30% of departments already bankrupt, 60 departments when the real estate market turns around

« It would be enough for the real estate market to turn around for 50 to 60 departments to find themselves in difficulty. 30% already cannot cope with their charges “, warned last weekend François Sauvadet, UDI president of the Côte d'Or. The financial situation of the departments has, however, seriously improved over the past two years, as confirmed by the study by KPMG and LocalNova presented at their congress last week. Gross savings reached 7,5 billion euros in 2017, above the 6,5 billion euros recorded in 2013, just before the fall in endowments and the explosion in social benefit payments plunged the departmental finances in red from 2014.

Frédéric Maury, leader of LocalNova explains this improvement by three phenomena. On the one hand, these communities have tightened the screw, saving in five years a billion euros on annual current expenses alone, to 4,5 billion euros. Even their very rigid personnel costs could be reduced by 70 million euros, through less hiring of contract agents.

On the other side, the departments have pulled their heads above water thanks to two fiscal levers. They took full advantage of the increase in notary fees (DMTO), which rose from 97 to 157 euros per inhabitant per year. The presidents also requested the lever of the property tax which rose from 170 to 198 euros in the same interval of 5 years.

Except that only attractive departments capable of soliciting their taxpayers have been able to replenish their savings. Frédéric Maury explains that the fifteen departments with a financial potential of less than 530 euros per inhabitant are satisfied with an average gross savings of 91 euros per inhabitant, up 1,9%. The richest (more than 620 euros of potential) exceed 114 euros of savings, growing by more than 6%. For the Assembly of the departments of France, they are rather 20 to 25 to be still in the red.

Pots

If the government has stopped the decline in grants, local finance experts now believe that the departments are weakened. Few new centers of savings would exist. On the fees of notaries, the departments have been observing for 3 months on the ground a brutal reversal of the economic situation, said Stéphane Troussel, PS president of Seine-Saint-Denis.

As for property tax, the government is considering to replace it with simple allocations as part of the reform of local taxation. " Deprived of these three levers, only a few departments with little debt would still have room for maneuver warns Frédéric Maury.