GYEONGJU — Twenty-two cities and counties in North Gyeongsang Province said on the 21st that ordinary local grants would fall by 4.5 trillion won ($3.2 billion) from current levels if the government creates a new future response fund and overhauls the local grant system, urging that statutory grant funding be guaranteed first.
The Council of North Gyeongsang Mayors and County Governors issued a statement that day calling for the government to guarantee local grant taxes and to establish a system allowing local governments to manage their finances autonomously.
In its 2027 budget proposal announced on the 1st, the government said it would create a future response fund worth about 162 trillion won, drawing on sources such as tax revenue collected above projections.
About 53 trillion won of the fund is to be spent in four areas: young adults, growth engines, regional development, and education and talent.
The council said it shares the aim of making strategic investments for future generations, but warned that local governments could lose autonomous revenue if national tax revenue earmarked for distribution as local grants is absorbed into the fund.
The council estimated that ordinary local grants for the province's 22 cities and counties would fall by about 4.5 trillion won from current levels next year if the future response fund is introduced.
That could lead to cuts in administrative services that directly affect residents' daily lives and to additional local bond issuance, worsening local finances, the council said.
The council also said that a plan under government review to set up a 15.3 trillion won local account within the future response fund and reinvest the money in the regions cannot serve as a fundamental alternative to the decline in local grants.
Local grant taxes are general revenue that local governments can spend at their own discretion according to regional conditions, the council said, whereas the local account within the future response fund would be distributed according to purposes and standards set by the central government, limiting local fiscal autonomy.
"Absorbing revenue that should go to the regions into a central government fund and then redistributing it does not match the government's policy of a regional era and locally led growth," said Joo Nak-young, chairman of the Council of North Gyeongsang Mayors and County Governors. "The 22 cities and counties will respond jointly to protect our fiscal autonomy."
