Subsection 4: Compensation grants

A compensation allowance is created within the departments' overall operating allowance, the amount of which is equal in 2004, for each department, to the amount due in respect of 2003 pursuant to article L. 3334-7-1 as it stood prior to the Finance Act for 2004 (no. 2003-1311 of 30 December 2003), increased by 95% of the amount of the general decentralisation allowance due to the department in respect of 2003, excluding the fraction of this allowance corresponding to tax compensation and the special assistance provided for in articles L. 1614-8 and L. 1614-4, revalued according to the growth rate of the overall operating grant distributed in 2004. From 2005 onwards, this allocation changes each year according to a rate set by the Local Finance Committee that is at most equal to the rate of change in the overall operating allocation apportioned.

For 2005, the compensation allowance calculated in application of the preceding paragraph is reduced by the sum of the reductions made in application of the following paragraph. The distribution of this reduction between the départements is calculated as follows:

- the compensation allowance of the départements and, if necessary, the share of the proceeds of the tax on insurance agreements mentioned in I are subject to a reduction of 900 million euros, distributed between the départements according to the ratio between the number of land motor vehicles registered in each département on 31 December 2003 and the total number of land motor vehicles registered on national territory on this same date. If the amount of the rebate calculated in this way is greater than the compensation allowance received by a département in 2004 and indexed according to the rate mentioned in this article, the difference is deducted from the proceeds of the special tax on insurance policies allocated in application of I of article 53 of the 2005 finance law (n° 2004-1484 du 30 décembre 2004). From 2006 onwards, this levy will change each year according to the indexation rate of the global operating allowance distributed;

- the compensation allowance for the départements is topped up by 20 million euros, distributed between the départements according to the ratio between the number of volunteer firefighters in the departmental fire brigade of each département at 31 December 2003 and the total number of volunteer firefighters in the departmental fire brigades at national level at the same date.

From 2006, these amounts evolve in the same way as the overall operating allocation distributed.

In 2006, the compensation allocation calculated in application of the previous paragraphs is first increased for each department by an amount equal to the amount received in 2004 in application of the third and fifth paragraphs of article L. 3334-11 as it stood prior to Finance Act no. 2005-1719 of 30 December 2005 for 2006, indexed according to the rates of change in general government gross fixed capital formation as estimated in the economic, social and financial report attached to the Finance Bills for 2005 and 2006.

In 2006, this allocation is, secondly, increased for each département by an amount corresponding to the product of the average of its real investment expenditure having been subsidised in respect of 2002, 2003 and 2004 pursuant to the second paragraph of article L. 3334-11, as it stood prior to law no. 2005-1719 of 30 December 2005, by its actual rate of subsidy in respect of 2004 minus 2 points. From 2007, this increase in the compensation allowance for each département is calculated by taking the actual subsidy rate for 2004 less 1.22 points. This amount is indexed according to the rates of change in the gross fixed capital formation of general government as estimated in the economic, social and financial report attached to the draft finance bills for 2005 and 2006. The actual subsidy rate mentioned above is equal to the amount of subsidies received in respect of the 2004 financial year pursuant to the second, seventh and last paragraphs of Article L. 3334-11, in its wording prior to the aforementioned Law no. 2005-1719 of 30 December 2005, compared to the volume of investments that gave rise to a subsidy for that same financial year pursuant to the second paragraph of that Article.

Thirdly, in 2006, this allocation is topped up by 15 million euros, divided between each department in proportion to the average amount of the allocations received in 2002, 2003 and 2004 by the departmental fire and rescue service of that department under the first part of the global equipment allocation, provided for in the first paragraph of article L. 3334-11 as it read prior to the aforementioned law no. 2005-1719 of 30 December 2005. This top-up contributes to the departments' participation in the financing of the departmental fire and rescue services.

In 2006, this endowment is fourthly topped up by an amount of 12 million euros, distributed between the departments according to the terms and conditions set out in the fourth paragraph.

From 2007, the compensation endowment to be taken into account in respect of 2006 incorporates the increases set out in the four preceding paragraphs.

In 2007, the departments' compensation allowance is subject to an additional supplement of 12 million euros distributed among the departments on the basis of the ratio between the number of volunteer firefighters in the departmental corps of each department on 31 December 2003 and the number of volunteer firefighters present in the departmental corps at national level on that same date.

From 2011, the amount of the compensation allowance is equal, for each department, to the amount received in 2010.

In 2017, the departments' compensation allowance is subject to a reduction of 32 million euros corresponding to the sum of the top-ups provided for in the fourth and ninth paragraphs of this article. This reduction is distributed between the départements in accordance with the procedures set out in the fourth paragraph. If the compensation allowance is insufficient, the amount of the reduction is deducted from the flat-rate allowance provided for in article L. 3334-3. ;

From 2020, the amount of the compensation allowance for the department of La Réunion is reduced under the conditions provided for in the article of law no. 2019-1479 of 28 December 2019 on finances for 2020.

As of 2022, the amount of the compensation allowance for departments experimenting with the recentralisation of the active solidarity income mentioned in Article L. 262-2 of the Social Action and Family Code is reduced under the conditions provided for in Article 43 of Law No. 2021-1900 of 30 December 2021 on finances for 2022.