How does a municipality draw up its budget?

The budget of a municipality is composed of income and expenditure. Here is how it is constituted

The recipes of a municipality

The revenues of a municipality are made up of State financing but mainly of local taxes.

Initially, local taxes are represented by the housing tax paid by all inhabitants and the property tax paid by property owners. All these taxes are calculated on the basis of the value of the rent on the properties and the rate established by the municipality and controlled by the State.

State funding is added to these tax revenues. Previously, the State managed the construction of primary schools, kindergartens and nurseries, for example. Outside of 1982, this activity has been delegated to the municipalities, which must therefore be able to assume them and ensure their proper functioning. The State therefore provides the municipalities with the necessary funding for this. This is called “Decentralization”.

Moreover, as rents vary from one municipality to another, the income from housing and property taxes can be very unequal from one municipality to another. In order to ensure equality between the territories, the State allocates more budget to the financially less wealthy municipalities. This concept is called “Equalization”.

Municipalities can also apply for loans from banks but only to make investments in sustainable facilities such as a leisure centre for example. It is therefore impossible for a municipality to get into debt to pay its municipal employees.

The expenses of a municipality

The expenses of a municipality can be mentioned in three points:

  • Operating expenses: Examples include subsidies to associations, salaries of municipal employees and mayor’s allowances.
  • Capital expenditure: urban development such as pavement, construction of a school, tramway line, sports facility, etc
  • The repayment of loans.
common expenses
Examples of expenses of a municipality

The implementation of a budget

Before April 15th of each year, the budget of the municipality is voted by the municipal council. The Municipal Council is an assembly of elected representatives that takes all decisions for the municipality.
To limit debt, especially after decentralization, almost all municipalities have decided to pool expenses such as waste and transport collection.

The objective is also to improve services and savings. Groups of municipalities have therefore been set up. These groups each have their own budget funded by the member municipalities. Depending on the number of inhabitants present in each group of municipalities, these groups are called: communities of municipalities, communities of agglomerations or urban communities.

Like government finances, community finances are of increasing interest to French people. They will therefore undoubtedly be at the centre of discussions during the upcoming municipal elections.