Territorial finance in Italy. 2012 Report

The 2012 Report on territorial finance in Italy analyzes the profound changes in public finance occurring in these difficult years of economic downturn, with a special attention to local and regional finances. The instability of financial markets in the international scenario, as well as the tougher measures to tackle debt are imposing a radical revision of the welfare model adopted so far. As local authorities were summoned to play their part in the rebalancing game, the report investigates the impact of government’s measures on the supply of services to citizens and its territorial articulation. Analyzing trends in budget indicators allows to examine the reaction of administrations to the financial measures, and their strategies to preserve investments and protect public services. Territorial authorities are indeed caught in a double bind: the growing demand from service users, hit by the crisis, and the larger budget and staff constraints. Since some taxes are allocated on an equal revenue basis, fiscal responsibility is handed down locally but no new resources are made available. A relevant factor in the way public administrative structures are evolving is that of institutional settings. The first part of this year’s report deals with the recent financial trends, while the second part is uniquely devoted to specific regional experiences, like the merging of municipalities and the prospective impacts of the reorganization of provinces. The third part, as is customary, compares the events taking place in our country with international experiences.