Valérie Pécresse takes legal action against the regional financial solidarity system

The president of the Ile-de-France region, Valérie Pécresse, and the mayor of Paris, Anne Hidalgo, during a m*** led by Laurent Ulrich, archbishop of Paris, in the Saint-Sulpice church, in Paris, on 23 May 2022. BERTRAND GUAY / AFP

Is Ile-de-France a victim of solidarity between regions? This is what Valérie Pécresse (Les Républicains, LR) seems to think. The president of the regional council considers that the current interregional equalization system disadvantages Ile-de-France residents. Ile-de-France pays far too much for the others and Mme Pécresse decided in 2023 to ask the courts to condemn this “unfair device”. The administrative court of Paris was seized on February 28 to judge the legality of the prefectural decree of December 31, 2022, which sets the contribution of Ile-de-France at 1.85 million euros. A priority question of constitutionality was also put to the Council of State.

If Valérie Pécresse wins her case, it will have the effect of a bombshell concerning all the financing of local authorities. The general manager of regional services is taking precautions: “We have no problem with the principle of equalization, consisting in the territories that are objectively the best endowed being in solidarity with those that are less endowed”, explains David Bonneau. The problem, he says, is that Ile-de-France is the only one to show solidarity with everyone. According to Mme Pécresse, since the scheme was created in 2013, it has financed 97% of funds paid to other regions.

And, when the business value added contribution (CVAE) was reformed in 2021, the vase overflowed. The municipalities and departments will no longer receive the CVAE from 2024. But it had already been abolished for the regions two years ago. And these resources were then replaced by a share of VAT shared between them.

However, during this reform, “We have frozen an already unfavorable historical situation in Ile-de-France. And that resulted in an extra drain on the region”, deplores Mr. Bonneau, who also considers that, since the CVAE (paid by companies to their local authorities) has been replaced by a share of VAT collected at national level, equalization is no longer justified. Especially in a context where the state is gradually eroding the power of local authorities to raise taxes. The share of regional taxation linked to the Ile-de-France territory fell from 84% in 2019 to 24% in 2024.

“Undeniable additional costs”

The regional council makes two basic criticisms of the system. The purpose of equalization is that the revenues of the regions all evolve more or less at the same rate. However, this is not the case: those of Ile-de-France progressed less quickly (17%) between 2007-2009 and 2017-2019 than those of all the regions (39%). Valérie Pécresse told the prefect on March 30. Revenue per capita, she continued, is only 310 euros in Ile-de-France, against 391 euros elsewhere. “A counter-equalizing effect”, denounces David Bonneau. So much so that the efforts made by the regional executive to save money paradoxically benefit other regions more than Ile-de-France residents. “Ile-de-France is the only region that has lowered its operating expenses five years in a row”recalls Mr. Bonneau.

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