Here we return to the issue of the debt of the municipality and the metropolis, which, as it is very easy to foresee, will be one of the central themes of the upcoming election campaign. Talking about debt? To say what?
While it is easy to agree that it’s better not to have debts (even if some economists theorize the benefits of debt as a tool for growth), if necessary, the main parameter to take into account is not the amount but the solvency and the debtor’s ability to handle the debt, namely, to pay the interest and repay the capital. This preamble, to then proceed to the definition of debt itself.
Well, here too, there’s no mystery: As there is good and bad cholesterol, there is also good and bad debt.
The former is the one used to finance investments (in the broadest sense) which, if productive, will generate an economic return that will allow the debtor to pay off their debt and profit from it. The other, the bad one, is when the financed investments turn out to be negative and lose the invested money or when this money is used to finance current expenses.
Finally, to make the headlines, beyond the basic and conventional principles (for example, the one from the Court of Auditors that has set the threshold for the capacity to get out of debt for public entities at 15 years), oh yes, there is no magic formula to determine what the optimal amount of debt is!
Economics, despite the massive use of mathematics, remains a social science and not an exact science like physics or chemistry.
So, beware of those who (self-)proclaim themselves inventors of new formulas or harsh judges of those applied by others.
In the end, economic theories explain that each economic situation has its dominant pathology and the economist must act as its physician. In this case, it would be good to remember that the fundamental principle of medicine remains “primum non nocere” (first, do no harm).
That’s why the ongoing debate seems rather off-topic. And then experience tells us that too many doctors at the patient’s bedside often end up having a fatal effect.
Christian Estrosi’s statements regarding the Government’s fiscal policy, its impact on the finances of Nice and the Metropolis, and his strategy and action concerning the financial future of the city of Nice have provoked (what else is expected and legitimate?) reactions from his opposition.
We hereby publish two contributions in their entirety.
The mysterious seventh fiscal year of Christian Estrosi.
The Mayor of Nice, probably too preoccupied with his desire to uncover the files of his -thankfully very hypothetical- future Ministry of Culture, seems to have lost sight of some essential data of the mandate he occupies. Among these, let me very humbly remind you that a Mayor is elected for six years.
Six years is not five years.
Yet, Christian Estrosi, who loudly proclaims that he has not raised taxes for five years, omits – no doubt totally unintentionally – to mention that he increased the rates of the communal share of local taxes by 17% as soon as he took office… A simple little year of mandate forgotten; a trifle when you know that this colossal increase, which adds to the annual revaluation of the bases, impacted all the budgets of the following years.
Six years is not seven years.
Ultimately, over the total duration of the Mayor’s mandate, it is not six, but indeed the equivalent of seven fiscal years that the people of Nice will have paid during this mandate. A nice nest egg that one can be surprised did not lead to better investments, the implementation of ambitious projects, the realization of necessary works, or the financing of expensive infrastructures now acquired on credit…
Because there lies the whole mystery of the budgetary estrosism: by his sole will, he made an additional fiscal year of revenue appear, by his sole will, he mortgaged those of the decades to come.
Gaël NOFRI Director of Campaign of the FN list in Nice / President of Nice Génération Espoir
On the contrary, we should address the rates of local taxes!
It is surprising to hear Christian Estrosi declare: “since 2008, the municipality has not touched the various tax rates within its competence” [1]. It is appropriate to remind elected officials with memory troubles that, on February 13, 2009, the Nice municipal council voted a 14.8% increase in the rate of the housing tax, the tax on built property, and the tax on unbuilt property!
As for Christian Estrosi’s new commitment “not to touch the rates of local taxes in the coming years” [2], it is questionable…
Indeed, the advent of intercommunality (creation of the community of agglomeration in 2002) and its rise in power (transformation into an urban community in 2009, then into a metropolis in 2012) has led to a massive transfer of the city’s most significant competences to a public establishment of intercommunal cooperation. Evidently, the management of transferred competences on behalf of 46 municipalities should have generated substantial savings of scale. This was even the stated objective of intercommunality!
Moreover, the mutualization of the services of the city of Nice and the metropolis, launched in 2010, continues to rise in power. Here too, this new organization should have led to a substantial reduction in operating expenses.
Logically, it is therefore not the maintenance of the current rates of local taxes that should be announced… but their decrease!
Jean-Christophe Picard President of the PRG 06
[1] Cf. Direct Matin Côte d’Azur, edition of October 24, 2013.
[2] Cf. Nice-Matin, edition of October 24, 2013.
