This preview shows page 1. Sign up to view the full content.
Unformatted text preview: an
guarantees provided by the authorities are also monitored. They are only accepted if the cumulative total of yearly loan
repayments exceeds half the authority’s actual operating revenues. In addition, the amount of the annual repayments
guaranteed in respect of a given debtor must not exceed 10% of the commune’s total guarantee capacity. Annual
provisions equivalent to 2.5% of the guaranteed annual repayments that remain to be covered must cover such
Each year, the State representative verifies compliance with legal provisions and, in the event of failure to comply,
approaches the Chambre régionale des comptes. Control focuses both on the budget estimate (preliminary budget) and
the actual budget (administrative account). The authority’s balance depends, by and large, on its level of savings, i.e. the
outcome of the fiscal year, in conjunction with depreciation expenses and provisions. However, legal protection offered
by the legislation no longer guarantees, under all circumstances, the solvency of decentralized administrations.
Budgetary control has a twofold temporal and spatial bias. Consequently, annual balance no longer corresponds to
multi-year balance, in other words, to durable solvency (Gilbert and Guengant, 2001b). 4. RECENT CHANGES IN LOCAL FINANCES: ARE LOCAL AUTHORITIES “RISK-FREE PLAYERS”? 4.1. A growing macroeconomic weight (Table 2)
Overall, the APULs now account for between 5% and 10% of GDP, depending on whether account is taken of their
consolidated added value (400 billion francs in 1996 in relation to a GDP totalling 8 000 billion francs) and their budgets
are added up without consolidation (450 billion francs for the communes, 150 billion francs for groups, 250 billion francs
for the departments, and 100 billion francs for the regions). The trend is the same in both instances. Since the early
1970s, the weight of the APULs in GDP has risen by one-third but such growth is slowing gradually, with a marked drop
during the economic crisis of the 1990s, which strongly tightened up local budgetary constraints. 4.2. Budget control achieved at the cost of reduced investment
Local budgets, which, overall, are balanced, do not lead to macroeconomic risks.
Operating revenues, which grew in volume by 8% a year between 1970 and 1977, have barely risen by 3% since the
beginning of this decade, since the increase in rates does not offset the erosion of the tax bases.
Given that operating expenditures, especially personnel expenditures and social action expenditures, continued to climb
steadily (2 points higher than GDP in volume), the management surplus of local authorities gradually diminished. The
surplus is certainly comfortable and now stands at more than 25% before interest expenses are charged, but it did reach
a record level of 32% in 1989.
This sound budgetary performance could only be sustained at the cost of slower growth in capital expenditures, which
are more malleable than operating expenditures. Thus, unt...
View Full Document