The 2020 accounts of the State of Geneva show a deficit of 498 million francs. The effects of the health crisis and the costs of three major reforms raised fears of a deficit of close to a billion, but additional income helped to alleviate it.
The 2020 budget forecast a deficit of 585 million, the Council of State recalls Thursday. In the meantime, the health, social and economic crisis caused by the Covid-19 pandemic has forced the state to intervene massively to support the population, businesses and the health system.
The cost of this intervention amounts to 378 million, including 138 million in lost funds and 232 million in additional subsidies. To this must be added a loss of income of 107 million. Directly affected by the health crisis, Genève Aéroport, for example, did not retrocede any profit in 2020. In total, the pandemic has an impact of 485 million on the 2020 accounts.
This financial year was also marked by the implementation of three reforms voted in 2019 (corporate taxation, increase in health insurance subsidies and recapitalization of the Geneva State Provident Fund CPEG). The cost of these reforms is 497 million, which is in line with estimates (499 million), noted the President of the State Council Anne Emery-Torracinta.
Real estate transactions
The “happy surprise” of these 2020 accounts comes, according to State Councilor Serge Dal Busco, from additional income to the tune of 445 million francs (+ 5.2% compared to the 2020 budget). Very large real estate transactions brought in 130 million in registration fees.
Personal income tax adjustments relating to previous years also paid off (+260 million). The SNB also distributed 117 million more in profits than expected. Serge Dal Busco, however, warned against the one-off aspect of this additional income which “has no lasting structural effect”.
In terms of charges, the executive is pleased with their “very good control”. With 348 million additional expenses compared to the 2020 budget (+ 3.9%), the differences are very small, noted State Councilor Thierry Apothéloz. Excluding Covid-19, expenses are in line with the budget.
The canton’s debt reached 12.8 billion at the end of 2020, that is to say 991 million more compared to the end of 2019. “This is not an off-road,” says State Councilor Antonio Hodgers. Indeed, this increase corresponds to the payment made in 2020 to the CPEG. However, there is a risk that interest rates will rise.
Another subject of concern for the Council of State: the slowdown in investments (-15% to 534 million). The health crisis has slowed down construction sites and a downward trend has been emerging for several years. The canton intends to pursue a countercyclical policy based on significant investments, particularly in the field of energy transition.
The Council of State also warns against the structural deficit which persists and which risks being amplified by the crisis. All eyes are already on the 2022 draft budget, which will have to contain additional measures to limit the increase in charges. Discussions are already underway with the parties represented in the Grand Council.
The latter have rather freshly welcomed these accounts which are less in deficit than expected. The PLR notes that it is “the taxation of the largest taxpayers that saves the situation”. The UDC denounces a “colossal” deficit and an “obese state”. The PDC notes that the State is no longer able to carry out the planned investments.
The MCG deplores “the weight of the mistakes of the past”, that is to say the “billions of BCG, CEVA and pension funds”. On the left, the PS emphasizes that Geneva has the means to support its population. Finally, the inter-union cartel notes that the “alarmist announcements of the Council of State, which serve its austerity policies, do not hold true”.
Note that the canton’s cashier, Nathalie Fontanet, affected by Covid-19, was unable to participate in the presentation of the accounts. Her condition is not alarming and she should be back soon.