Giuseppe Pagano

Pouvoirs locaux: entre transparence et refinancement

The control and the funding of cities, communes and provinces is one of the major stakes ahead of the regional election of June 2009. The following sections discuss four topics : the Communes Fund, the control regulations, the role of provinces, and the possible introduction of ESA standards on local level. The Walloon Region decree of July 15, 2008 reshapes in depth the Communes Fund for the first time since 1989. The new mechanism is more transparent and objective. It applies from 2008 on, but its effects on the financial situation of the communes will be marked mainly in the future. With the decree of November 22, 2007, and a new general regulation for communal accountancy the current Walloon government and parliament have also taken new measures to improve the respect of legal budgetary procedures by the local authorities. However, another, perhaps more efficient approach could be the creation of an external control body with broad powers of investigation, on the model of the federal Court of Auditors. As far as provinces are concerned, the main debate is not so much about the way they are funded but more fundamentally about their very role. The creation of Regions and Communities and the merger of communes have reduced the need for another intermediate political authority. Therefore the transfer of competences from the provinces to the Regions or Communities is sometimes seen as a rather simple way to reduce the overall government expenses. However, the economic composition of provincial budgets, in which wages and debt amount to more than two thirds of the total, strongly reduces the amount that could be saved. Nevertheless, the forthcoming legislature could be used by the provinces to analyze the fields in which their presence can foster a more efficient provision of public goods. Communes, cities and provinces belong to the sector of public administrations, known under ESA terminology as « Sector 13 ». Their budgets are therefore included in the computation of public deficit and debt used for the European Excessive Deficit Procedure. However, their current accountacy system is not shaped in accordance with ESA standards. Their budgetary realisations are translated into ESA terms by the Institute for National Accounts. The forthcoming legislature could be used to adapt the current system to ESA requirements. JEL Codes – H1, H4, H7.