Regulation for the Implementation of the Law on the Municipal Assistance Fund (RALFAC), of October 22, 2003 - Department (RALFAC)

[2] The Department of Education and Finance (hereinafter: the department) is responsible for the implementation of the Act on the Municipal Assistance Fund (AMAF), dated December 3, 2001 (hereinafter: the Act).

1. The total commitments for the annual exercise of the municipal aid fund (hereinafter: the fund) should, if possible, be limited to 10% of the capital of the fund.

2. If this capital is reduced to less than 5 million francs, the above limit is mandatory.

The tax revenues mentioned in Article 10 of the law, which may lead to the adjustment of the tax coefficient, are the municipal property tax and the special contribution provided for in Article 41 of the Municipalities Act (LCo), of December 21, 1964.

The minimal municipal tax coefficient, necessary to qualify for investment aid, is 5 points higher than the average tax coefficient of all municipalities (art. 6, para. 2, of the law).

Any municipality seeking to benefit from investment aid must submit an application to the Council of State.

1. The application includes a detailed description of the investment for which assistance is required.

2. It also specifies all ordinary grants, loans, or external assistance, promised or contemplated.

1. The Council of State forwards the request to the department which gathers the necessary documentation and presents a report to this effect.

2. The Office for Municipalities and Fiduciary Management [4] (hereinafter: the office) is responsible for preparing this report, which addresses, in particular, the following points

1. Financial situation of the municipality, including the results of the operating account for the last five fiscal years, as well as extracts from the balance sheet, with comparative data;

2. Taxation and contributory capacity;

3. Financial indicators for at least three fiscal years;

4. Previous aid from the fund;

5. Budgetary situation of the fund;

6. Nature and advisability of the investment.

1. The Council of State, upon the proposal of the department, determines the amount, form, and potential conditions of the assistance.

2. Profit-generating investments, as referred to in Article 6, paragraph 3, letter a, of the law, are understood to be investments financed by sales to individuals (for example: water, electricity, gas, district heating).

3. The loans are generally repayable over twenty years.

1. Assistance may exceptionally be granted to one or more municipalities whose financial and fiscal situation does not meet the requirements of the law if such assistance is likely to consolidate or improve the position of one or more municipalities in financial difficulty.

2. In addition, a balance sheet relief aid, possibly accompanied by a cash loan, may exceptionally be granted to a municipality experiencing a structural deficit, where the net wealth is significantly dwindling and that decides to implement a substantial increase in its tax coefficient.

The minimum municipal tax coefficient, necessary to qualify for operational aid, is 25 points higher than the average tax coefficient of all municipalities (art. 7, para. 2, of the law).

The Council of State may condition the granting of operating subsidies on requirements such as the obligation for the municipality to have its investments approved by the department or to implement operating cost-saving measures.

1. Articles 5 to 7 of the present regulation apply by analogy.

2. The assistance is granted principally in the form of a subsidy, with interest-free loans being provided as a supplementary measure.

1. Incentive aids may be granted to all municipalities.

2. Intercommunal cooperation aids pertain to investments made jointly by multiple municipalities, which allow for increased efficiency or savings.

3. Exceptionally, they may relate to operating expenses, for a limited period not exceeding three years.

4. Merger aids cover both study costs and the subsidization of the mergers themselves.

1. Intermunicipal Collaboration Aid can only be granted for areas in which collaboration is neither mandated nor subsidized, particularly through a more favorable rate by the State.

2. Aid related to investments is granted upon request from the concerned Municipal Councils, in the form of a grant determined in proportion to the investment borne by each municipality.

3. Aid related to operating expenses is granted upon the proposal of one or more departments and must, on one hand, comply with the conditions listed in paragraph 1 above and, on the other hand, take into account the financial and fiscal situation of the beneficiary municipalities.

The aids for the merger of municipalities are granted, upon request by the municipal councils concerned, in the form of subsidies.

The studies necessary for mergers may be financed partially or entirely by the fund.

[5] 1 The subsidy granted for municipal merger projects submitted to the population of the concerned municipalities until December 31, 2016, is

a) 800 francs per inhabitant if the merger has been accepted;

b) 600 francs per inhabitant if the merger has been rejected and a new merger project including at least two municipalities involved in the initial project is accepted by December 31, 2020.

2. The subsidy granted for municipal merger projects that do not meet the conditions of the first paragraph is 200 francs per inhabitant.

3. These amounts are increased by 5% if the average tax coefficient of the concerned municipalities is greater than the average tax coefficient of all municipalities by 10% or more.

3bis These amounts are decreased by 5% if the average tax coefficient of the concerned municipalities is less than the average tax coefficient of all municipalities by 10% or more.

4. The population figure as well as the average relative tax coefficient and the average relative fiscal income are those known at the time of the preliminary decision by the Council of State pursuant to Article 21 below.

5. Exceptionally, the Council of State may allocate a subsidy higher than the per inhabitant amount set in the first paragraph, for municipalities in a financially difficult situation despite a high tax coefficient.

[6] 1 When the population of one of the merging municipalities exceeds 5,000 inhabitants, the share of the subsidy for that municipality is calculated based on a population of 5,000 inhabitants.

2. An exceptionally higher ceiling, up to a maximum of 10,000 inhabitants, may be admitted for municipalities with more than 10,000 inhabitants.

[7] In the event of successive mergers, the former municipalities that were taken into account for the calculation of a previous subsidy will only be reconsidered at the end of an eight-year period following the entry into force of the previous merger project.

[8] 1 Municipalities considering a merger shall adopt a merger agreement that includes at least the following details

a) names of the former municipalities and name of the merged municipality;

b) date of the merger;

c) composition and election method of the authorities of the merged municipality;

d) provisional budget of the merged municipality and tax coefficient;

e) transfer of all assets to the merged municipality;

f) liquidation or acquisition of the shares of the former municipalities in extra-municipal entities (intermunicipal unions, joint-stock companies, etc.);

g) acquisition of municipal citizenship of the merged municipality by the citizens of the former municipalities.

2. Municipalities wishing to benefit from the following clauses must include them in the merger agreement

b) advancement or postponement of the date of the general election.

1. Initially, the interested municipalities submit a draft agreement to the State Council according to the model defined in Article 20, signed by all the municipal councils.

2. Upon proposal by the department, the State Council issues a preliminary decision, notably setting the amount of the incentive aid.

3. The draft agreement, possibly amended, is then submitted to the general councils and subsequently to a mandatory referendum, in each of the interested municipalities.

4. The merger requires the agreement of all the interested municipalities.

5. Once their agreement is obtained, the merger agreement is transmitted to the State Council for approval.

6. The approval only occurs after the merger is approved by the Grand Council through a law amending Article 2 of the Municipalities Act (Municipalities Table), which is subject to an optional referendum.

[9] 1 The merger assistance subsidy is paid in 3 successive installments, with the first third being paid in the year the merger takes effect.

2. The State may, depending on its resources, pay annual installments that exceed those provided for in paragraph 1 and thereby reduce the payment schedule.

The following are repealed

– the implementing regulation of the law concerning the creation and use of the compensation fund intended to assist municipalities in difficult financial situations, dated February 8, 1952 [10],

– the provisional executive order of the LFAC, dated January 30, 2002 [11].

The department is responsible for the enforcement of this regulation.

1. This regulation shall enter into force immediately.

2. It shall be published in the Official Gazette and inserted into the Collection of Neuchâtel Legislation.