Mayors worried about funding

PRIME Minister François Fillon is set to face a difficult audience this afternoon as he addresses the conference of the mayors of France – many of whom are worried about their finances.

Faced with cuts to funding in the government’s austerity plan and with difficulties in accessing loans, this is proving a difficult year for the 36,000 mayors of France, around 7,000 of whom are thought to be attending their annual conference, at Porte de Versailles, Paris. They are worried about balancing the books for this year and funding their 2012 budgets.

Pundits are asking whether Fillon will be booed, as happened last in 2009. Meanwhile, according to La Tribune out of 40 mayors invited to dine at the Elysée tomorrow by President Sarkozy, half have declined.

Local authority financing is facing an uncertain future, partly due to the problems being faced by their traditional bank, Dexia, of which the “dismantling” into separate bodies was recently announced in a bid to stave off bankruptcy. It emerged earlier in the year many councils are also struggling to make repayment on certain loans from the bank that have become “toxic” due to being pegged to the euro and Swiss franc exchange rate.

They have also faced reductions in funding due to changes in the system of local professional tax which came in last year.

Difficulties in obtaining credit meant the government had to release €3 billion via the Caisse des Dépôts to allow the councils to meet their responsibilities this year and a new agency for local authority financing is planned – but will not be operational until the end of next year.

A plan to redistribute government funding between the richest and poorest communes, called “horizontal balancing out”, meant to come in next year, is also controversial.

The president of the Finance Committee of the Association of Mayors of Large Towns, was quoted in Les Echos saying: “For 2012 some of us don’t know how our investments are going to be financed,” while Mayor of Nice Christian Estrosi said: “The financing crisis of our councils is more serious and deeper than people realise.”