1 Do new mayors know what is in store for them ? Will they have the financial resources to make the investments they have promised their electorate ? Is their financial independence real ? Now that there are no more allowances, and with tax leverage so difficult to use, what sources of funding do they have left ? Loans, which generate additional charges ? Cutting costs, which risks generating discontent (something an elected representative is loath to consider)? Make users pay for public amenities, or calling on the voluntary sector (already a reality in the UK)? Abandoning any hope of reforming local taxation and going back to sharing tax revenues between the State and local authorities, or even establishing a specific finance law for them ? But should the State have to continue providing resources, to accept the risk of the resulting future commitment ? The writing is on the wall : the time of triumphant local financial autonomy, as enjoyed by the “old mayors” following the original decentralisation laws, has gone.

2 As the opposite of the current situation, the transformations of the State as they began to take shape in the late 1970s came about against a backdrop of increased financial responsibility for local authorities, in the form of global loans and allowances. The Defferre laws of 1982/1983 applied and developed this concept, placing local financial power at the heart of a system understood unquestionably to be the ideal route out of the economic and financial crisis of the welfare state.

3 This approach opened the floodgates for decentralisation, with the mayor as the central figure on the front line in what came to be seen as “local power taking revenge over central power”, marked by a “withdrawal” of the State following a long history of interventionism [1]. The mayor, traditionally seen as a tenet of democracy bringing political power closer to the people, also came to symbolise an endogenous local economic development that promised a better world. Like pioneers in a new land, local elected representatives, transcending their differences (supporters of enterprise-based models [2] or conversely a model based on participatory budgets and self-management by the people [3]), all shared the same conviction that they would be able to achieve their objectives, despite the fact that deindustrialisation was disfiguring the landscape, unemployment was getting steadily worse, tax resources were beginning to run out and, conversely, public expenditure was increasing exponentially.

4 Building on this brand-new financial, fiscal and management autonomy, local elected representatives and civil servants nonetheless proved to be particularly creative, notably in developing synergies with local authorities, as well as between local authorities and the private sector. Local financial power was not subject to the same budgetary constraints as the State, which was beginning to take a backseat through the process of decentralisation. In this context, mayors were still able to remain optimistic, even if they believed that there resources were insufficient in consideration of the new responsibilities they were being given. In short, the much vaunted “municipal system” appeared to be a particularly efficient route for leading the State and the economy out of its difficulties. The local judiciary was thus able to take advantage of an unprecedented favourable situation that, although it appears to have lasted until relatively recently, nonetheless showed signs of very significant fragility. [4]

5 In this regard it is important to note the issue of controlling local expenditure, or rather the fact that it was increasing at a faster rate than State expenditure, which was posed in the late 1980s, at a time when decentralisation seems to be at its peak, consequently tarnishing the idyllic image presented until that time. The Feuilloley-Raynaud report [5] from 1986 had already highlighted this trend, backed up by figures, which it believed to jeopardise the sustainability of public finances, recommending that spending regulations be introduced to control this phenomenon. According to the report, reference standards needed to be set for local expenditure (such as the rate of increase of the State’s civil operating expenses). They could be mandatory provisions or guidelines, with the report favouring the latter solution, while nonetheless envisaging sanctions in the form of reductions to the total operating allowance if a local authority failed to comply with the standards.

6 This same line of thinking has persisted in recent years, both in the Balladur [6] report, a recent report from the court of auditors, and the report issued by the Lambert-Malvy committee [7].

7 Observing that the issue of local finance is “at the heart of any reform”, the Balladur report, coming 23 years after the Feuilloley-Raynaud report, again highlights the marked increase in local authority spending, and in particular the fact that it “ has increased more rapidly than national wealth over the last 20 years, in particular in consideration of the competencies transferred by the State, the resources of these authorities themselves only partially covering these expenses, despite the constitutional revision of 28 March 2003 established the principle of financial autonomy for local authorities”. Listing the main problems affecting local finance (“increased expenses, too much cross-financing, uncertainty over the fiscal autonomy of local authorities, question marks over the consequences of the anticipated withdrawal of business tax”) the report adds, in relation to potential solutions, that “all of these issues need clear answers”. It is not however in favour of a restrictive system, instead recommending “holding an annual debate in Parliament to set an annual growth target for local public expenditure” which would act only as a “marker”.

8 In its report of 14 October 2013 on local public finance, the Court of Auditors in turn highlighted the need to better control local authority operating expenses, and in particular expenses relating to staff remuneration. Notably, it recommends “drawing up reciprocal agreements between the State and local authorities concerning targets for controlling increases in civil service expenditure”.

9 The Lambert-Malvy report appears to reflect this recommendation in its handling of “collective control of public finance”.

10 The overall trend is therefore towards a reinforcement of State guidance of the financial system, with the objective of controlling the risk of collapse of the financial power and checking the excesses in public finances, and a related reduction in local financial autonomy. Should this be lamented or welcomed ? Should the objective not be rather to move beyond the State/local authority divide, to leave behind this limited concept of the State and public action, a concept that fails to recognise or formalise the multiple interactions and multi-rationality that characterise contemporary societies ? And finally, is it not worth exploring the possibility of building a system of relative autonomies organised both vertically and horizontally, i.e. transversely ?

11 There are a number of reasons to think so. Firstly, and barring any backtracking, we have to admit that the serious crisis affecting the public sector cannot be resolved by mere financial re-centralisation, but rather by interacting with social players [8]. We also need to admit that today’s context is very different from the 1980s, or even the 1990s. Since that time, the local system has changed considerably in terms of its very nature, as well as its internal and external environment. For this reason, and without thereby jeopardising the principle of free administration by local authorities, it would be beneficial to reorganise the local decision-making process. It would also be beneficial to consider and design a financial reform for the entire public sector, including setting up systems for ensuring consistency throughout the public finance system, thereby encouraging a shared vision for the development of expenses and revenues. It seems clear now that local financial autonomy has to be considered as part of public financial governance understood in a global sense. More and more, traditional vertical and horizontal synergies need to be complemented by transversal synergies. All in all, it is a new concept – admittedly less flamboyant than before – of local financial autonomy, that needs to be built by newly elected mayors. The challenge is unquestionably a daunting one.