Local: decline in investment in 2009

Local governments have reduced their investments by 2.7% in 2009, according to the memo on the economy of the bank Dexia. Can we conclude that the stimulus package the government has been ineffective? No, say experts Dexia. The decline would have been far higher without the flagship of the plan, the repayment with a year ahead of the VAT if the community is committed to invest more. As a result of the election cycle, 2009 could not be a good year for investment. In the second year in office, mayors have not yet launched new sites. Evidence that the stimulus package has had a positive effect of joint investment has declined only 3.1% in 2009, when he fell from 7.9% in 2002, another year post-election .

Still, the financial community may raise some concerns.Again in 2009, their operating costs rose faster than revenues (4.7% against 2.7%). The balance between the two remains the beneficiary of 39 billion euros is indeed an obligation, communities had no right to have an operating deficit. But the mattress decreases. Infuriating when you consider the blow on the property tax, property tax and business tax that taxpayers suffer this year. The fault lies with the transfer duties, the famous "notary fees. Dependent on the housing market, they have dropped 26% this year. For departments, the loss reached 1.9 billion euros, exceeding one billion additional revenues associated with higher taxes. Meanwhile, because of the crisis, these same departments, which included support the RMI and the RIAA, have suffered a 5% increase in social spending.

However, the debate on local government spending is far from exhausted. Excluding transfers of state employees, their numbers grew by 34,850 people this year and personnel costs rose by 4.9%.

In addition, as the subject arose from the difference between revenue and expenditure decreases, communities need to invest into debt. Their debt grew by 4% in 2009, and this leads to 132.1 billion euros, or 6.9% of GDP. This year, lower interest rates has reduced the cost of debt for municipalities, counties and regions. But it will not last forever. Even without the reform of business tax, the financial stability of communities becomes more difficult. And the state is determined to limit the growth of the funds it pays them.Municipalities, counties and regions will in future make an effort on the expenditure or investment, or operation, the experts conclude Dexia. They noted that reflections on the mutual commitment and optimization of operating costs. Continued …

November 27th, 2009 in economics, money, news, publications, top news | tags: , , , ,