Local and regional authorities (LRAs) have sounded the alarm due to additional expenses and drops in revenue as a result of the pandemic (a so-called scissors-effect) which will hamper their commitment to deliver on the twin transition goals. During a key political discussion on 'Local and regional finances and investment after COVID-19: Evidence and outlook', EPP leaders of villages, cities and regions from around Europe called for further financial and professional support to facilitate green and digital investments. The exchange of views was held with a representative of the Organisation for Economic Co-operation and Development (OECD) and the European Investment Bank (EIB) respectively. Across their interventions, EPP members stressed the fiscal space capacity of LRAs to empower local communities to deliver efficient public services.
Eddy van Hijum, Member of the Council of the Province of Overijssel (Economy, Finance and Europe) said "While it is positive that the impact of COVID-19 has been less severe than expected, let's keep in mind that some regions and SMEs have been badly hit. Increased levels of debts will slow down recovery and the twin transition." He thus called for monitoring of fiscal health of LRAs as increased depth will weaken their performance. He also called for the European Committee of the regions (CoR) to visit the European Investment Bank in 2022 and work more closely on financing for green and digital investments.
Aleksandra Dulkiewicz, Mayor of Gdansk stressed the need for LRAs to be consulted on National Recovery and Resilience Plan (NRRPs). “We have experienced government’s unwillingness to discuss the NRRP with regions in Poland. The only positive aspect of the fact that the Polish NRRP has not been accepted yet is that the European Commission may convince the government to reconsider its position. This is the only way we can solve a difficult situation for municipal and regional finances, especially in terms of the public investments which are fundamental in times of the EU’s twin transition.”
Deirdre Forde, Councillor Cork City Council said that Cork city council was voted LRA of the year for creativity shown in the way it responded to crisis but Cork would not have survived without central government support, particularly in hospitality, culture and support for SMEs. She added “LRAs need greater autonomy, increased funding and resources in how national and EU funds are spent in delivery of vital local services, meeting Climate Green and Digital responsibilities and driving growth in our cities and towns.”
Mariusz Frankowski, Councillor at the city of Warsaw spoke on drop in revenues and national reforms that may further hinder LRAs in Poland. "We have had a drop in revenue across the board, such as communications revenue and parking revenue. This drop is having a huge effect on LRAs ability to invest. There are currently plans in Poland to change legislation, which will impact LRA financing meaning that even if revenues go up, we will have less money to invest."
Adrian Teban, Mayor of Cugir said that municipalities have had to respond to the impacts of the pandemic in various ways leading to financial challenges. "Our local revenues have suffered stagnation or slight decreases, but we have also suffered a lot of new expenses. We have had to spend more on health care and medical equipment, on the digitalisation of public services due to social distancing measures, and unforeseen additional costs in building material, which put pressure on LRAs to meet Multiannual Financial Framework targets. He also raised the curtailment of cultural activities and the rising cost of building materials locally.