MIL-OSI Translation: Municipal finances 2020: an overall positive exercise

1

MIL OSI Translation. Government of the Republic of France statements from French to English –

Source: Canton of Jura Switzerland in French

The Jura municipalities made an overall profit of 10.9 million francs in 2020. They made investments for an amount of 36 million francs. However, the financial indicators show that debt remains high. First financial year established under the new harmonized accounting model, the results for the year 2020 must be considered with caution due to the health crisis and the significant disparity recorded from one municipality to another. The introduction of MCH2 also required a complete overhaul of the Report on municipal finances, which now takes into account ten financial indicators and which allows for improved comparability of data on municipal finances.

Since the 2011 accounting year, the cantonal report on municipal finances has presented the main elements relating to the annual accounts of the Jura municipalities. On the basis of the data collected by the Delegate for municipal affairs, the consolidated results of all the municipalities, as well as the balance sheet, indebtedness and investments, summarized according to a certain number of financial indicators, make it possible to objective assessment of the financial situation of municipalities.

A complete overhaul of the report on municipal finances

The introduction of the new accounting model (MCH2) from the 2020 financial year has considerably changed the way of accounting for entries in the accounts of municipalities and other corporations governed by public law. The annual report has therefore been completely overhauled to adapt to this new accounting model. There are now ten indicators which make it possible to assess the financial situation of municipalities. The new MCH2 accounting system does not allow comparisons to be made with data from previous years established with the MCH1 accounting model. The form of the report has also been revised. It is available via the following link: www.jura.ch/rfcom.

A consolidated profit of 10.9 million francs

The 2020 financial year, the first closing under the MCH2 regime, shows a consolidated profit of 10.9 million francs. This result is obtained by the profit from operating profit, in the amount of 13.6 million francs, from which is subtracted the allocation to the budgetary policy reserve, in the amount of 2.7 million francs. While the Covid-19 pandemic raised fears of negative financial effects for municipalities, it is gratifying to note that this has not been the case. In addition to the profit made, the municipalities as a whole were able to build up reserves. The general decrease in activities in 2020 and the stability of financial income (taxes and duties) explain this situation.

In connection with this positive result, the municipalities’ net investments amounted to 36 million francs. The financing surplus amounts to 1 million francs, which indicates that the municipalities have been able to invest without increasing their indebtedness.

As of December 31, 2020, the gross debt of all municipalities amounted to 587.7 million francs (7,973 francs per inhabitant). As for net debt, which corresponds to all debts less financial assets (335.9 million francs), it amounts to 285.3 million francs (3,871 francs per inhabitant).

A generally satisfactory 2020 financial year to be considered with caution, however

The generally positive financial situation of the Jura municipalities for the 2020 financial year has enabled a majority of them to make budgetary policy reservations, which bodes well for the future. This positive result should not, however, elude the fact that indebtedness remains high. On the other hand, the excellent results recorded in some communes have the effect of improving the overall situation of all the communes. In addition, the year 2020 was marked by a pandemic which had a significant impact on the usual functioning of public authorities in general and municipalities in particular, in particular due to a significant reduction in activities. At the same time, the effects of the health crisis have been very disparate on the taxation of companies and individuals from one municipality to another. The results for the 2020 financial year in the municipalities must therefore be considered with all the necessary caution given the general context and the major disparities between municipalities.

On the other hand, a trend has been confirmed for several years: the financial situation of municipalities with less than 500 inhabitants remains fragile. Most of these municipalities need financial equalization assistance to balance their operating account. Some of these municipalities do not have the means to invest in order to develop new services. Reflections with a view to merging municipalities seem inevitable for a good part of these municipalities.

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

MIL Translation OSI