Kahn’s finances are ‘healthy enough’ to get through tough years

Caen town hall cloister
With “limited” borrowing and ever-falling operating costs, the financial position of the city of Caen (Calvados) remains “healthy”. But the cost of energy and the savings that the state will soon demand may lead to an overload of the balance sheet in the future. ©Archive Margot Rousset – Svoboda

For the last municipal council before the summer holidays, elected representatives Caen (Calvados) worked for Accounts cities this Monday, June 27, 2022. Together, Mayor Joel Bruno and his financial assistant Michel Le Lan reviewed a balance sheet with “excellent fundamentals that remain healthy.” Compared to other cities of the same size, they say, “investment capacity is significant” and “limited access to debt.”

New savings and inflation at the same time

But both agree not to promise a bright future. “If the situation is healthy in 2022,” they repeat, “there will be many uncertainties in the future.” Which?

  • Joel Bruno is already pointing to the “euro 10 billion savings effort requested by the state from the communities”. Not having “much more information”;
  • the mayor also mentions “short-term inflation”. Fueled by booming energy prices. In his words, “We are moving towards tighter times for communities. Michel Le Lan assures him: “Until now, we have kept our energy costs at 5 million euros per year. We managed to prevent an increase in the account. How? Thanks to “sufficiently protective and reassuring contracts.” The problem is that they are being renewed and reviewed in 2023. Like the one for “15,000 city lighting points.” As a result, “fixed costs will increase, will have to be more and more strict.”

Faced with these bleak prospects, the city of Caen will have opportunities as a guarantor that other comparable communities do not.

First, the use of debt. At the end of 2021, Kahn’s debt stops at 89 million euros. It will even reach “120 million euros in 2026”, admits Michel Le Lan. For the finance assistant, “the ability to repay debt is as important as the level of debt itself.” He is delighted: “With the gross savings we have of €15.88 million, we are able to pay off our debt of €89 million in 5.6 years, which is a very favorable ratio. “According to Joel Bruno, Tours, for example, had to increase its gross savings by 10% “so that it doesn’t take more than 15 years to pay off.”

However, on the other hand, the ability to self-finance has declined somewhat, with gross savings falling from 18 million euros to less than 16 million euros in two years. On the contrary, working capital increased to 4.6 million euros and attracted 15 million euros of new loans “at a rate of 0.5% for 15 years.”

More than 30 million euros invested

The mayor’s office also prides itself on keeping operating costs under control, despite this “first year without housing tax”, which is actually compensated by the state, and the collection of property tax from the Council of the Department of Calvados. Between 2020 and 2021, it will fall by just under 1 million euros to 121 million euros. With a very small reduction in staff costs, just before the city has to increase the pay of its public employees. The upcoming purchasing power law could raise the index point by 3-4%.

In 2021, the city of Caen confirms this by being able to channel more than 31 million euros into investments. According to Michel Le Lan, on average for two Joël Bruno mandates, the city spends more than €37 million per year on investments “instead of €25-27 million per year between 2008 and 2014”. Investments are mainly focused on cultural and sports facilities such as the Saint-Jean-Eudes sports hall or the Théâtre des Cordes. Even buying new parking meters. “Our heritage is rich,” notes Joel Bruno, “but it requires a lot of maintenance.” From 2022 and “in subsequent years”, the mayor announces “several projects in schools.”

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Austerity logic without arbitrage

As for the municipal opposition, Rudy L’Orpheline, leader of the Caen environmentalists and citizens group, deplores this: “We must start looking at 7e administrative report of Joel Bruno since his election in 2014. The budget philosophy has not changed much. »

Namely, in his words:

Track operating savings wherever possible, especially on human resources, to free up margin for investment or, initially, to fund promised tax cuts to snatch the mayor’s seat.

Rudy Sirota

For his part, he stigmatizes “the logic of austerity” based on “pieces of justification for moderate leverage, cutting operating costs and stability in staff costs.” He puts forward this:

What do these indicators tell us about the real state of our equipment or assets? Almost nothing or next to nothing. »

Not surprisingly, the elected oppositionist recommends instead “invest in the ecological transition, live better in terms of employment, quality of life or purchasing power.” And he regrets that Joel Bruno’s municipal majority does not even act as an arbiter “between questions related to the end of the world and questions related to the end of the month.” Rudy L’Orfelin fears “a return to a new course of fiscal austerity.” And challenges the mayor: “Are you going to support this policy? We expect you to disclose your intentions and choices in full transparency. »

“Means that others don’t have”

In response, Joel Bruno is relying on this “good management” to get through the difficult years ahead: “We are really concerned about the prospects. Our room for maneuver will be reduced. You should congratulate yourself that the city of Caen is entering this period with resources that other communities of the same size don’t have. »

For him, his vision – “the one that you accuse me of from the beginning” – remains “to develop the city, improving its attractiveness, we must be able to print this pace of progress.” By the way, he could not contain this approach to the opposition: “I understand that you are worried when we simultaneously lowered taxes, increased investment spending and improved the service of the senets. I don’t mind this apocalyptic description, but it’s based on nothing but words. »

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