JUDGMENT NO. 63

YEAR 2024

ITALIAN REPUBLIC

IN THE NAME OF THE ITALIAN PEOPLE

THE CONSTITUTIONAL COURT

composed of:

President: Augusto Antonio BARBERA;

Justices: Franco MODUGNO, Giulio PROSPERETTI, Giovanni AMOROSO, Francesco VIGANÒ, Luca ANTONINI, Stefano PETITTI, Angelo BUSCEMA, Emanuela NAVARRETTA, Filippo PATRONI GRIFFI, Marco D’ALBERTI, Giovanni PITRUZZELLA, Antonella SCIARRONE ALIBRANDI,

has rendered the following

JUDGMENT

in the proceedings concerning the constitutional legitimacy of Article 1, paragraphs 332 and 774, of Law No. 197 of 29 December 2022 (State budget forecast for the financial year 2023 and multi-year budget for the three-year period 2023-2025), initiated by the Liguria Region with an appeal notified on 27 February 2023, filed with the Court Registry on 7 March 2023, registered under No. 12 of the appeals register for 2023, and published in the Official Gazette of the Republic No. 14, first special series, of the year 2023.

Having seen the act of constitution of the President of the Council of Ministers;

Having heard the Judge Rapporteur Marco D’Alberti at the public hearing of 21 February 2024;

Having heard attorney Pietro Piciocchi for the Liguria Region and State Attorney Carmela Pluchino for the President of the Council of Ministers;

Deliberated in the Council Chamber of 21 February 2024.

Considered in fact

1. – The Liguria Region, with an appeal notified on 27 February 2023, filed on 7 March 2023, and registered under No. 12 of the appeals register for 2023, initiated questions of constitutional legitimacy of Article 1, paragraphs 332 and 774, of Law No. 197 of 29 December 2022 (State budget forecast for the financial year 2023 and multi-year budget for the three-year period 2023-2025), with reference to Articles 5, 114, 119, first, third and fourth paragraphs, and 120, second paragraph, of the Constitution.

1.1. – The questions were initiated upon the proposal of the Council of Local Authorities of the Liguria Region, pursuant to Article 32, second paragraph, of Law No. 87 of 11 March 1953 (Rules on the establishment and operation of the Constitutional Court), as the aforementioned provisions would impair the financial autonomy of the municipalities of Liguria, as well as the principle of loyal cooperation.

2. – The first challenged provision (Article 1, paragraph 332, of Law No. 197 of 2022), in extending also to employees of local authorities the supplementary allowance one-off provided for state personnel by Article 1, paragraph 330, of the same law (to be paid for thirteen months and determined at 1.5 percent of the salary), established that the related costs "shall be borne by the respective budgets pursuant to Article 48, paragraph 2, of Legislative Decree No. 165 of 30 March 2001." According to this provision, in fact, in relation to local authorities, "the costs arising from national collective bargaining are determined to be borne by the respective budgets in compliance with Article 40, paragraph 3-quinquies."

The appellant – while not contesting "the recognition of the one-off treatment to the employees of the sector, which clearly appears to be oriented towards the understandable purpose of mitigating the negative consequences of inflation on the salaries of public employees" – censures the state provision in the part in which it has attributed the related cost (which would amount "for the entire local authorities sector to 150 million euros") to be borne by the budget of the municipalities, instead of by the budget of the State, or in the part in which it has not provided for any form of compensation, nor has it provided for any form of consultation with the representative associations of local authorities.

2.1. – In the first place, the violation of Articles 5, 114, and 119, first paragraph, of the Constitution is lamented, because the challenged provision – by imposing a financial burden on the municipalities – would limit their spending capacity, with consequent violation of the political autonomy and the financial competences of these entities. The provision, in fact, would impact "on the possibility of the latter to pursue, with appropriate means also in terms of an adequate number of human resources, their own political-administrative direction."

On the other hand, since the regulations on collective bargaining for the local authorities sector are attributable to the exclusive legislative competence of the State in the matter of "civil law," it would be up to the State to "provide the financial resources necessary to meet it" directly or in any case by ensuring that the territorial administrations receive "forms of adequate compensation."

2.2. – Secondly, the infringement of Article 119, fourth paragraph, of the Constitution is lamented, since the challenged provision, further increasing the current expenditure of local authorities for personnel costs "and without any prior impact assessment," would prevent them from the regular exercise of the functions attributed by law.

In the opinion of the appellant, in fact, the effect that the provision will produce "in terms of reduction of services or staff turnover" is "quite intuitive." On the other hand, since the payment of the supplementary allowance one-off will contribute to the determination of the achievement of personnel spending thresholds, the hiring capacity of local authorities will inevitably be reduced, with a consequent compromise of the results of the administrative action.

2.3. – Thirdly, the appellant denounces the violation of the principle of loyal cooperation referred to in Article 120, second paragraph, of the Constitution, since the state provision, while imposing a financial burden on local authorities, has not provided for any agreement, nor any other form of consultation with the representative bodies of local authorities.

According to the Region, in fact, the challenged provision would have referred to Article 48, paragraph 2, of Legislative Decree No. 165 of 30 March 2001 (General rules on the organization of work in the service of public administrations), for the sole purpose of imputing the financial burden of the expenditure to the budget of local authorities, and not to refer also to the regulations that – in the subsequent period of the same paragraph – provide for consultation between the Government and the "institutional representations of the autonomy system" for the definition of the resources to be allocated to the salary increases resulting from the renewal of national collective bargaining agreements of employees of local administrations.

By virtue of this, the principle of loyal cooperation would be violated, which, in a system of political and administrative decentralization based on the model of cohesion and solidarity, should also inspire the relations between the State and local authorities.

3. – The second challenged provision (Article 1, paragraph 774, of Law No. 197 of 2022) intervenes in the regulations of the municipal solidarity fund (FSC), provided for by Article 1, paragraph 380, of Law No. 228 of 24 December 2012, containing "Provisions for the formation of the annual and multi-annual budget of the State (Stability Law 2013)," increasing its financial endowment for the year 2023 by 50 million euros compared to what was already provided for by Article 1, paragraphs 448 and 449, letter d-quater), of Law No. 232 of 11 December 2016 (State budget forecast for the financial year 2017 and multi-year budget for the three-year period 2017-2019).

3.1. – The appellant states that the State, with Law No. 160 of 27 December 2019 (State budget forecast for the financial year 2020 and multi-year budget for the three-year period 2020-2022), has ordered the gradual return of the "vertical" share of the municipal solidarity fund, which had been subtracted – as a contribution by local authorities to the recovery of public finances – by Article 47, paragraph 8, of Decree-Law No. 66 of 24 April 2014 (Urgent measures for competitiveness and social justice), converted, with amendments, into Law No. 89 of 23 June 2014.

This progressive return – equal to 100 million euros in 2020, 200 million euros in 2021, 300 million euros in 2022, 330 million euros in 2023 and 560 million euros starting from 2024 – was intended "for specific needs of correction in the allocation of the Municipal Solidarity Fund, to be identified by decrees of the President of the Council of Ministers [...]" (Article 1, paragraph 449, letter d-quater, of Law No. 232 of 2016, inserted by Article 1, paragraph 849, of Law No. 160 of 2019).

As recalled by the regional defense, the legislative intervention also aimed at sterilizing the negative effects of the progression of the equalization based on the difference between fiscal capacity and standard needs, which had been ordered, for the purpose of allocating the shares of the FSC, by Article 57, paragraph 1, of Decree-Law No. 124 of 26 October 2019 (Urgent provisions on tax matters and for unavoidable needs), converted, with amendments, into Law No. 157 of 19 December 2019.

3.2. – The appellant emphasizes that the sums allocated so far by the State have in fact "made it possible to make practically null the negative effects of the equalization," ensuring the allocation of greater resources to municipalities with less fiscal capacity, without the other municipalities bearing the burden.

However, according to the Region, with the progressive advance of the equalization percentage for the allocation of the shares of the FSC, the effect of neutralization in favor of the municipalities could not "longer be pursued except through a new injection of resources by the State, the amounts originally provided not being sufficient for this purpose." In particular, on the basis of estimates by the IFEL Foundation, the appellant argues that, in order to avoid negative repercussions on the municipalities for the year 2023, it would be necessary – in addition to the aforementioned 50 million additional already provided by the State with the challenged provision – "an additional 36 million euros."

According to the appellant, such an increase in state resources would allow overcoming the many critical profiles that characterize the current equalization model and, above all, would ensure an adaptation of this model "to the constitutional choice of vertical equalization" (the judgments of this Court No. 61 of 2018 and No. 46 of 2013 are cited). This, also taking into account the heterogeneity of the results of the cadastral system, as well as the overall under-sizing of the financial endowment of local authorities, as resulting from the relationship between the value of fiscal capacity and the amount of resources needed to perform basic functions.

3.3. – In the light of this reconstruction, the challenged provision would first of all violate Articles 5 and 119, paragraphs one, three, and four, of the Constitution. In fact, the increase of 50 million provided for by this provision – not being sufficient to ensure the full sterilization of the negative effects deriving from the adoption of the horizontal equalization mechanism – would prejudice the financial autonomy of the municipalities, preventing them from adequately exercising their action, also in violation of the canon of responsibility of the political mandate of the administrators.

On the other hand, the provision would conflict with the very "principle of typicality of equalization instruments," since – according to the appellant – the equalization system "desired by the Constitution" would have the "main function, typified and not derogable by the legislator, to support the municipalities with less fiscal capacity per inhabitant according to a modality that is not that of taking resources from some municipalities to allocate them to others." Therefore, the failure to provide adequate state resources would offload the cost of equalization onto the municipalities, instead of onto the State, consolidating a horizontal equalization model "openly in contrast" with the constitutional jurisprudence.

3.4. – Secondly, the Region laments the violation of Article 119, paragraphs one and four, of the Constitution, because the failure to provide the necessary resources to neutralize the negative effects of the equalization would jeopardize the possibility for municipalities to provide for the regular exercise of the functions assigned by law.

According to the appellant, the State would have the obligation and responsibility to ensure the regular exercise of the functions assigned to local authorities: this, in accordance with the guidelines of the constitutional jurisprudence that would have imposed the temporary nature of the spending limits set for the regions and local authorities, also in order to avert a possible vulnus to the functions exercised in areas of considerable social importance (among others, judgments No. 103 of 2018 and No. 10 of 2016 are cited).

3.5. – Finally, the Region laments the infringement of Article 120, second paragraph, of the Constitution, since the challenged provision should have identified the resources necessary to sterilize the negative repercussions of the equalization on the basis of a preliminary analysis of the capacity of the bodies to fulfill the full exercise of the functions attributed to them: this has not happened, with consequent violation of the "most elementary rules of loyal cooperation," which would be all the more necessary in the presence of state interventions aimed at reducing resources with respect to local authorities.

4. – The President of the Council of Ministers, represented and defended by the State General Attorney, appeared in the proceedings with an act filed on 31 March 2023, requesting that the related questions be declared inadmissible or, in any case, unfounded.

4.1. – In relation to the challenge of Article 1, paragraph 332, of Law No. 197 of 2022, the State Attorney considers legitimate the choice of the state legislator to extend the supplementary allowance one-off – provided for by paragraph 330 of the same article – also to the employees of local authorities: this, "in order to avoid disparities in treatment between state personnel and the rest of the public personnel."

Moreover, the non-violation of the constitutional parameters invoked by the Liguria Region would be confirmed by the same reference made by the challenged provision to Article 48, paragraph 2, of Legislative Decree No. 165 of 2001, which provides that it is the local authorities that bear the costs arising from salary increases of their personnel.

But above all, according to the President of the Council of Ministers, the appellant should have provided adequate proof of the prejudicial effects of the challenged provision for the regular performance of the functions assigned to the municipalities: this in the light of the constitutional jurisprudence, which has excluded that the financial autonomy constitutionally recognized to territorial bodies can imply a rigid quantitative guarantee, while reductions in resources are however allowed, provided that they do not make it impossible to perform the functions attributed to the same bodies.

The appellant, therefore, would not have adequately fulfilled the burden of proving the irreparability of the damage arising from the challenged provision (the judgment of this Court No. 76 of 2020 is cited).

4.2. – With reference to the challenge of Article 1, paragraph 774, of Law No. 197 of 2022, the State Attorney emphasizes the unfoundedness of the criticisms put forward by the Region, in the light of the full consistency of the challenged provision with the overall evolution of the state regulatory framework on the FSC, the legitimacy of which would have been confirmed by this same Court (the judgment No. 220 of 2021 is cited).

4.2.1. – The President of the Council of Ministers first of all recalls the reasons that, in recent years, have led the state legislator to progressively reconstitute the vertical component of the FSC, in order to compensate the municipalities for the lower revenues deriving from the reform of real estate taxation and from cost containment measures.

In a similar context – which, as highlighted by this Court, is in "clear continuity with respect to the phase of linear cuts and inaugurates the progressive restoration of the original amount of the FSC" (the judgment No. 220 of 2021 is cited again) – it would be possible to grasp "the intrinsic reasonableness of the provision subject to specific censure," which, by increasing the state resources already provided for 2023, would contribute to strengthening its vertical component.

4.2.2. – According to the state defense, moreover, the unfoundedness of the appeal would derive from the fact that the Liguria Region – in lamenting the insufficient endowment of the FSC – would be reproposing criticisms substantially analogous to those already rejected by this Court in the aforementioned judgment No. 220 of 2021, where it was reiterated, among other things, that legislative interventions that affect the financial structure of territorial bodies should not be considered in an atomistic way, but in the context of other provisions of a financial nature and the rebalancing objectives pursued by the state legislator in the context of public finance maneuvers.

By virtue of this, the appellant should have considered – in addition to the state allocations aimed at financing important municipal functions in the field of social services, assistance and educational services – also the further corrective measures already adopted by the State to mitigate the negative effects of the change in resources, especially with reference to small municipalities (Article 1, paragraph 449, letter d-ter, of Law No. 232 of 2016).

But above all, the appellant should have demonstrated, in a precise manner, the impact of the challenged provision on the actual performance of the functions assigned to the municipalities: instead, the need to supplement the FSC by a further 36 million euros would have been put forward "in a completely apodictic and merely assertive way."

4.2.3. – The State Attorney also disputes the appellant's thesis according to which the Constitution would have outlined a single "typical" model of vertical equalization, while the horizontal nature of the Municipal Solidarity Fund is fully legitimate. The vertical equalization model would be imposed exclusively by Article 119, fifth paragraph, of the Constitution, where the necessary intervention of the State is provided for through the allocation of "additional resources" for the pursuit of specific purposes of public importance. However, the case outlined in Article 119, third paragraph, of the Constitution should be clearly distinguished from this model, where the establishment of an "equalization fund, without destination constraints, for the territories with less fiscal capacity per inhabitant" is provided.

4.2.4. – Finally, with regard to the lamented violation of the principle of loyal cooperation enshrined in Article 120, second paragraph, of the Constitution, the State Attorney points out that Article 1, paragraph 380, of Law No. 228 of 2012, establishing the FSC, provides that the criteria for the formation and allocation thereof shall be established by decree of the President of the Council of Ministers, upon the proposal of the Minister of Economy and Finance, in agreement with the Minister of Interior, subject to an agreement to be sanctioned in the State-City and Local Autonomies Conference. It is therefore precisely within the framework of this Conference – where the draft decree for the allocation of the Fund is approved – that the dialogue between the different levels of government is guaranteed and adequate representation of the requests of local authorities is ensured.

5. – In the vicinity of the hearing, the Liguria Region submitted a brief in reply to the defenses of the State Attorney.

5.1. – In relation to the first challenged provision, the appellant reiterates that the reference made by Article 1, paragraph 332, of Law No. 197 of 2022, to Article 48, paragraph 2, of Legislative Decree No. 165 of 2001, would only be functional to clarify that the one-off allowance is borne entirely by the budget of local authorities, but not to refer to the provision that provides for "prior consultation with the respective institutional representations of the autonomy system": this consultation, in fact, "never took place, nor could it have taken place" in the light of the complete quantification of the amount of the allowance by the state law. Precisely by virtue of the "completely unilateral" nature of the state decision to recognize such a salary increase, the State "should have provided a suitable compensation in order not to mortify once again [...] the value of local autonomy protected by the Constitution and loyal cooperation."

As for the objection of the State Attorney regarding the failure to demonstrate the impact of this cost on the actual possibility of carrying out the functions assigned to local authorities, the Region emphasizes first of all that the amount of the same is very significant and that, in any case, the objective difficulty of demonstrating the damage suffered by local authorities in the light of the failure of the State to define the LEP should be taken into account.

5.2. – In relation to the second challenged provision, the Region first of all highlights that – also because of the insufficient allocation by the State of "the resources necessary to neutralize the effects of equalization for more than 4,300 Italian Municipalities" – no agreement was reached at the State-City and Local Autonomies Conference on the criteria for the allocation of the FSC for the year 2023, although this did not prevent the State from adopting the decree for the formation and allocation of the resources of the FSC (Decree of the President of the Council of Ministers of 13 June 2023, containing "Criteria for the formation and allocation of the resources of the Municipal Solidarity Fund for the year 2023").

As for the specific state defenses, the appellant disputes the thesis of the State Attorney, according to which – in the light of Article 119, third paragraph, of the Constitution – the resources of the FSC should be distributed "on a fully equalizing basis and, therefore, on the basis of standard needs and fiscal capacity of the individual bodies."

According to the Region, in fact, the Constitution would not legitimize an equalization system such as the existing one, based almost exclusively on the horizontal transfer of resources by municipalities with greater fiscal capacity in favor of municipalities in greater difficulty.

Nor, on the other hand, could it be argued – as instead proposed by the State Attorney – that the constitutional jurisprudence has expressly affirmed the full compliance of the current equalization system with Article 119, third paragraph, of the Constitution. The same judgment No. 220 of 2021 would have identified the "merely horizontal nature" of the FSC as one of the main criticalities of the current system, without reaching the declaration of unconstitutionality of the challenged provisions only because of the "acknowledgment of the abandonment of the season of linear cuts" and of the commitment of the legislator to the "progressive reconstruction of the vertical component of the municipal solidarity fund."

The challenged provision, however, would not have achieved the purpose of mitigating the negative consequences of the progression of the equalization criterion, in the light of the insufficient allocation of resources for the reconstruction of the vertical component of the FSC, with a consequent aggravation of the prejudice to the detriment of municipalities with greater fiscal capacity.

6. – Pursuant to Article 6 of the Supplementary Rules for proceedings before the Constitutional Court, the National Association of Teachers and Trainers (ANIEF), on 23 April 2023, and the National Association of Italian Municipalities (ANCI), on 26 April 2023, filed written opinions as amici curiae, both opinions admitted by presidential decree of 8 January 2024.

6.1. – ANIEF considers Article 1, paragraph 332, of Law No. 197 of 2022 to be constitutionally illegitimate, since the one-off salary increase would have been unilaterally decided by the State, regardless of prior consultation with the representative institutions of the territorial autonomies, which is instead provided for by Article 48, paragraph 2, of Legislative Decree No. 165 of 2001.

6.2. – ANCI, for its part, while sharing the appropriateness of the salary increase ordered by Article 1, paragraph 332, of Law No. 197 of 2022, emphasizes that this provision would depart from the model of determination of the economic treatments of the employees of local authorities, which is the result of a complex process of negotiation, which also involves the relevant representative associations.

It is also emphasized that the State General Accounting Office has proceeded to communicate, through the publication of a specific note, the precise amount of the one-off allowance attributable to all employees of local authorities, the overall cost of which would exceed 160 million euros. However, these costs should have been borne by the State, also in the light of the absence of any mechanism for prior negotiation.

Finally, ANCI also considers Article 1, paragraph 774, of Law No. 197 of 2022 to be constitutionally illegitimate, given that the integration of state resources provided for by the budget law for 2023 would be completely insufficient to ensure the invariance of resources for the "financing" municipalities, also in the light of the increase in energy costs and the structural effects of inflation.

Considered in law

1. – With an appeal registered under No. 12 of the appeals register for 2023, the Liguria Region initiated – at the request of the Council of Local Authorities – questions of constitutional legitimacy of Article 1, paragraphs 332 and 774, of Law No. 197 of 2022, with reference to Articles 5, 114, 119, paragraphs one, three and four, and 120, second paragraph, of the Constitution.

2. – Article 1, paragraph 332, of Law No. 197 of 2022 is challenged in the part in which it places on the budget of the municipalities the costs arising from the recognition – also in favor of the employees of these bodies – of the supplementary allowance one-off provided for state personnel by Article 1, paragraph 330, of the same law, to be paid for thirteen months and determined at 1.5 percent of the salary.

2.1. – According to the appellant, the challenged provision would violate Articles 5, 114 and 119, paragraphs one and four, of the Constitution, since, by imposing a financial burden on the municipalities, it would have impaired their political and financial autonomy, hindering the possibility for these bodies to regularly carry out the functions assigned to them by law. In addition, the violation of the principle of loyal cooperation referred to in Article 120, second paragraph, of the Constitution is lamented, since the challenged provision would have unilaterally imposed this financial burden on the municipalities, without providing for any agreement, nor any other form of consultation with the representative bodies of local authorities.

2.2. – The questions are not well-founded.

2.3. – The budget law for 2023 has put in place an extraordinary intervention in favor of all public employees, providing for the recognition of a "supplementary allowance one-off," at the rate of 1.5 percent of the salary (Article 1, paragraphs 330 and 332, of Law No. 197 of 2022). This is a temporary salary increase, because it is intended to operate in 2023 only "for thirteen months," and which is relevant for the sole purpose of retirement treatment.

As emerges from the preparatory work, the legislative intervention is inspired by the purpose of counteracting the impact of inflation on personnel in the entire public sector. Precisely by virtue of this purpose, the salary increase was recognized not only in favor of state employees (for whom the same budget law has directly allocated the necessary resources), but also in favor of the employees of local authorities and regional administrations.

With regard to the financial costs arising from the recognition of this allowance in favor of non-state employees, the legislator limited himself to referring to the first period of Article 48, paragraph 2, of Legislative Decree No. 165 of 2001, which provides that "[f]or the administrations referred to in Article 41, paragraph 2" (which also include municipalities) "the costs arising from national collective bargaining are determined to be borne by the respective budgets in compliance with Article 40, paragraph 3-quinquies."

2.4. – Thus reconstructed the regulatory framework of reference, the exceptional and temporary nature of the challenged provision must be considered in the case in question. This nature makes it possible to exclude the denounced conflict with Articles 5, 114 and 119, first paragraph, of the Constitution, for violation of the political and financial autonomy of the municipalities.

This Court, in fact, has on several occasions stressed that the State may impose limitations on the spending autonomy of territorial bodies, provided that they have, within the limits to be stated, a transitional scope (see: judgments No. 103 of 2018, No. 169 of 2017, No. 43 of 2016, No. 156 of 2015, No. 23 of 2014, No. 236 of 2013, No. 139 of 2012, No. 159 of 2008, No. 417 of 2005 and No. 36 of 2004).

This orientation, while having been affirmed in relation to state interventions attributable to the matter of coordination of public finances, expresses a general principle applicable also in today's case in which the State, in the exercise of its own legislative competence, affects the spending capacity of territorial bodies.

In the case in question, the temporary nature of the obligation imposed on local authorities is clearly confirmed by the fact that the additional allowance was applied exclusively in relation to the thirteen months of 2023 and, therefore, for a limited and well-determined period of time, which was not the subject of extension interventions by the state legislator.

2.5. – Nor, on the other hand, can it be considered – as instead argued by the appellant – that the imposition of this expenditure has determined a vulnus to the financial autonomy of local authorities with consequent violation of Article 119, fourth paragraph, of the Constitution.

As reiterated by this Court, the financial