Suwon Mayor Yeom Tae-young: "Paradigm Shift in Government Finance Needed for Local Development to Drive National Growth"

[Suwon Ilbo=Reporter Seo Dong-young] Yeom Tae-young, Suwon Mayor and Chair of the Association of Mayors and Governors of Korea, stated on the 13th that a "paradigm shift in government finance" is needed so that local development drives national growth by allowing local governments to handle areas where they can perform well.

Chair Yeom emphasized this point at the fiscal decentralization policy seminar held at Suwon Convention Center on the theme of "The Current State of Local Government Finance and Desirable Fiscal Decentralization," adding, "The government must listen to the difficulties and voices of basic local governments across the nation regarding their fiscal challenges."

The seminar, jointly hosted by three institutions—Suwon City, the Association of Mayors, Governors, and Heads of Local Councils, and the Presidential Committee on Balanced National Development—brought together experts in related fields to diagnose the fiscal realities of local governments and explore desirable directions for fiscal decentralization. Held one year after the government announced its fiscal decentralization promotion plan in October of last year, the seminar aimed to review the implementation of the first phase of fiscal decentralization and explore future directions for advancing fiscal decentralization.

In his opening remarks, Chair Yeom stated: "Fiscal decentralization represents not only the distribution of fiscal authority between the central and local governments, but also the degree to which local governments can exercise authority without interference and control from the central government. It is about changing the budget allocation method so that local governments can autonomously and effectively spend budgets suited to their circumstances."

He also emphasized: "Please become a driving force in opening an era of substantive decentralization of authority by sharing empathy with the fiscal situations and on-site difficulties faced by all 226 basic local governments across the nation, and by expanding the autonomy and efficiency of local budget execution centered on basic local governments."

In the first session of the full seminar, chaired by Professor Sohn Hee-jun of Cheongju University, Lee Sang-beom, a specialist committee member of the Association of Mayors, Governors, and Heads of Local Councils, presented on "The Current State and Realities of Local Finance," and Professor Bae In-myung of Seoul Women's University presented on "An Evaluation of the Moon Jae-in Administration's First Phase Fiscal Decentralization Policy."

In particular, Professor Bae In-myung stated: "It is necessary to improve unreasonable national treasury subsidy rates to enable efficient resource allocation and reduce excessive local government burden. The adjustment of subsidy rates for welfare subsidy projects, which are the greatest obstacle to local finance, and the role division between governments in welfare services are highly urgent tasks."

The second session, chaired by Kim Jae-hoon, president of the Korean Local Government Finance Association, featured presentations by Hong Sung-sun, director of the Local Finance Strategy Research Institute, on "Measures for Developing Local Finance Under Local Decentralization," and Professor Yoo Tae-hyun of Namseoul University on "Implications by Means and Impact of Phase Two Local Decentralization," discussing ways to develop local finance for implementing grassroots local self-governance.

Meanwhile, the fiscal decentralization the government is pursuing includes Phase One (2019-2020), which aims to realize fiscal decentralization tangibly through expanding local taxes (revenue-side decentralization) and transferring central government functions to local governments (expenditure-side decentralization), and Phase Two (2021 onwards), which targets fundamental institutional reforms of the overall local finance system to strengthen local autonomy and promote balanced development.