Due to Economic Contraction... 'Nationwide No.1' Hwaseong City's Fiscal Independence Rate Drops from 61% to 50%

Next Year's Main Budget 3.1849 Trillion KRW... 1.98% Increase
Welfare Budget Increased by 17% Through Expenditure Restructuring

Due to a decrease in tax revenue caused by the economic downturn, the financial independence of local governments is expected to significantly decline next year. Even Hwaseong-si in Gyeonggi-do, which ranked first nationwide with a financial independence ratio of 61.08% this year, is expected to see this ratio drop to 50.19% next year.

On the 20th, Hwaseong-si announced through a regular municipal briefing that the main budget for next year has been finalized at 3.184985 trillion KRW. This represents a 1.98% increase compared to this year's 3.12317 trillion KRW.

Lee Byeong-yeol, Director of Planning and Coordination at Hwaseong-si, explained, "Due to the real estate market slump, tax system reforms, and poor business performance of companies, local tax revenue is expected to decrease by about 220 billion KRW, creating unfavorable financial conditions." However, he added, "We have slightly increased next year's budget through increased national subsidies in the welfare sector and fund borrowing."

The city's budget for next year consists of 2.845782 trillion KRW in the general account and 339.23 billion KRW in the special account. The general account increased by 61.012 billion KRW, and the special account by 820 million KRW.

Despite the decrease in tax revenue, the city increased the social welfare budget through extensive expenditure restructuring. The social welfare budget, which was about 1.0158 trillion KRW this year, has been increased by 17% to 1.1899 trillion KRW next year. The social welfare budget will account for 41.8% of total expenditures next year. Budgets related to public order and safety, as well as the environment, will also see slight increases.

On the other hand, budgets for education, culture and tourism, health, agriculture, forestry, marine and fisheries, industry, small and medium enterprises and energy, transportation and logistics, and national land and regional development have been reduced compared to this year.

Director Lee stated, "Although there are difficulties due to the decrease in tax revenue, we have concentrated limited resources on projects with high citizen impact, such as building social safety nets and revitalizing the local economy."

However, with a significant drop in revenue, a decline in Hwaseong-si's financial independence is inevitable. The city's financial independence ratio, which ranked first nationwide at 61.08% this year, is expected to fall by 10.89 percentage points to 50.19% next year. Financial independence ratio refers to the proportion of local taxes and non-tax revenues in the general account.

The 'financial autonomy,' which considers local allocation tax and adjustment grants, is also expected to decrease from 69.27% this year to 58.32% next year. Hwaseong-si's financial autonomy this year is also ranked among the top, at 4th nationwide.

Mayor Jeong Myeong-geun of Hwaseong-si said, "Although the economic downturn next year is unavoidable, we cannot give up on building social safety nets, so the decline in financial independence is inevitable. We will respond efficiently to the unstable financial situation and secure fiscal soundness."

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