The analysis by the Public Finance Council (CFP) on local administration accounts from the previous year shows that the surplus achieved was significantly below the forecasted 474 million euros, as stated in the report accompanying the State Budget proposal for 2024 (OE2024).
The CFP notes that the results are based on public budget accounting values from 305 of the 308 municipalities (five more than in 2023), due to “lack of information” in both budgeting and execution processes.
Regarding revenue, there was a 10% increase (1.1 million euros), “driven by increased transfers from the Central Administration,” both “traditional under the Local Authorities and Intermunicipal Entities Financial Regime (RFALEI) and through the Decentralization Financing Fund.”
Municipal tax revenue, one of the main sources of income for municipalities, grew by 2%, a slower pace than the 2.6% recorded in 2023.
Meanwhile, effective municipal expenditure rose by 7.9% (900 million euros), “driven by primary current expenditure,” with notable increases in the acquisition of goods and services (13%) and personnel expenses (7.2%), justified by the decentralization of competencies and “salary increases.”
“It is important to note that the available data still do not allow for a solid and accurate determination of the expenditure amount of municipalities resulting directly from the decentralization of competencies. This situation results from strong data limitations, already addressed in the CFP Report on the budgetary evolution of local administration in 2023,” the Public Finance Council highlights.
Despite these limitations, information obtained by the CFP indicated a decrease in non-financial liabilities, accounts payable, and overdue payments in 2024, while the average payment period for municipalities “worsened by one day, reaching 22 days, despite unavailability of data for 17 of the 308 municipalities.”
The report also mentions that the total municipal debt for 303 out of 308 municipalities (including financial and non-financial debt), which is considered to calculate the legal debt limit, increased by 80 million euros (2.3%) to 3.624 billion euros.
However, “based on this indicator alone,” at least 10 of the 303 municipalities for which information is available “were still above the total debt limit on December 31, 2024,” two fewer than at the end of 2023.
This trend reflects the debt increase observed in 112 municipalities (increase of 360 million euros), which more than offset the increase reported by the remaining 191 municipalities (280 million euros).
In the report, the CFP also warns of the need for “strengthening transparency, timely reporting capabilities, and municipal fiscal autonomy,” which are deemed essential “to ensure budgetary sustainability of the sub-sector.”
