What financial health for the small towns of tomorrow?

This study provides a financial portrait of the communities grouped together in the "Small Towns of Tomorrow" program, led by the National Agency for Territorial Cohesion (ANCT) and supported by the Association of Small Towns of France (APVF). It is, like the Barometer of the Financial Health of Communities, published last June, based on the score assigned by the AFL to each community. Do these Small Towns of Tomorrow stand out from all French municipalities in terms of their financial health? How did these municipalities weather the shocks of 2023? Can we correlate financial health and the centrality costs borne by these municipalities?

A fourth edition of the Barometer of the financial health of the Small Towns of tomorrow, supported by the AFL, the ANCT and the APVF

This new publication is the result of a partnership signed between the National Agency for Territorial Cohesion (ANCT) in 2020, renewed in 2024, and the Association of Small Towns of France (APVF).

This overview of the financial health of the Small Towns of Tomorrow, established over the period 2019-2023, offers a focus on the municipalities concerned at the mid-point of the program and makes it possible to extend the lessons learned from the Barometer of the Financial Health of Communities published in June 2024. It places the data in a broader perspective, by comparing the financial scores awarded by the AFL and the centrality charges of the Small Towns of Tomorrow.

For Marie Ducamin, President of the Board of Directors of the AFL-ST: "The communities have shown real resilience in 2023, but at the cost of increasing heterogeneity between territories. This new edition of the PVD Barometer makes it possible to draw up an overall financial assessment of the exercise for these particular municipalities that are those of the "Small towns of tomorrow" program, and above all to highlight their atypical situation."

For Christophe Bouillon, Mayor of Barentin, President of the APVF and the ANCT: "The municipalities of the developing countries have managed to be the locomotives, in terms of investment, of their territory, while resisting inflation: this is one of the essential lessons of the barometer on the financial health of the developing countries. With 14 months to go before the municipal elections, we are entering the money-time for the realization of the projects of the mayors. The developing countries have healthy finances to achieve this. However, this sustained effort will require the support of all the actors of their ecosystem, with the ANCT and the AFL in the lead."

Healthy finances and budgetary profiles partially distinct from other municipalities

After the Covid pandemic, the increase in interest rates and the return of inflation, local authorities experienced another atypical year in 2023. While some encountered budgetary difficulties, others managed to invest massively, without deteriorating their financial balance. Despite a more difficult year and higher centrality costs, the developing countries municipalities managed to limit the gap measured with other municipalities of similar size and have better financial margins, by investing more.

In this regard, the developing countries municipalities have made a significant investment effort in 2023: +10% investment, with a total of €449 per inhabitant compared to €382 per inhabitant in non-developing countries municipalities.

Communal centrality: plural dynamics within developing country communes

Part of the Barometer analyses the PVD municipalities according to their level of centrality – intermediate, local and structuring – in order to highlight the trends specific to each group. It should be remembered that these municipalities were selected to be supported within the framework of the PVD program to help them meet their centrality functions.

The study shows us that the financial ratings of the PVD municipalities, of local and intermediate centrality levels, remained stable between 2022 and 2023, but remain slightly less favorable than those of the other municipalities. Conversely, the gap is widening between the PVD and non-PVD structuring municipalities, over the same period. It should also be noted that, whatever the level of centrality, the investment rate per inhabitant of the PVD municipalities is higher than that of the other municipalities.

Finally, one of the other lessons from this Barometer of the financial health of developing country municipalities concerns annual solvency, which improved for all of the municipalities studied between 2022 and 2023.

The question that arises is the capacity in 2024 for the developing countries' municipalities to maintain this level of investment. They will therefore have to, in a context where the communities must participate in the recovery of the nation's accounts, even more than in 2023, mobilize their cash flow and their borrowing capacity.

For Marie Ducamin: "Given the sometimes significant disparities between municipalities - whether they belong to the PVD program or not - and for a better understanding of financial situations and trajectories, an analysis by municipality is preferable. The AFL teams are at your disposal to determine the investment and borrowing capacity of each municipality. As a bank for local authorities, the AFL also has the mission of offering municipalities this financial engineering and supporting them in carrying out their projects."

The study can be found in full here.

Illustrative image of the article via Depositphotos.com.