France’s regional financial oversight body, the Chambre régionale des comptes (CRC), has issued a stark warning about the financial health of French departments, particularly those experiencing population growth. The update, presented on , to law students in Montpellier, reveals a deepening crisis as departments struggle with volatile revenues and increasing mandatory social spending.
The CRC’s president highlighted that most departments have been facing financial difficulties for approximately three years. This strain is particularly acute in areas like the Hérault and Gard, which are witnessing significant demographic increases. A larger population directly translates to higher mandatory social expenditures, including benefits like RSA (Revenue de Solidarité Active – Active Solidarity Income), the allocation personnalisée d’autonomie (APA – personalized autonomy allowance), and benefits for people with disabilities.
In 2025, the department of Hérault managed to balance its budget only through cuts to non-essential services, such as cultural programs. While the president of Hérault feels less pressure this year regarding the budget vote, this is largely due to an unexpected surge in property transaction taxes. After a substantial decline between 2022 and 2024 – a drop of €63 million in the Gard and €114 million in the Hérault – revenues from these taxes (droits de mutation à titre onéreux, or DMTO) rebounded sharply in 2025. Valérie Renet, the CRC president, described this as “a bubble of oxygen for the departments of Occitanie,” but cautioned against complacency, drawing a parallel to the post-COVID surge that proved unsustainable.
The financial pressures on departments are compounded by a loss of fiscal control. The CRC points out that departments no longer have the power to set tax rates, as the business tax (taxe professionnelle) has been eliminated and the property tax (taxe foncière) has been replaced with a reversion of VAT. This has effectively severed the link between departments and their citizens, creating a situation where revenues are “volatile” and expenditures are largely fixed. The CRC suggests that a new tax, with the departments able to set the rate, might be necessary to address the unsustainable financial model.
The situation is further complicated by outstanding debts owed to the departments by the state. In 2025, the amount owed due to the non-compensation of transferred charges totaled €260 million. A prompt settlement of this debt would provide immediate relief. The Hérault department, with €830 million in debt and a negative net savings rate, is already resorting to borrowing to cover debt repayments.
France’s broader financial turmoil, as reported by the Associated Press and CNN, adds context to the departmental struggles. The country has seen four prime ministers in the past 12 months, signaling significant political instability. This instability, coupled with a history of overspending, is exacerbating the debt problem. As of , France’s total debt stood at €3.35 trillion, expected to reach 116% of economic output by the end of the year – one of the highest levels in the Eurozone.
The CNN report highlights that France is Europe’s biggest spender relative to its economic output, with a debt burden trailing only Greece and Italy. The country consistently ranks among the most spendthrift nations in the European Union in terms of budget deficit – the gap between government spending and revenue. Bond investors have grown increasingly concerned about France’s finances since June 2025, leading to higher borrowing costs for the government.
The political crisis is hindering efforts to implement necessary debt-cutting reforms. The recent resignation of Sébastien Lecornu, following François Bayrou’s earlier departure after attempting to push through a savings plan, has cast doubt on the passage of the 2026 budget. However, Lecornu, acting in a caretaker capacity, expressed optimism that a budget could be approved before , citing a willingness among lawmakers to reach an agreement.
The European Central Bank’s Financial Stability Review from provides a broader European context, though it does not specifically address the French departmental issues. It underscores the importance of financial stability within the Eurozone, a region where France’s debt levels are increasingly scrutinized. The combination of political uncertainty, high debt, and volatile revenues presents a significant challenge for France’s departments and the nation as a whole.
The situation underscores a fundamental disconnect between the financial responsibilities of French departments and their ability to generate revenue. Without greater fiscal autonomy or substantial financial support from the central government, the financial viability of these regional entities remains precarious.
