The Council of Public Finances (CFP) released an analysis of the local administration accounts for the past year, indicating that the budgetary surplus did not meet the expected 474 million euros forecasted in the State Budget proposal for 2024. This analysis draws on provisional accounting data from 305 of the 308 municipalities, an increase of five from 2023, owing to ‘lack of information’ both for budgeting and execution processes.
Revenue showed a 10% increase totaling 1.1 million euros, bolstered by increased transfers from Central Administration, both through the Local Government Financial Regime (RFALEI) and the Decentralization Financing Fund. Municipal tax revenue, a primary income source for local authorities, increased by 2%, a slower pace than the 2.6% growth recorded in 2023.
Municipal effective expenses rose by 7.9%, reaching 900 million euros, primarily driven by current primary expenses, with significant increases in goods and services acquisition (13%) and personnel expenses (7.2%), attributed to the decentralization of competencies and ‘salary valorizations’.
The CFP emphasizes that available data remain insufficient for accurate and thorough determination of municipal expenses directly resulting from the decentralization process. These data limitations were highlighted in the CFP’s report on budgetary evolution in local administration in 2023.
Despite limitations, CFP’s findings indicate a reduction in non-financial liabilities, outstanding accounts, and overdue payments in 2024. The average payment period for municipalities worsened by one day to 22 days, with data unavailable for 17 out of 308 municipalities.
The report notes an increase in total municipal debt by 80 million euros (2.3%), totaling 3.624 billion euros across 303 of 308 municipalities. This debt level is considered when calculating legal borrowing limits. As of December 31, 2024, at least 10 municipalities still exceeded the total debt limit, down from 12 at the end of 2023.
This trend reflects a 360 million euro debt increase in 112 municipalities, outweighing the 280 million euro increase reported by the remaining 191 municipalities.
The CFP also underscores the necessity for ‘enhanced transparency, timely reporting capacity, and municipal fiscal autonomy’ as essential factors for ensuring budgetary sustainability in the sector.
