sou · GZB359 · 2011-09-15 00:00:00 — The link between the state of the economy and net lending has become slightly weaker in recent years, perhaps due to the balanced budget requirement. The fact that net lending has become less variable means that the automatic stabilisers in the public finances have weakened. This means that in so far as cyclical impulses are not reflected in net lending, they will instead generate cyclical effects on the expenditure side. The purpose of analysing the cyclical sensitivity of local govern- ment finances has partly been to show whether there is a need to stabilise or smooth revenue over time in order to increase stability. A smoothing effect can be achieved by giving municipalities and county councils greater freedom to smooth out revenues between years or by central regulation of the flow of tax revenues and central government grants, or a combination of the two. What is the situation in other countries? The Inquiry has taken an international outlook and studied how other countries have solved their problems with cyclical variations so as to prevent their having too great an impact at local level. The Nordic countries and some other European countries have been studied, as well as the and . Compared with the situation in , central government control is often stronger and central government accounts for a considerably grea- ter proportion of financing. Various forms of balanced budget requirements and local regulatory funds are common. While the systems and solutions used vary, there are no new and different solutions that are directly transferable to Swedish conditions and the Swedish model of local government autonomy. The most important lesson to learn concerns the more institutionalised forms of net lending that exist in certain countries. The local government balanced budget requirement from a business cycle perspective The local government balanced budget requirement is very impor- tant for promoting sound economic management by municipalities and county councils. The economic analyses also show that vari- ations in local government sector surplus and net lending can be one of several shock absorbers counteracting cyclical variations in services. , municipalities and county councils themselves can manage variations, given reasonable conditions. On the whole, the financial situation of the local government sector has improved considerably following the introduction of the balanced budget requirement in 2000. In 2010, virtually all munici- palities and county councils reported surpluses. However, their equity ratio has not notably improved over this period if the calculation includes local government pension commitments. The purpose of sound financial management is to create a sus- tainable economy, and the purpose of the balanced budget require- ment is to prevent the economy from being undermined by requi- ring current revenues to cover current costs. According to the Inquirys investigations, the balanced budget requirement has brought a greater focus on economic issues in municipalities and county councils, and it has therefore also led to better financial management. It thereby strengthens the ability to manage the economy, but it can also lead to short-term measures with results that, while certainly rapid, are sometimes undesired. The Inquirys investigations show that municipalities and county councils vary relatively widely in their interpretation and application of the concept of sound financial management. In many cases there is a tendency to be short-sighted, focusing more on meeting the balanced budget requirement in a single-year per- spective than on achieving sound financial management in the longer term. There is an asymmetry to the balanced budget requirement in that surpluses are to be used to strengthen equity while deficits, in principle, are to be rectified within three years. This asymmetry can be said to discourage savings and can lead municipalities and county councils to opt for creative accounting instead, redistri- buting revenue and costs between years in order to deal with vari- ations in revenue caused by cyclical fluctuations or other factors. The current regulations governing the balanced budget require- ment are not perceived to be fully clear and transparent. On an overall assessment, the balanced budget requirement has helped to reinforce sound financial management by putting a greater focus on the economy and improving the financial position. Having said that, the requirement can be said to have had the effect of limiting the possibility of sound management by not clearly allowing savings for cyclical variations that can be used to cover deficits in times of recession. This can lead to short-sighted cut- backs in the local government sector during recessions and over- heating during upswings, which can have a detrimental impact on the national economy. The Inquirys investigations thus confirm previous findings that the balanced budget requirement is associated with certain pro- blems that discourage cyclical savings, while there is a need to strengthen efforts to achieve sound financial management. A clearer focus on sound financial management makes municipalities and county councils better prepared to meet the balanced budget requirement even in times of recession, without needing to resort to temporary cutbacks. In light of the analyses of cyclical sensitivity and the application of the balanced budget requirement, the Inquiry proposes that the regulations on financial management be amended and strengthened so as to promote stability by means of increased local responsibility for stabilising revenues over time. Under the proposal, as part of sound financial management and provided certain conditions are met, municipalities and county councils will be allowed to build up local regulatory reserves that can then be used to cover deficits. The proposals mean, in brief, that: A possibility will be created for municipalities and county councils to build up local regulatory reserves that can be drawn on to meet the balanced budget requirement when revenues are weak. Funds may be added to the reserve when the financial position satisfies certain requirements. The surplus and deficit statement in the annual report will be clarified. Municipalities and county councils will decide on regulations for sound financial management and the management of the regulatory reserve, and will develop the financial analysis in the annual report, for example by presenting an evaluation of the financial position. The proposals will strengthen sound financial management and increase local responsibility for cyclical savings over time. Reporting of local government pension commitments The Inquiry has also had the task of analysing the regulations on reporting local government pension commitments from a business cycle perspective. The analysis shows that the fully funded model is more sensitive to cyclical variations than the mixed model. The Inquiry does not propose any changes in the rules for reporting pension commitments. However, the opinion is expressed that this issue could be further investigated based on aspects other than the business cycle alone. A central system for stabilisation of local government revenues The Inquiry has studied the possibility of introducing a centralised stabilisation fund aimed at stabilising local government sector reve- nues over the business cycle. The purpose of a central stabilisation system is to redistribute revenues over time so as to promote stable local government ser- vices and, ultimately, benefit the stability of the national economy. However, a stabilisation of revenues does not necessarily lead to stable services. The requirements formulated by the Inquiry are that a stabili- sation system should be reasonably robust to changes in the eco- nomic pattern without giving rise to major financial imbalances. It should be governed by rules and its parameters should be sustaina- ble in a multi-year perspective. The system should be based on the nominal growth of the tax base. In addition, a system should be simple and comprehensible so that its purpose and substance can be understood, and it should not create incentives that run counter to the purpose of the system. A stabilisation system means that, in principle, local govern- ment revenues are reduced during upswings and increased during downturns in the economy, and over time the payments out of and into the system should be in balance. The definition of upswing and downturn is key and determines how far-reaching the stabili- sation will be. The Inquiry has analysed a stabilisation model in which pay- ments both out of and into the system depend on the state of the economy, and a model in which outgoing payments depend on the state of the economy while incoming payments are fixed relative to the tax base. A model in which both incoming and outgoing payments depend on the state of the economy – a corridor model – aims to moderate both weak and strong growth in the tax base. A model with outgoing payments that depend on the state of the economy and fixed incoming payments – a guarantee model – is primarily designed to counteract weak growth. A combination of the two models is also possible, i.e. a corridor model with both cyclically dependent and fixed incoming payments. Each stabilisation model has advantages and disadvantages. As a general point, it can be stated that the more far-reaching and strong the stabilisation aimed for, the greater the risk that the system will be unstable and difficult to calibrate for different economic dev- elopments, if the system is to be in financial balance. Different models vary in how well they work, depending on the aim – e.g. counter-cyclical effect or safety net in a crisis. The Inquiry presents estimates for different models, using both historical data and future scenarios, together with the advantages and disadvantages that arise based on the requirements that are set. The more far-reaching a stabilisation system is made, following the designs described here, the more often it needs to be followed up, checked and calibrated to avoid imbalances. This applies to the corridor model in particular, and increasingly so the narrower the corridor is made. A system that requires frequent adjustment har- dly helps to create stable conditions for planning, whether at local or central government level. Payments into and out of a system must be in balance over time. However, the calculation examples show that it can be difficult to calibrate a system to achieve this. This means that a system may need to be capitalised before it enters into effect, or be linked to a credit line. Otherwise a long build-up period will be required, with only incoming payments. An alternative means of achieving stabilisation is to change the payment system for local government taxes. Such a solution also entails a risk of major imbalances arising. Another possibility is to introduce a central government grant adapted to the state of the economy. The Inquiry proposes the introduction of a central stabilisation system, intended primarily to provide protection in a crisis when it is unreasonable to expect individual municipalities and county councils to have their own preparedness. This system will be in the form of an income guarantee designed to create stability in a crisis in which the local government tax base is experiencing very weak growth. Under the proposal, a local government stabilisation fund will be established from which municipal and county councils will be able to receive grants when their tax base is growing at less than a guaranteed rate of 2.2 per cent. It is proposed that the fund be financed by having municipalities and county councils pay in an annual stabilisation contribution of a total of 0.15 per cent of the local government tax base. This is equivalent to approximately billion per year. A ceiling of billion is proposed for the fund, after which no further contributions will be charged. A credit line of an equivalent sum will be linked to the fund. An alternative financing solution – one that has not fallen within the framework of the remit but that the Inquiry considers preferable from the point of view of legitimacy and autonomy – would be to instead reduce general government grants. Implications of the Inquirys proposals The proposals aim to improve the conditions for stable local government services over the business cycle. They are also inten- ded to prevent situations of uncertainty in the event of a crisis and to reduce the need for discretionary measures on the part of central government. The proposals affect both the local and central government economy and have an impact on general government finances and the central government borrowing requirement. It is mainly a matter of effects spread between years. In principle, the proposals aim to be financially neutral over time between the central and local government sector and between different local governments. The Inquirys proposals should be seen against the background of the financial crisis in 2008. The proposals are intended to prevent a repeat of the problems that arose at that time – primarily a sharp drop in forecast and actual tax revenues and in employment in the local government sector – in a new, similar situation. Some of the Inquirys proposals aim to strengthen the develop- ment of sound financial management in municipalities and county councils. They are based on the idea that what ultimately creates stability is local governments taking responsibility for their own services and economy. Assessments of the impact of the proposals mainly concern their direction, not the pace and intensity of the changes that the proposals can be expected to lead to. The ability of municipalities and county councils to live up to the intentions of the proposals may also be affected by other factors in their envi- ronment than the development of tax revenues as such. Crises can be neither foreseen nor forecast. The report presents certain impact and risk assessments for the proposals based on various conceivable courses of events for the future development of the economy. For municipalities and county councils, the proposals mean better opportunities to reserve funds for cyclical variations. If the proposed rules on smoothing surpluses had been in force in 2008, then, purely theoretically, over billion could have been reserved, according to calculations made by the Inquiry based on annual accounts statistics. If the proposed stabilisation system had been in effect during the financial crisis in 2008, the local government sector would have received support in both 2009 and 2010. The amount of support provided would have been more in line with the financial needs, and municipalities and county councils would also have received earlier information about how much support they would receive than was the case in reality. The consequences of the proposals for central government are estimated to entail an increase in central government net lending during the period in which the local government stabilisation fund is being built up, and a corresponding reduction when outgoing payments are to be made. In the calculations made by the Inquiry of the outcome in a crisis scenario, outgoing payments of a maximum of billion per year would be made over a period of several years. The central government credit line would be drawn on up to a maximum of billion. The Inquiry also points out the risk involved in tying up fiscal policy by introducing automatic expenditure systems. The Inquirys overall assessment is that the proposals are com- patible with budget policy objectives and contribute to sustainable public finances by creating better conditions for increased cyclical savings, and hence a more sustainable local government economy. The Inquiry also considers that the proposals are in line with the regulations on local government autonomy. It is estimated that the proposals can enter into effect in 2013. Att främja en stabil verksamhet Kommunsektorn utgör en betydande del av svensk ekonomi. Verk- samheten i kommuner och landsting finansieras till största delen av inkomstskatt som främst tas ut på löner. Den kom- munala skattebasen är känslig för konjunkturvariationer, vilket framför allt beror på att lönesumman påverkas av sysselsättnings- utvecklingen. Även vissa utgifter är konjunkturkänsliga, t.ex. utbe- talningar av ekonomiskt bistånd. Eftersom kommunsektorns finan- ser är beroende av konjunkturen finns det en risk för att kommuner och landsting genom förändringar av utgifter och skatter agerar procykliskt, dvs. på ett sätt som kan bidra till att förstärka konjunk- tursvängningar, vilket är negativt för samhällsekonomins stabilitet. Detta är ett problem ur ett stabiliseringspolitiskt perspektiv. Det kommunala balanskravet kan bidra till att förstärka detta beteende. En särskild utredare ska mot denna bakgrund lämna förslag på hur procykliska variationer i kommuners och landstings verksam- heter kan förebyggas. Utredaren ska analysera de kommunala finansernas konjunkturkänslighet, och med utgångspunkt i denna analys föreslå möjliga förändringar i nuvarande regelverk för den ekonomiska förvaltningen i kommuner och landsting, t.ex. avse- ende det kommunala balanskravet, och i regelverket för den kom- munala redovisningen. Utredaren ska vidare lämna förslag till ett system för stabilisering av kommunsektorns intäkter över en kon- junkturcykel. Uppdraget ska redovisas . Kommunernas och landstingens betydelse för den svenska ekonomin har en lång tradition av självstyrelse. Kommuner och landsting har enligt regeringsformen egen beskattningsrätt och svarar för merparten av den skattefinansierade tjänsteproduktionen av välfärdstjänster som t.ex. utbildning, hälso- och sjukvård samt barn- och äldreomsorg. Kommunsektorns utgifter uppgick till totalt , vilket motsvarade av BNP. Merparten av kommunsektorns utgifter, , utgörs av konsumtion, som till största delen består av personalkostnader. sysselsätter kommuner och landsting cirka 1,1 miljoner personer, vilket mot- svarar av arbetskraften. Antalet sysselsatta som finansieras med kommunala skattemedel är dock högre eftersom en del av den kommunalt finansierade verksamheten produceras av privata aktörer. Verksamheten i kommuner och landsting finansieras framför allt av inkomstskatt. Skatteintäkter utgör av kommunsektorns samlade intäkter. Även generella och specialdestinerade statsbidrag utgör en viktig inkomstkälla och mot- svarar av de totala intäkterna. En mindre del av intäkterna utgörs av avgifter på vissa kommunala tjänster. Den kommunala självstyrelsen ger kommuner och landsting möj- lighet att utforma verksamheten utifrån lokala förutsättningar och behov. Förutsättningarna för kommuner och landsting att tillhanda- hålla kommunala tjänster kan dock skilja sig kraftigt åt inom sektorn och det finns en bred politisk enighet kring tanken att medborgare bör ha tillgång till likvärdig service, oberoende av bostadsort. För att utjämna skillnader i skattekraft och strukturella faktorer, t.ex. ålderstruktur, mellan kommuner respektive landsting finns därför ett system för kommunalekonomisk utjämning. Det kommunala utjäm- ningssystemet har även betydelse för i vilken utsträckning konjunk- turvariationer påverkar enskilda kommuner och landsting. Sammantaget kan konstateras att kommunsektorn utgör en betyd- ande del av den svenska ekonomin och att kommunala beslut därför kan få återverkningar på den makroekonomiska utvecklingen. Den ekonomiska förvaltningen i kommuner och landsting Kommunernas och landstingens organisation och kompetens regle- ras i kommunallagen (1991:900), förkortad KL. I lagens 8 kap. regleras den ekonomiska förvaltningen i kommuner och landsting, bland annat den kommunala budgetprocessen, budgetens innehåll och den kommunala medelsförvaltningen. Kommuner och landsting ska enligt KL ha en god ekonomisk hushållning i sin verksamhet, vilket innebär att de ska sköta sin ekonomi på ett ansvarsfullt sätt. I förarbetena ges ingen uttöm- mande beskrivning av vad som utgör en god ekonomisk hushåll- ning. Däremot ges vissa vägledande exempel. Ett sådant exempel är att resultatet i normalfallet bör ligga på en nivå som realt sett åtminstone konsoliderar ekonomin (prop. 1996/97:52 s. 33). I detta inbegrips att hänsyn bland annat ska tas till pensionsskulden och reinvesteringsbehovet, vilket har betydelse för kommunsektorns resultat- nivå, och därmed även sektorns förmåga att hantera kortsiktiga intäkts- försvagningar. Av 8 kap. 5 § KL framgår vidare att kommunerna och landstingen bland annat ska ange finansiella mål som är av betyd- else för god ekonomisk hushållning. Ett bland kommuner och landsting vanligt förekommande mål är att resultatet ska uppgå till av intäkterna från skatter och generella statsbidrag. Kommuner och landsting ska upprätta en budget som är förenlig med det s.k. balanskravet. Balanskravet är underordnat målet om god ekonomisk hushållning och innebär att intäkterna måste överskrida kostnaderna. Undantag kan dock göras om det finns synnerliga skäl (8 kap. 4 § KL). Ett exempel på synnerliga skäl är då kommunen eller har en stark finansiell ställning eller om större omstruktureringskostnader uppkommer i samband med åtgärder som syftar till att uppnå en god ekonomisk hushåll- ning (prop. 2003/04:105 s. 19). Om ett underskott skulle uppkomma ska detta regleras under de tre följande åren. En reglering behöver dock inte göras om det finns synnerliga skäl. Det kommunala balanskravet infördes för att förhindra en fortlöpande urgröpning av kommunernas och landstingens ekonomi. Det har även kommit att ses som en del av det finanspolitiska ramverket och bidrar till att överskottsmålet för den offentliga sektorns finansiella sparande kan upprätthållas. Balanskravet har därmed betydelse för de offent- liga finansernas hållbarhet. De kommunala finansernas konjunkturkänslighet Konjunkturutvecklingen styr i hög grad förutsättningarna för kom- muner och landsting, främst via sysselsättningsutvecklingen, eftersom verksamheten till största delen finansieras med inkomst- skatt. Historiskt sett har tillväxten i det kommunala skatteunderlaget varierat kraftigt. –ökade skatteunderlaget med i genomsnitt . Till följd av den pågående låg- konjunkturen har skatteunderlaget utvecklats svagare. Även kommunsektorns kostnader varierar med konjunkturen. Exempelvis kan kostnader för ekonomiskt bistånd öka kraftigt till följd av ökad arbetslöshet. Dessa kostnader utgör dock endast en mindre del av kommunsektorns totala kostnader. Sammantaget är det kommunsektorns skatteintäkter som är av störst betydelse för de kommunala finansernas konjunkturkänslighet. Behovet av en utredning Kommuner och landsting kan förstärka konjunktursvängningar Att kommunsektorns finanser varierar med konjunkturen medför att det finns en risk för att kommunernas och landstingens ager- ande kan förstärka konjunkturvariationer. Kommuner och lands- ting kan tvingas till nedskärningar eller skattehöjningar då skatte- intäkterna viker till följd av en kraftig lågkonjunktur, vilket kan bidra till att förstärka en konjunkturavmattning. Likaså kan kom- muner och landsting bidra till att förstärka en konjunkturuppgång genom att öka den kommunala konsumtionen eller sänka skatten när skatteunderlaget tillfälligt växer snabbare. En procyklisk kom- munal verksamhet som förstärker konjunktursvängningar är nega- tiv för samhällsekonomins stabilitet och är därför ett problem ur ett stabiliseringspolitiskt perspektiv. Kravet på att kommuner och landsting ska upprätta en budget i balans bidrar till risken att kommunsektorn förstärker varia- tioner i konjunkturen. Det finns dock ett visst utrymme att hantera en temporär kostnadsökning eller temporärt minskade intäkter under löpande budgetår, utan att bryta mot balanskravet.