The fiscal sustainability of Italian municipalities has a dimension that goes beyond the deadlines set by the Consolidated Act on Local Authorities (TUEL) for budget submission. What matters is understanding what will happen when the demographic transformations already under way present the bill. To answer this question, Civiqa analysed approximately 7,900 Italian municipalities, cross-referencing two structural dimensions that are often assessed separately: the demographic pressure associated with population ageing and the degree of rigidity of municipal budgets.

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The map of fiscal vulnerability across municipalities shows a geographic distribution that does not follow a simple North–South divide. While inland areas and many southern municipalities concentrate the most critical combination — high demographic pressure coupled with historically rigid budgets - structural vulnerability is present in every region. North-Eastern Italy, for example, features municipalities with more flexible budgets but already advanced population ageing; Liguria and Sardinia record the highest old-age dependency ratios in the country. The chromatic variation of the map reflects exactly this: structural vulnerability is a heterogeneously distributed phenomenon that cannot be read in regional averages but only becomes visible at the level of the individual municipality.

Why these two dimensions together
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Population ageing is hardly new. Yet its implications for local public expenditure remain underestimated in the financial planning of many local authorities. The figures speak clearly: today, people aged 65 and over account for 24.7% of Italy's population, and the old-age index — measuring the number of elderly persons per 100 young people under 14 — reached 208% in 2024, up from 149% in 2011. ISTAT projections (Previsioni della popolazione residente e delle famiglie — Base 1/1/2024, July 2025) indicate that by 2050 the share of over-65s will rise to 34.6%, with more than 6.5 million elderly people living alone.

‍More elderly people means growing demand for personal care services — home assistance, transport, local welfare — services that fall largely on municipalities. This is a demand that grows silently and gradually, difficult to "feel" in a single year's budget, but which over the medium-to-long term completely reshapes the profile of required expenditure. Against this growing pressure, the average municipal expenditure per elderly person has moved in the opposite direction, declining from €107 to €93 per year between 2012 and 2022, with a territorial gap ranging from €174 per capita in North-Eastern Italy to just €40 in the South.

Assessing budget "rigidity" is a way to understand how much real fiscal space a municipality currently has. A rigid budget is one in which the share of committed current expenditure — personnel, debt service, non-compressible essential services — is already so high as to leave little room to reallocate resources, invest, or respond to new needs. The standard spending review introduced by the 2024 Budget Law made this problem even more tangible: cuts to the municipal solidarity fund were distributed in proportion to committed current expenditure, penalising authorities with the least fiscal room. Under normal conditions, this rigidity is a structural weakness. In the presence of growing demographic pressures, it becomes a vulnerability multiplier.
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Four types of municipalities, four risk levels
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Cross-referencing these two dimensions yields very different structural vulnerability profiles. Simplifying, four scenarios can be identified:

• High demographic pressure + rigid budget: this is the most critical combination. These municipalities will face growing demand for services with increasingly inflexible resources. The room for adaptation is minimal;

• High demographic pressure + flexible budget: the demographic condition is challenging, but the authority still has room to redirect resources. The risk exists, but is manageable with careful planning;

• Low demographic pressure + rigid budget: fiscal rigidity remains a structural problem, but within a more stable demographic context. A risk to monitor, though not yet urgent;

• Low demographic pressure + flexible budget: this is the most resilient profile. These municipalities start from a position of relative advantage in facing the future.

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Looking beyond short-term fiscal balance

This analysis does not claim that these municipalities are in crisis today. It says something more subtle and more important: that some local administrations are accumulating structural fragilities without necessarily seeing them in their annual balance indicators. A budget can be formally in balance while the future capacity to meet citizens' needs erodes slowly.

This is a matter of time horizon. Local public finance tends to be assessed over the short term, while demographic transformations unfold over decades. Aligning these time horizons - bringing the structural dimension into today's decisions - is one of the most significant challenges facing those who govern local territories.

Data to support better decisions

Analyses such as this do not aim to identify "who is struggling", but to equip administrators and public decision-makers with a richer understanding of their authority's situation. Understanding which quadrant of the positioning map a municipality falls into and understanding why - is the first step towards building informed adaptation strategies. This means planning expenditure allocation, setting investment priorities, and accessing available funds to strengthen services for the most vulnerable citizens.

The efficiency and sustainability of public decisions are not built by looking only at the present. They are built by learning to read the future in today's data - and by equipping oneself with the tools to turn that reading into concrete choices.

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