The Court of Auditors calls for a reduction of 100.000 jobs in local authorities

"Staff costs, which represent a quarter of local authority expenditure, are experiencing sustained growth, mainly driven by the 'communal bloc'", namely the municipalities and inter-municipal authorities, the Court observes in a report, at a time when France's public deficit is expected to exceed 6% of GDP in 2024.

"While the workforce has increased significantly until recently, despite the absence of new transfers of skills, controlling their development is a central issue," the magistrates emphasize.

The Sages of Rue Cambon specify that the "increase in staff numbers (since 2011) has mainly concerned inter-municipal authorities", which have developed over this period, and "has not been compensated by an equivalent decrease in the municipalities".

They recommend a "gradual return of local authority staff", which employ around 2 million people, "to their level of the early 2010s", i.e. a "reduction of 100.000 jobs", which would save 4,1 billion euros per year from 2030.

This potentially explosive proposal, the motivations of which are contested by local elected representatives' associations, echoes that of Emmanuel Macron, who in 2017 considered cutting 120.000 civil service jobs.

"Territorial staff cannot be reduced to an accounting issue," said the president of the Association of Mayors of France (AMF) David Lisnard in his written response, recalling that inter-municipal authorities "are entrusted with skills that are not always previously exercised by the municipalities."

The magistrates of the Court of Auditors are defending a "pooling scheme" between the different levels of local authorities which "must enable public services to function better".

In its outlook for 2024, the Court estimates the increase in local authority operating expenditure over the first eight months of the year at +5,4%.

In addition to personnel, they are driven by purchases of goods and services boosted by inflation, as well as by social spending linked to the increase in precariousness.

"Skid"

Investment spending is also accelerating due to the "municipal electoral cycle", which logically sees the projects voted on at the start of the mandate come to fruition.

However, not all communities are in good health, the report acknowledges. As in 2023, municipalities and inter-municipalities are doing well, but this is less the case for regions, and even less so for departments, which have been largely weighed down by the fall in transfer taxes (DMTO) levied on real estate transactions.

In terms of revenue, VAT revenue, which replaces the housing tax on primary residences, will not be as good as hoped, so much so that the financial trajectory of local authorities "is slipping more and more" compared to what was predicted in the 2023-2027 public finance programming law, warns the Court.

While Prime Minister Michel Barnier wants to bring the public deficit below 3% of GDP by 2029, the Court is imagining avenues for "participation" by local authorities, recalling that the latter represented 17,8% of public spending in 2023.

The report recommends "massifying and pooling purchases" between communities, a potential source of 5 billion euros of savings per year, and refocusing their investments on the ecological transition.

Rather than controlling expenditure, which is firmly opposed by local authorities in the name of the constitutional principle of free administration, the magistrates are counting on a "slowdown in the growth of revenue".

This could involve ending "indexation of property taxes on inflation of cadastral rental values" or "capping part of the VAT dynamic", the primary source of income for local authorities.

"We cannot subscribe to a proposal that involves inducing (...) a scissor effect in the budget of local authorities," responded the president of France urbaine Johanna Rolland. The AMF denounced the "brutality of these proposals", which it said would lead to "an unprecedented weakening of the municipal bloc's capacity to act."