "rather good" financial health, assures Mathieu Plane, economist at the French Observatory of Economic Conditions (OFCE).
But faced with the economic shock, and while the association of mayors of France warns of losses to the tune of six billion euros, they will have to find new revenue to revive.
Covid-related spending weighed heavily on city budgets.
Receipts have often fallen.
Is the situation so difficult for local communities?
MATHIEU PLANE.
The shock was violent for everyone.
But in view of the global economic shock, the State absorbs most of it with the many aid it distributes and the Recovery Plan.
Overall, the local communities approached the health crisis with a rather good financial situation.
But if they show good resistance, they will have much less facility than the State to borrow to restart the machine.
And since the reform of the abolition of the housing tax, their tax leverage is weaker and weaker.
Will some elected officials increase taxes to pay the Covid bill?
Yes, it is probable.
Even if the choices will be heterogeneous depending on the communities, it is certain that some elected officials will choose to increase the property tax rate - the main tax revenue for local communities at present - to balance the accounts.
They may also be tempted to reassess the contribution on the added value of companies (CVAE) or the collection tax on household waste (TEOM).
Taxation can be an adjustment variable for communities.
Because when Bruno Le Maire
(Editor's note: the Minister of the Economy)
promises not to increase taxes, he commits to national taxes.
Not for the others.
Can local elected officials also increase certain municipal tariffs?
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Everything is possible.
This can involve an increase in fees to access public places, such as swimming pools for example.
We can expect a “mix” of all of this.
What about debt?
This will be a possible solution for larger cities because they will get attractive loans.
But not all cities will be able to afford it, far from it.
The risk, in a complicated budgetary context, is that the municipalities cut or postpone investment projects.
A boost from the state is it expected?
Yes.
In the Recovery Plan, the State has provided for transfers to compensate for the drop in revenue of local authorities and allow them to invest, for example via aid for energy renovation.
It remains to be seen whether they will be sufficient ...