Intercommunal Financial Equalization Act (LPI) (LPI)

1 The purpose of this law is to guarantee all Ticino municipalities with sufficient demographic and territorial size the financial resources necessary to ensure the population receives the appropriate provision of services, as well as to contain differences between tax multipliers.

2 Financial equalization is implemented through

a) the equalization of fiscal capacity;

b) vertical compensation;

c) investment aid and recurrent contributions for charges related to geographical location.

[2] **1 Application of the law is harmonised with the cantonal objectives concerning new municipal mergers.**

2 The Council of State may reduce, respectively suspend, the disbursement of contributions and aid according to Art. 1 para. 2 lett. a and c, making them conditional upon the beneficiary municipality participating in a merger procedure compatible with the objectives and Cantonal Plan of Mergers established by the Law on Municipal Mergers and Separations; the relevant procedure is reserved.

3 Contributions and aid reduced or suspended under the preceding paragraph shall be set aside for a maximum period of four years in favour of the new municipality.

4 The decision to reduce, respectively suspend, the contributions and aid referred to in paragraphs 2 and 3 may not exceed the equivalent of 10 points of the beneficiary municipality's coordinated municipal multiplier. [3]

5 In the event of a municipal merger, the Council of State may also, for a defined period, grant the merged municipality the benefit of the aid referred to in lett. c) of Art. 1, or increase the usual financing percentage, even if the conditions provided for in Art. 14 and 15 are not met.

[2] Art. amended by L 17.3.2011; in force since 1.1.2012 - BU 2011, 506; BU 2012, 147; BU 2013, 402.

[3] Para. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

Messages from the Council of State concerning new legislative acts or amendments to existing laws must include information on the financial implications for municipalities.

1. To municipalities with a per capita fiscal revenue lower than 90% of the cantonal average, an equalisation contribution equal to 20% of the difference between the municipality's per capita resources and 90% of the cantonal average shall be paid, it being understood that each beneficiary shall be guaranteed to reach at least 70% of the cantonal average. [4]

2. The equalisation contribution shall be financed by municipalities having a per capita fiscal revenue above the cantonal average, ascertained annually by the competent cantonal authority.

3. The per capita fiscal revenue shall be calculated based on the average of the last five years.

[4] Para. modified by Law of 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

[5] 1 The equalisation contribution (CL) is paid to municipalities whose coordinated municipal multiplier (MCC) is equal to or higher than the average municipal multiplier (MCM) according to the following table

MCC

CL

MCM

25%

MCM + 1%

32%

MCM + 2%

39%

MCM + 3%

46%

MCM + 4%

53%

MCM + 5%

60%

MCM + 6%

65%

MCM + 7%

70%

MCM + 8%

75%

MCM + 9%

80%

MCM + 10%

85%

MCM + 11%

88%

MCM + 12%

91%

MCM + 13%

94%

MCM + 14%

97%

MCM + 15% and above

100%

2 The State Council shall recover the equalisation contribution to the extent that the operating surplus exceeds 10% of the cantonal tax revenue, provided that the surplus is at least 50,000 francs and that the budget surplus exceeds 50% of the cantonal tax revenue.

3 The regulation shall establish the details for determining the budget surplus, for examining the operating result, in particular regarding the maximum admissible depreciation percentage and the imposition of adequate causal fees, as well as specify how recoveries made from beneficiary municipalities are to be computed in the equalisation contribution requirement.

4 The State Council shall reduce the coordinated municipal multiplier as a parameter for calculating the equalisation contribution in cases where tax multipliers are artificially kept high.

[5] Art. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116; previous amendment: BU 2010, 514.

[6] **6 Funding**

1. Funding is carried out through the levy of a share on the ascertained difference (municipal per capita revenue minus average cantonal per capita revenue) multiplied by the number of inhabitants and divided by the following coefficient: MCC - 0.4 x [(MCM + 15%) - MCC], where MCC is the coordinated municipal multiplier and MCM is the average municipal multiplier. [7]

2. The coordinated municipal multiplier, as a parameter of the weighting coefficient, is reduced by the Council of State in cases where tax multipliers are artificially kept high. [8]

3. The maximum percentage of the levy referred to in paragraph 1 may not exceed 15%; if, as a result of the application of Articles 4 and 5, this limit were to be exceeded, a proportional reduction is initially made to the contribution of municipalities which, after the equalization contribution, exceed the minimum threshold of 70% of the per capita revenue, and limited to the amount exceeding this threshold; should an uncovered difference remain, a linear reduction is applied to all beneficiary municipalities.

[6] Art. amended by L 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

[7] Par. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

[8] Par. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

[9] The regulation establishes the methods for determining the computational elements necessary for the application of this law.

[9] Article amended by Law of 14.2.2012; in force since 20.4.2012 - BU 2012, 158.

1 The financial strength of municipalities is established according to a general average index resulting from the weighted average of a set of partial indices.

2 The general average index is equal to 100.

Every two years, the Council of State determines the financial capacity index, which includes the following sub-indices

a) per capita yield of tax resources

- triple value;

b) per capita IFD yield

- simple value;

c) percentage of taxpayers subject to IFD

- simple value;

d) coordinated municipal multiplier

- double value; [10]

e) population evolution

- simple value.

[10] Let. amended by Law of 24.3.2025; in force from 1.6.2025 - BU 2025, 116; previous amendment: BU 2010, 514.

Vertical financial equalization** refers to the determination, according to the financial capacity of the communes, of state subsidies to the communes and their contributions to cantonal expenses.

The current cantonal subsidies referred to in Article 10 of this law are calculated according to the following table

The participations of municipalities in current cantonal expenses referred to in Art. 10 of this law are calculated based on the following table

1 A equalization fund is established.

2 The equalization fund finances investment aid for municipalities according to Art. 14 and the supplementary contributions provided for in Art. 22. [11]

[11] Para. amended by Law of 18.10.2010; in force since 1.1.2011 - BO 2010, 514.

[12] **1 Aid shall be granted preferentially for financing investments in basic infrastructure such as aqueducts, sewers, school buildings, roads, or mandatory investment works or expenses under superior law, which would cause an excessive financial burden on the municipality; investments for which aid is requested must be designed respecting the principles of parsimony and economic efficiency.**

**2 Works may not commence before the requested aid is granted; the regulation may establish exceptions.**

**3 Aid for investments may be requested by municipalities that apply both multipliers at least at 90% and that have fiscal resources below 90% of the cantonal average. [13]**

**Exceptions may be allowed for smaller municipalities with fiscal resources above the aforementioned limit, only if involved in a formally initiated aggregation project.**

**4 The maximum aid shall be 90% of the net burden borne by the municipality.**

**5 For investments of minor importance, no aid shall be granted.**

[12] Art. amended by L of 18.10.2010; in force from 1.1.2011 - BU 2010, 514.

[13] Para. amended by L of 24.3.2025; in force from 1.6.2025 - BU 2025, 116.

[14] **Article 1** The State Council, having heard the opinion of the Equalisation Commission, shall decide and determine the aid, taking into account the amount of the investment, net of federal and cantonal subsidies, any improvement contributions up to the maximum provided for by the relevant law and any other income or revenue from which the project may benefit, and the amount of the total potential self-financing. [15]

2 The annual potential self-financing is expressed as a percentage of the fiscal resources and the geographical location contribution, as set out in the regulations.

3 The total self-financing is given by the annual potential self-financing multiplied by a factor that depends on the magnitude of the investment, as established by the regulations.

4 For projects relating to services financed through the levying of specific fees, the aid will be determined in such a way as to keep the fees charged to users within tolerable limits.

5 The financial commitment for the aid referred to in paragraph 1 is determined every 4 years by the Grand Council, at the beginning of the legislative period.

[14] Art. introduced by Law of 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

[15] Para. modified by Law of 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

[16] **1** In consideration of the increased costs generated by an unfavorable geographical location, the Council of State grants a recurring contribution to peripheral municipalities, equal to 29% of the amount of water fees collected by the Canton in the preceding year; the contribution for each individual municipality is calculated taking into account the surface area of the different components of the municipal territory and the altitude above sea level; the regulation specifies the parameters used. [17]

**2** ...

**3** ...

**4** The implementing regulation of the law establishes the beneficiary regional districts.

**5** ...

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[16] Art. modified by Law of 18.10.2010; in force since 1.1.2011 - BU 2010, 514; previous modification: BU 2004, 63.

[17] Sub-paragraph modified by Law of 6.2.2024; in force since 1.1.2024 - BU 2024, 100.

[18] **1** The State Council shall annually determine the needs of the equalization fund, taking into particular account Art. 14a para. 5.

**2** The equalization fund shall be financed by the following means

a) the Canton's contribution, equal to 50% of the needs;

b) the contribution of municipalities with a financial strength index greater than 70 points, equal to 50% of the needs, distributed among the municipalities based on their tax resources divided by the coordinated municipal multiplier. [19]

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[18] Art. amended by L 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

[19] Lett. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

The communes shall collaborate with the competent cantonal authority for the application of this law and for the assessment of the cantonal tax revenue per commune.

1 The equalisation fund is administered by the Council of State assisted by a commission composed predominantly of municipal representatives.

2 The Council of State, having consulted the commission, determines, according to the needs of the fund, the percentage of tax resources to be borne by the municipalities and the contribution to be borne by the Canton, as referred to in Art. 16 lett. a) and b) of this law, and the withdrawal quota for financing the equalisation contribution referred to in para. 1 of Art. 6.

3 Payments from the equalisation fund are made through the Cantonal Treasury, and the costs are integrated into those of the State.

Against the decisions of the Council of State, an appeal lies to the Cantonal Administrative Court.

... [20]

[20] Article repealed by Law 18.10.2010; effective from 1.1.2011 - BU 2010, 514.

1 The municipality which, in the year preceding the entry into force of this law, benefited from aid provided by the equalization fund pursuant to Art. 7 and 8 para. 2 Lcint, may request transitional current management aid.

2 The transitional contribution is paid provided that a tax multiplier of at least 15 points higher than the general average multiplier of the municipalities is applied.

3 The transitional contribution has a duration of 5 years and is equal to the average of the equalization share of the last three years, duly corrected, reduced by 1/6 each year.

4 The Council of State determines the amount of the transitional contribution after having heard the observations of the Municipal Council of the interested municipality.

5 The implementing regulation establishes the procedures to be observed when submitting the request and defines the calculation of the transitional contribution. In particular

- it takes into account the burdens arising from works already authorized before the entry into force of this law but not yet carried out;

- it considers improvement and construction contributions provided for by law but not yet collected;

- it takes into account any other relevant element for the correct determination of the contribution.

6 In the event that the municipality benefiting from the transitional contribution joins a new aggregation of municipalities, the remaining contribution is paid to the new municipality in one or two installments. [21]

7 The transitional aid is financed according to the procedures established by Art. 16.

8 The Council of State may, ex officio, impose on the municipality benefiting from the transitional contribution, which is not already part of an aggregation project, the initiation of a study or integration into an existing project.

[21] Para. amended by Law of 18.12.2003; in force since 1.1.2004 - BU 2004, 63.

[22] **Article 22**

1 If, notwithstanding the transitional assistance provided for in Article 21, paragraph 1, medium-term financial equilibrium cannot be maintained, the Council of State may, after consulting the Municipal Council of the commune concerned, grant additional assistance to allow the maintenance of tax multipliers within the 100% limit. [23]

In such cases, the Council of State is authorized to initiate an aggregation procedure with another commune in accordance with the law.

2 Additional contributions may also be paid by the Council of State to newly aggregated communes if, within a period of 4 years from their entry into function, the new commune finds itself in a situation of marked imbalance in current management despite the application of sound accounting and financial management measures.

3 Such assistance is limited to a maximum of 4 years and may be subject to specific conditions set by the Council of State.

[22] Art. amended by L 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

[23] Par. amended by L 24.3.2025; in force since 1.6.2025 - BU 2025, 116.

1. The Council of State shall verify every four years, starting from the entry into force of this law, the effectiveness of the equalization mechanisms, addressing a report thereon to the Grand Council and proposing, if necessary, the required legislative adjustments.

2. ... [24]

[24] Par. repealed by Law of 18.10.2010; in force since 1.1.2011 - BU 2010, 514.

The Intercommunal Compensation Act of 18 December 1979 is hereby repealed.

1 After the expiry of the time limits for the exercise of the right to a referendum, this law shall be published in the Official Bulletin of Laws and Executive Acts.

2 The Council of State shall determine its date of entry into force. [25]

Published in OB 2002, 437.

[25] Entry into force: 1 January 2003 - OB 2002, 444.