"Full Operation Suspension" Enforced? ... Gyeongju City, City Bus Company’s "1.6 Billion Won Subsidy Recovery" Fizzles Out

Gyeongju City Official: "Refund Amount Not Yet Confirmed"... Reverses Previous Position
"Subsidies Lower Than Other Regions" Amid "Budget Giveaway" Controversy
Civic Group: "Subsidy Scale Should Be Based on Normal Standards, Not 'COVID Compensation'

[Asia Economy Yeongnam Reporting Headquarters Reporter Park Dong-wook] Gyeongju City, which had declared a plan to recover about 1.6 billion KRW from a city bus company that misused subsidies, including doubling executive salaries, is instead downplaying the issue by claiming it provided less subsidy than other local governments.

Having paid the city bus company an average of around 7 billion KRW annually, and this year more than double that amount at 16 billion KRW, Gyeongju City has been embroiled in controversy over 'budget overspending.' This sudden change in attitude has raised curiosity about the underlying reasons.

On the 28th and 29th, Gyeongju City consecutively released press statements related to city buses.

The statement on the 28th contained information that Gyeongju City's city bus subsidies are lower compared to other local governments. It revealed the "2020 City Bus Financial Support Status in Gyeongsangbuk-do," showing that Gyeongju’s subsidy of 97 million KRW per bus (totaling 16.1 billion KRW) ranked 8th among 10 cities in the province.

On the 29th, the city went a step further by proposing measures to ensure subsidy transparency. The plan includes establishing a 'Public Transportation Team' dedicated to city bus policies and forming a tentative 'Bus Policy Advisory Committee,' a broad civic countermeasure organization.

However, there is no mention anywhere of the 1.625 billion KRW subsidy misuse recovery plan for the city bus company announced by Gyeongju City on November 27. The plan to form the Bus Policy Advisory Committee had already been announced on the 14th.

Local civic groups and the business community generally view this recent reversal in Gyeongju City's stance as a result of being once again hampered by the company that monopolizes local city bus operations.

The city bus operator, Saecheonnyun Miso Co., Ltd., attacked Gyeongju City on November 25 through a press release, stating that "bus operations are at risk of complete suspension due to not receiving two years' worth of deficit compensation." This company, operated as a family business, has not received deficit compensation totaling about 3.6 billion KRW from Gyeongju City: 1.6 billion KRW in 2018 and 2 billion KRW in 2019.

Deficit (缺損) refers to a financial loss caused by expenditures exceeding income. Local governments nationwide, including Gyeongju City, provide deficit support to city bus companies with a public interest nature under the Automobile Transportation Business Act and related ordinances.

The problem is that although Gyeongju City has identified the bus operator’s reckless management, it has only applied temporary fixes year after year without offering fundamental solutions. Moreover, the threat of a 'complete suspension of operations' by the bus operator has raised concerns that the city might quietly abandon plans to recover subsidies that were misused.

Gyeongju City has been criticized by the Board of Audit and Inspection early last year for violating the Local Finance Act by paying subsidies annually as a matter of practice, then recovering or additionally paying some amounts based on deficit size outside the fiscal year.

Amid this wavering subsidy payment practice, Saecheonnyun Miso was found to have spent 2019 fuel costs, vehicle maintenance fees, and rental fees from this year’s subsidy, despite the Local Finance Act stipulating that expenses incurred in the previous year cannot be executed from the current year’s budget.

The financial support investigation of the bus operator by Gyeongju City in November also confirmed that the CEO’s salary was raised by up to double, from the previous year by 120 million KRW to 276 million KRW, among other executive pay increases.

Regarding this, a representative of a Gyeongju civic group argued, "The subsidy scale this year is due to the special circumstances of COVID-19, and since it varies greatly by local government, claiming that city bus subsidies are low is misleading."

They added, "If Gyeongju City does not file a complaint with judicial authorities against the company accused of embezzling and misappropriating subsidies and only issues a 'warning,' and then fails to take recovery action, it signals a willingness to overlook illegal acts in the future."

In response, a Gyeongju City official explained, "The recovery amount announced previously was not finalized," and "The issue of deficit payment requested by the bus operator is linked to the corporate acquisition process in March last year, so it requires further examination."

This content was produced with the assistance of AI translation services.