MUNICIPAL INVESTMENTS: RESOURCES AND ROOM FOR FINANCIAL MANOEUVRE
In Italy, local authorities used to contribute (before the Internal Stability Pact came into force) to 65% of overall national public investments, a share today decreased to 55%. The debt burden of municipalities amounts to 6% of the country’s total. The 2017 Budget Law is aimed at stimulating local investments, as part of a process of loosening the Internal Stability Pact (ISP). In fact, it allows local bodies to use fiscal surplus or liquidity resources in promptly enforceable investment projects, giving priority to school and seismic building renovation, up to a limit of 700 million. In Tuscany, 73% of municipalities have the resources and the corresponding cash from their balance sheets. The new rules replacing the ISP bind the investment funding scheme to capital revenues on a steady financial basis (480 million, as from the 2015 budget). The recourse to indebtedness, being the traditional method of financing investments, is only permitted to municipalities with a sound financial health (85%) and within the limits of their positive balances (500 million in 2015) which, at a steady state, should decrease to zero. More resources, for about 1.6 milliard at national level, will be provided by the “Suburbs Program”.
In conclusion, there is quite enough financial room for local investments, against the 550 million investment of 2015. The situation, however, will be more complex in the long run, when investments will only be covered by capital revenues (basically, urbanization fees, disposal of assets and structural funds), and by one-time expenditures allowed by the State.
Source: estimates from 2015 budgets
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