Municipal expenditure on the function “public roads and planning”

The function "Public roads and planning" deals with aspects concerning citizens' quality of life, such as public roads, maintenance of green areas, investments to safeguard the territory, for example, in case of hydrogeological risk, etc. In this article, we analyse the factors affecting each municipality's expenditure for this function.  

Italy: one country multiple realities 

The quality of life in a territory depends on many different factors, such as the environment, the accessibility of services, environmental risks, parks, and green areas. 

Spending on public roads and planning can improve citizens' quality of life.  

Local administrations have different levers to intervene in some areas. For example, they can improve road conditions by constructing and maintaining roads, bicycle paths, pedestrian zones, and exchange car parks. For others, they have no authority. 

As regards urban planning, local authorities can decide on a more favourable location of services and activities to meet citizens' needs. They can invest in improving green areas or preventing risks, such as seismic and hydrogeological damages. 

The resources allocated to these activities fall within the function "public roads and planning," one of the seven municipalities' fundamental functions. They amount to over 4 billion euros in the municipalities of regions with ordinary statutes, equal to 12.5% of the total expenditure for basic municipal functions. However, these resources have decreased in recent years. 

4.19 billion euros was the total historical expenditure for the function "public roads and planning" of all the municipalities in the Regions with ordinary statutes in 2017, 4.24 in 2015. 

Municipalities in central Italy spend on average almost 21 euros per inhabitant more than those in the south. 

In 2017, the average expenditure was 81.61 euros per inhabitant, with many regional differences. In Marche, Umbria, Abruzzo and Liguria, municipalities record a historical expenditure exceeding 100 euros per capita. While in Campania and Puglia it is below 70 euros per inhabitant. 

These wide gaps depend on several factors. Fiscal federalism aims to define whether local authorities' level of expenditure is adequate to the local needs. This is possible by estimating each municipality's needs through a series of variables. 

For example, in the case of "public roads and planning", a more significant presence of roads requires a greater expenditure for their maintenance. 

Standard expenditure needs are indicators estimating municipalities' financial needs to carry out their basic functions. 

See Expenditure needs 

The definition of these variables is anything but simple, and it is in constant evolution. In fact, in 2020, methodological innovations were introduced. 

This article analyses the main changes and factors determining the standard expenditure needs for the function "public roads and planning. 

The determinants of the expenditure for the function “public roads and planning.” 

Until 2020, a reference variable for determining standard expenditure needs was the resident population. In brief, the assumption was: the greater the number of inhabitants, the greater the expense incurred by the municipality. 

However, this assumption showed a contradiction: municipalities with very few inhabitants, often in internal areas subject to depopulation, must preserve the territory equally (if not more). 

Inland areas are territories often distant from essential services (such as education, health, public transport). This condition regards over 4,000 municipalities, with 13 million inhabitants at risk of depopulation. 

Unlike other services, the expenditure on "public roads and planning" often does not depend on the number of inhabitants. For this reason, the variable "resident population" was replaced by the variable "total housing units." 

13 variables define the standard expenditure needs for "public roads and planning." 

Furthermore, the estimation model considers data concerning the expenditures incurred in different years (between 2013 and 2017) and morphological aspects such as seismicity and landslide risk. 

The variables are crucial to determine the expenditure needs correctly and, for this function, we consider 13 variables.  

The most crucial is the number of inhabitants per housing unit, determining (on average) 54% of the standard expenditure.  

Considering a standard expenditure of approximately 82 euros per capita on average, 44 derive from this variable. About 14 derive from the total number of housing units and 3.5 from the second homes on the municipality's territory. However, the differences due to the location and the number of inhabitants are many. 

€ 221.11 is the per capita standard expenditure estimated for municipalities with less than 500 inhabitants compared to a national average of € 81.61 per inhabitant. 

According to the methodological revision, small municipalities standard expenditure for this function amounts to almost three times the average due to the number of housing units, regardless of the number of residents. We must underscore that some variables are much more impactful in small municipalities than in cities. 

In small municipalities, the number and the extension of roads have a considerable impact on standard expenditure due to the maintenance costs. 

Determinants of the per capita standard expenditure on public roads planning: comparison between small municipalities and cities with over 100,000 inhabitants (2017). 

SOURCE: elaboration by openpolis on SOSE database (last updated on Monday 15 March 2021) 

The diseconomies of scale are more significant in small municipalities. However, the road network and the municipality's territory also cause considerable gaps based on the number of inhabitants. The road network extension impacts small municipalities with fewer human, financial and instrumental resources more significantly. 

22.1% of the per capita standard expenditure on public roads and planning in municipalities with less than 500 inhabitants is attributable to public roads and their extension. In large cities, these variables determine less than 2% of the standard expenditure. 

In small municipalities, diseconomies, territorial extension, and environmental risks have a much more significant impact. 

In larger municipalities, the number of inhabitants per housing unit is the most decisive variable since it represents 57% of the standard expenditure on public roads and planning. At the same time, environmental risks such as landslides and earthquakes represent a variable with a much lower impact on the standard expenditure. 

In large cities, these variables account for 1.47% of standard expenditure. On the contrary, in municipalities with less than 500 inhabitants, almost 4% of the per capita standard expenditure on public roads and planning is attributable to the share of residents living in landslide risk and seismic areas with a high probability of strong earthquakes. 

In the south and northwest, the historical expenditure is lower than the standard one. 

After estimating the standard expenditure on public roads and planning for each municipality, it is interesting to compare it with the historical expenditure on the same function. 

On average, in 69% of municipalities, the historical expenditure is lower than the standard one. 

The historical expenditure generally exceeds the standard one in central Italy and the northeast. In the first macro-area, the per capita historical expenditure is 93.61 compared to 81.58 euros per capita of the standard one. In the second macro-area, the gap is much less wide: 85.79 euros per inhabitant of historical expenditure against 83.16 of the standard one. 

This means that in these areas of the country - on average - the expenditure incurred by the local authority on the function "public roads and planning" is higher than the one estimated based on territorial and the socio-demographic characteristics of the population. 

However, this trend is not identical for all municipalities. Also in these areas, over 60% of municipalities recorded a historical expenditure lower than the standard one (62% in the centre, 66% in the northeast). 

In the South, 72% of municipalities record a historical expenditure on public roads and planning lower than the standard one. 

Historical expenditure and standard expenditure on the function "public roads and planning" in all municipalities of RSOs (2017). 

SOURCE: openpolis elaboration on SOSE database 

Throughout the country, most municipalities record a historical expenditure lower than the standard one. 

This means that municipalities spend less on public roads and the environment than the expenditure estimated based on their territorial characteristics. 

This trend is even more evident in the south and northwest. 

In the southern municipalities, a standard expenditure of 81.61 euros per capita corresponds to a historical expenditure of 72.84 euros per inhabitant. Mezzogiorno is the only macro-region where more than 7 municipalities out of 10 do not reach the standard expenditure threshold for public roads and planning. In the northwest, the scenario is similar, even though the gap between standard expenditure (80.72 euros per capita) and historical expenditure (77.80 euros per capita) is more contained. 

A historical expenditure lower than the standard one can depend on various reasons. A local authority could spend less due to greater efficiency or the lack of resources to guarantee an adequate service level. 

How the expenditure level varies according to the services offered 

The expenditure analysis is incomplete if we do not consider the number of services offered for the function "public roads and planning. In other words, it is also necessary to evaluate the level of services provided by municipalities in this specific sector. 

This comparison is possible through the performance indicators published for each municipality on this portal. 

Considering the 10 largest Italian cities. we note that 4 (Milan, Florence, Bologna and Venice) have a historical expenditure higher than the standard one but also a level of services above the average. 

The analysis of large cities' performances in the function “public roads and planning” 

The levels of expenditure and services for the function "public roads and planning, in the 10 most populated Italian municipalities in RSOs (2017) 

SOURCE: elaboration by openpolis on SOSE database 

 

THINGS TO KNOW 

• The position of municipalities in the four quadrants depends on their level of expenditure and the number of services provided on a 1:10 scale 
• The municipalities in the lower right quadrant incur a historical expenditure higher than the standard one and provide fewer services than the average of municipalities with the same number of inhabitants. 
• The municipalities in the upper-right quadrant record a historical expenditure lower than the standard one and a higher service level than the average of municipalities with the number of inhabitants 
• The municipalities in the lower-left quadrant incur a historical expenditure lower than the standard one and provide fewer services than the average of municipalities with the same number of inhabitants.  
• The municipalities in the upper-right quadrant show a higher historical expenditure than the standard one and a higher service level than the average of municipalities with the same number of inhabitants. 

Naples and Rome show a level of expenditure similar to Florence. Nevertheless, the number of services provided in the function (level 1 of the indicator developed by Sose) is much lower. Bari records the same value, but it offers the same services with a much lower level of expenditure. 

Genoa is in an intermediate position as regards both the level of services and expenditure. Turin and Verona are in the opposite quadrants. The first city records an expenditure level above the average but a service level below the average in the “public roads and environment” function. The second shows a high quantity of services (8 out of 10 of the Sose indicator) and an expenditure level below the average (4 out of 10).