NEWS » 180 Italian City Councils on the brink of failure
180 Italian City Councils on the brink of failure
180 Italian city councils are on the brink of failure. Budget difficulties are wide spread not only in areas where criminal organizations operate, such as Casal Di Principe, but also in towns such as Alessandria which now protests against the unequal granting of benefits to large debtors such as Rome or Naples.
In Casal di Principe due to a 16 million debt in a city of 20,000 inhabitants the administration was forced to act as a company in bankruptcy proceedings. It had to cut spending to the bone, raise revenue and sell assets to pay off creditors quickly at a fraction of the theoretical value of the debts. But a bankrupted company usually ceases to exist, while a municipality must continue to ensure the safety on the streets, the water service or aid to families in need. The result is a paradoxical situation, so for example in Casal di Principe 700 applications for family allowances remain in a drawer because in the town administration, there are no more social workers able to deal with them, and the mayor cannot hire others. More than half of the population does not have running water and no school gets the certificate of use and occupancy, but there isn’t money and there aren’t workers to do the restoration.
The worrying aspect is that Casal di Principe is not the only municipality in this condition. In 2009 the municipalities officially in crisis were two, the following year there were eight, half through this year the number had risen to 63. Among these there are cases of partial default piloted and agreed to creditors for many hundreds of millions of Euros. The municipality of Alessandria was forced to declare insolvency. Other towns such as Terracina, Latina, Velletri and dozens of others are liquidating suppliers with sums between 40% and 60% of what is written on the invoices.
Some other municipalities are subject to what the law calls a rebalancing plan: a long delay in the payment schedule and cancellation of default interests. This category includes approximately 120 cities, sometimes with billions of debts and millions of voters, among them, Naples, Catania, Messina, Reggio Calabria and Frosinone.
Sometimes the default on creditors is considered as a legitimate form of defence. Treasury data show that the supply of goods and services in many cases are made at prices more than double the norm. But according to many, the crisis is not equal for everyone. Rome was cleared of its financial disarray. Meanwhile Alessandria, Caserta, Casal di Principe, and dozens of other smaller municipalities have been forced to raise rates and council tax to the maximum, consolidate their debts, lay off many employees and stop investments. Cash deposits and new loans were granted only in the short term and to liquidate the private creditors, and not used to face urgent problems such as closing the holes in the asphalt. To sue the municipalities for the condition of the roads in the event of an accident is now so widespread among Italians that certain institutions have ended up in distress for the claims of damage, and others use the footage from the satellite to defend against citizens’ scams.