White Paper on
Local Public Finance, 2012
- Illustrated -
Financial Management Division,
Local Public Finance Bureau,
Ministry of Internal Affairs and Communications
Address: 2-1-2 Kasumigaseki, Chiyoda-ku, Tokyo 100-8926,
Japan
Tel.: +81-(0)3-5253-5111 (ext. 5649)
http://www.soumu.go.jp
All Rights Reserved
F Y 2 0 1 0 S e t t l e m e n t
Contents
The Role of Local Public Finance 1
FY2010 Settlement Overview 4
Scale of Account Settlement 5
Revenue and Expenditure Settlement 5
Revenues 6
1. Revenue Breakdown 6
2. Revenue Trends 7
3. Local Taxes 8
4. Local Allocation Tax 11
Expenditures 13
1. Expenses by Function 13
2. Expenses by Type 16
Flexibility of the Financial Structure 19
1. Ordinary Balance Ratio 19
2. Real Debt Service Ratio and Debt Service Payment Ratio 20
Outstanding Local Government Borrowing 21
1. Trends in Outstanding Local Government Borrowing 21
2. Outstanding Local Finance Borrowing 22
Local Public Enterprises 23
1. Ratio of Local Public Enterprises 23
2. Number of Businesses Operated by Local Public Enterprises 24
3. Scale of Financial Settlement 24
4. Financial Status 25
Promotion of the Soundness of Local Public Finance 26
1.Overview of the Act on Assurance of Sound Financial Status of Local Governments 26
2.Status of the Ratios for Determining Soundness 29 1Ordinary accounts
General administrative sector accounts
Public enterprise accounts
National health
insurance accounts
Latter-stage elderly
medical care
accounts
Nursing care
insurance accounts
Other accounts
(Public business accounts)
Classification of the Accounts of Local Governments
Applied in the Settlement Account Statistics
The Role of Local Public Finance
Prefectures and municipalities (cities, towns, and villages) are the central actors in various areas of public services, including school
education, public welfare and health, police and fire services, and public works such as roads and sewage systems, thereby fulfilling
a major role in the lives of the citizens of the nation. This brochure describes the status of local public finance (which comprises collec-
tively the finances of individual local governments), the state of settlements for FY2010, and the status of the ratios for determining
soundness of local governments, with particular attention given to ordinary accounts.
Although the accounts of local governments are divided into general accounts and special accounts, the classification of accounts is
not uniform between local governments. Accordingly, a uniform method for settlement account statistics has been adopted in this
brochure. Accounts are classified as ordinary accounts, which cover the general administrative sector, and other accounts (public
business accounts). This makes it possible to clarify the financial condition of local governments as a whole and to make a statistical
comparison between local governments.Etc.Water supply, transportation, electrical power, gas, hospitals,
sewer systems, residential land development, etc.
Local Government Accounts 2Government sector
117,141円.0 billion (24.4%)
357,764円.1 billion (74.7%)
Private sector
Local government
56,061円.0 billion (11.7%)
Ordinary account
50,567円.7 billion (10.6%)
Central government
22,175円.7 billion
(4.6%)
Social security fund
38,904円.3 billion
(8.1%)
Net export of goods and services
4,299円.5 billion (0.9%)
Corporate sector
64,037円.6 billion (13.4%)
Household sector
293,726円.5 billion
(61.3%)
479,204円.6 billion
Gross domestic
product
(expenditure,nominal)
How large is local public finance compared with central government finance?
The ratio of gross domestic product (expenditure) consisting of local public finance is 11.7%, about 2.5 times that of the central
government.
Gross Domestic Product (Expenditure) and Local Public Finance 3In which areas is the share of local expenditures high?
Share of expenditures
by function3.7%Sanitation expenses9.1%School education expenses4.0%Judicial, police, and
fire service expenses2.8%Social education expenses, etc.9.6%Land development
expenses
19.0%
Public welfare expenses
(excluding pension expenses)1.5%Land conservation expenses2.1%Agriculture,forestryandfisheryindustryexpenses6.3%Commercial and
industrial expenses
20.3%
Debt service1.9%Housing expenses, etc.0.5%Onkyu pension expenses6.3%Pension expenses
(of public welfare expenses)2.9%Defense expenses8.6%General administration
expenses, etc.1.2%Others0.2%Disaster recovery
expenses, etc.
Central98%89%78%76%69%72%66%36%63%40%39%2%11%22%24%31%28%34%64%37%60%61%100%100%22%58.7% 41.3%
4% 96%100%49% 51%
Local
Public health centers, garbage and human waste disposal, etc.
Elementary and junior high schools, kindergartens, etc.
Community centers, libraries, museums, etc.
Urban planning, roads and bridges,
public housing, etc.
Child welfare, elderly care and welfare,
public assistance, etc.
Rivers and coasts
Family register, basic resident register, etc.
The share of local governments' expenditures is higher than that of central government’s expenditures in areas that are deeply related
to daily life, such as public health and sanitation, school education, police and fire services, and social education.
Share of Expenditures by Function of Central and Local Governments
(final expenditure basis)78% 4
(trillion yen)020015010050FY2010
FY2000 FY2006 FY2007 FY2008 FY2009 (FY end)
Revenues and expenditures decreased from the previous fiscal year.
Revenues
Notes:
1. Outstanding public enterprises bonds (borne by the ordinary account) are estimates based on settlement account statistics.
2. Outstanding local government bonds exclude special fund public investment bonds.
3. Figures for each item that are less than the given unit are rounded off. Therefore, they do not necessarily add up exactly to the total.197,511円.5 billion (down 854円.2 billion, 0.9% year on year)
While revenues from local allocation tax and municipal bonds, etc. increased, revenues from local taxes and national treasury
disbursements, etc. decreased, resulting in total revenues decreasing by 854円.2 billion from the previous fiscal year.
Expenditures2Trends in Outstanding Borrowing Borne by Ordinary Accounts394,775円.0 billion (down 1,331円.4 billion, 1.4% year on year)
While public assistance expenses and debt service, etc. increased, personnel expenses, ordinary construction expenses, and
other expenses (mainly subsidies, etc. and reserves) decreased, resulting in total expenditures decreasing by 1,331円.4 billion from
the previous fiscal year.
Amounts remained at a high level.142342420012826271811393427200138342719913734261971403425199
Outstanding public enterprises bonds
(borne by the ordinary account)
Outstanding borrowing from
the special account for
the local allocation tax
Outstanding local government bonds
FY2010 Settlement Overview 95908501005
Revenues and expenditures both showed year-on-year decreases in settlement amount. The main factor for the decrease in
revenues was a decrease in revenue from local taxes and national treasury disbursements. The main factor for the decrease in
expenditures was a decrease in ordinary construction expenses, subsidies, etc., and reserves.
The real single year balance showed a surplus for the third consecutive year, while the single year balance showed a surplus for
the second consecutive year.
Notes:
1. Real single year balance refers to the amount calculated by adding reserves and advanced redemption of local loans for the public finance adjustment fund to the single
year balance and subtracting public finance adjustment fund reversals.
Single year balance refers to the amount calculated by subtracting the real balance of the previous fiscal year from the real balance of the relevant fiscal year. Real balance refers
to the amount calculated by subtracting the revenue resources that should be carried over to the next fiscal year from the income expenditure balance.
2. The number of local governments with a deficit does not include special districts or inter-municipal/prefectural joint authorities.
Figures in parentheses indicate the number of local governments including special districts and inter-municipal/prefectural joint authorities.
Category
Single year
balance
Settlement period
FY2010
225円.8 billion 172円.0 billion 567(1,278) 579(1,153)
Real single year
balance 1,039円.5 billion 238円.2 billion 237(917) 440(1,004)
Real balance 1,670円.2 billion 1,444円.7 billion 8(8) 13(13)
FY2009 FY2010 FY2009
No. of local governments with a deficit
(billion yen)
Total
revenues
Total
expenditures
FY2000 FY2006 FY2007 FY2008 FY2009 FY2010 (Fiscal year)
100,275.1
97,616.4
91,528.3
89,210.6
91,181.4
89,147.6
92,213.5
89,691.5
98,365.7
96,106.4
97,511円.5billion
94,775円.0billion
Scale of Account Settlement
Revenue and Expenditure Settlement 6General Revenue Resources
Revenues
Revenue Breakdown1What are the revenue sources for local governments' activities?
Revenue resources for which the use is not specified, such as local taxes and local allocation tax, are called general
revenue resources. Here, the total of local taxes, local transfer taxes, local allocation tax, and special local grants is
treated as general revenue resources. It is important for local governments to ensure sufficient general revenue
resources in order to handle various administrative needs properly.
Notes:
1. The figures here are mainly for ordinary accounts. (For the accounts of public enterprises, such as water supply and sewerage businesses, transportation
businesses, and hospitals, see "Local Public Enterprises.")
2. Figures for each item that are less than the given unit are rounded off. Therefore, they do not necessarily add up exactly to the total.
3."National treasury disbursements" includes "special grants to measures for traffic safety" and "grants to cities, towns and villages where national institutions
are located."
Local transfer tax Collected as a national tax and transferred to local governments. Includes local gasoline transfer tax, etc.
A collective term for the national obligatory share, commissioning expenses, incentives for specific policies, or financial assistance, disbursed from
the central government to local governments.
The debts of local governments to be repaid over a period of time in excess of one fiscal year for which redemption continues for more than one fiscal year.
Special local grants
Includes such things as the special grants for the child support allowance and child allowance in response to the increased local burden as a result of
the expanded child support allowance system in FY2006 and FY2007 and the establishment of the child allowance in FY2010.
Local allocation tax
National treasury
disbursements
Local bonds
Net total
97,511円.5billion
Prefectures total
50,066円.1bilion
Municipalitiestotal
53,854円.0billion
Local taxes
18,384円.0 billion
(34.1%)
Local transfer tax
475円.9 billion
(0.9%)
Special local grants
226円.5 billion
(0.4%)
Local allocation tax
8,427円.1 billion
(15.6%)
Other general
revenue resources
1,690円.0 billion
(3.2%)
Other revenue
resources
11,454円.7 billion
(21.3%)
Local bonds
5,185円.0 billion
(9.6%)
National treasury
disbursements
8,010円.8 billion
(14.9%)
Local taxes
15,932円.3 billion
(31.8%)
Local transfer tax
1,593円.3 billion
(3.2%)
Special local grants
156円.6 billion
(0.3%)
Local allocation tax
8,766円.5 billion
(17.5%)
Other general
revenue resources
0円.6 billion
(0.0%)
National treasury
disbursements
6,294円.4 billion
(12.6%)
Local bonds
7,809円.9 billion
(15.6%)
Other revenue
resources
9,512円.5 billion
(19.0%)
Local taxes
34,316円.3 billion
(35.2%)
Local transfer tax 2,069円.2 billion
(2.1%)
Special local grants 383円.2 billion
(0.4%)
Local allocation tax 17,193円.6 billion
(17.6%)
National treasury disbursements
14,305円.2 billion
(14.7%)
Local bonds
12,969円.5 billion
(13.3%)
Other revenue resources
16,274円.6 billion
(16.7%)
General revenue resources
53,962円.2 billion (55.3%)
General revenue resources
26,449円.3 billion (52.8%)
General revenue resources
29,203円.5 billion (54.2%)
The revenue of local governments consists mainly of local taxes (about 35.2%), local allocation tax, national treasury disbursements,
and local bonds, in that order.
An intrinsic revenue source of local governments in order to adjust imbalances in tax revenue among local governments and to guarantee revenue sources so
that all the local governments across the country can provide a consistent level of public services. (See pg.11, "4. Local Allocation Tax.") 7Note: "National treasury disbursements" includes "special grants to measures for traffic safety" and "grants to cities, towns and villages where national institutions
are located."FY2000FY2006FY2007FY2008FY2009FY2010
Revenue Trends2Net Total
Local transfer tax 0.6%
(0円.6 trillion) Special local grants 0.9%
(0円.9 trillion)
Local taxes 35.4%
(35円.5 trillion)
Local allocation tax
21.7%
(21円.8trillion)
General revenue resources 58.7%(58円.9 trillion)
National treasury
disbursements
14.4%
(14円.5 trillion)
Local bonds
11.1%
(11円.1 trillion)
Other revenue
resources
15.8%
(15円.8 trillion)
Net Total 100円.3 trillion
Local transfer tax 4.1%
(3円.7 trillion) Special local grants 0.9%
(0円.8 trillion)
Local taxes 39.9%
(36円.5 trillion)
Local allocation tax
17.5%
(16円.0 trillion)
General revenue resources 62.3%(57円.0 trillion)
National treasury
disbursements
11.5%
(10円.5 trillion)
Local bonds
10.5%
(9円.6 trillion)
Other revenue
resources
15.7%
(14円.4 trillion)
Net Total 91円.5 trillion
Local transfer tax 0.8%
(0円.7 trillion) Special local grants 0.3%
(0円.3 trillion)
Local taxes 44.2%
(40円.3 trillion)
Local allocation tax
16.7%
(15円.2 trillion)
General revenue resources 62.0%(56円.5 trillion)
National treasury
disbursements
11.3%
(10円.3 trillion)
Local bonds
10.5%
(9円.6 trillion)
Other revenue
resources
16.2%
(14円.8 trillion)
Net Total 91円.2 trillion
Local transfer tax 0.7%
(0円.7 trillion) Special local grants 0.6%
(0円.5 trillion)
Local taxes 42.9%
(39円.6 trillion)
Local allocation tax
16.7%
(15円.4 trillion)
General revenue resources 60.9%(56円.2 trillion)
National treasury
disbursements
12.7%
(11円.7 trillion)
Local bonds
10.8%
(9円.9 trillion)
Other revenue
resources
15.6%
(14円.4 trillion)
Net Total 92円.2 trillion
Local transfer tax 1.3%
(1円.3 trillion) Special local grants 0.5%
(0円.5 trillion)
Local taxes 35.8%
(35円.2 trillion)
Local allocation tax
16.1%
(15円.8 trillion)
General revenue resources 53.6%(52円.8 trillion)
National treasury
disbursements
17.1%
(16円.8 trillion)
Local bonds
12.6%
(12円.4 trillion)
Other revenue
resources
16.6%
(16円.4 trillion)
Net Total 98円.4 trillion
Local transfer tax 2.1%
(2円.1 trillion) Special local grants 0.4%
(0円.4 trillion)
Local taxes 35.2%
(34円.3 trillion)
Local allocation tax
17.6%
(17円.2 trillion)
General revenue resources 55.3%(54円.0 trillion)
National treasury
disbursements
14.7%
(14円.3 trillion)
Local bonds
13.3%
(13円.0 trillion)
Other revenue
resources
16.7%
(16円.2 trillion)
Net Total 97円.5 trillion
General revenue resources constituted approximately 55% of total revenues, a year-on-year increase resulting from an increase in
revenue from local allocation taxes, etc. and a drop in revenue from national treasury disbursements. 8Local Taxes3Local taxes consist of prefectural taxes and municipal taxes. (In the case of the special wards of Tokyo, the Tokyo Metropolitan
Government collects a portion of the municipal taxes.)
Composition of Revenue from Prefectural Taxes (FY2010 settlement)
Composition of Revenue from Municipal Taxes (FY2010 settlement)
Total
14,026円.2billion
Total
20,290円.1billion
Note: Municipal tax revenue figures include municipal taxes collected by the Tokyo Metropolitan Government.
Prefectural inhabitant tax
Individual
4,568円.6 billion (32.6%)
5,476円.7billion (39.0%)
Municipal inhabitant tax
8,748円.5 billion (43.1%)
2,437円.1billion (17.4%)
Corporate
757円.9 billion (5.4%)
On interests
150円.2 billion
(1.1%)
Enterprise tax
Corporate
2,253円.0 billion (16.1%)
Individual
184円.0 billion (1.3%)
Other taxes 110円.9 billion (0.9%)
Local consumption tax
2,641円.9 billion (18.8%)
Automobile tax
1,615円.5 billion (11.5%)
Light oil delivery tax
917円.5 billion (6.5%)
Real estate acquisition tax
378円.9 billion (2.7%)
Prefectural tobacco tax 256円.1 billion (1.8%)
Automobile acquisition tax 191円.6 billion (1.4%)
Individual
6,795円.0 billion (33.5%)
Corporate
1,953円.5 billion (9.6%)
Fixed asset tax
8,961円.3 billion (44.2%)
City planning tax 1,255円.5 billion (6.2%)
Municipal tobacco tax 787円.6 billion (3.9%)
Other taxes 537円.2 billion (2.6%) 9(trillion yen)02010121416186482(trillion yen)0202210121416186482
(Fiscal year)
(Fiscal year)
FY 2000 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
FY 2000 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Enterprise tax
Prefectural inhabitant tax
Municipal inhabitant tax
(28.9%)
(26.6%)15.38.35.325.11.416.23.61.811.33.07.70.9
15,585.0
Trends in Prefectural Tax Revenues
Trends in Municipal Tax Revenues
Notes:
1. Figures in parentheses indicate the component ratio of the municipal inhabitant tax.
2. Municipal tax revenue figures include municipal taxes collected by the Tokyo Metropolitan Government.
Note: Figures in parentheses indicate the component ratios of the business tax and prefectural inhabitant tax.
(33.3%) (34.8%)
(31.2%) (30.2%)25.81.16.330.01.213.82.61.59.22.35.50.627.81.15.929.01.22.513.81.59.42.05.10.7
(39.3%)
(19.8%)33.51.14.718.41.416.52.81.711.31.65.61.4
(39.0%)
(17.4%)32.61.15.416.11.318.82.71.811.51.46.50.9
(24.4%)
(34.2%)16.61.06.832.91.316.13.01.710.62.86.40.8
(44.4%)35.88.66.03.743.22.7
20,528.4
(43.1%)33.59.66.23.944.22.6
20,290円.1billion
(41.2%)30.310.945.34.36.62.6
19,961.4
(45.0%)30.914.142.54.35.92.3
20,181.9
(47.7%)33.814.040.43.95.62.4
21,602.6
(47.1%)34.412.741.03.75.72.5
21,630.5
17,928.0
16,324.3
14,654.5
14,026円.2billion
18,664.2
Other taxes
Light oil delivery tax
Automobile acquisition tax
Automobile tax
Prefectural tobacco tax
Real estate acquisition tax
Local consumption tax
Individual
Corporate
Corporate
Corporate interest
Individual
Other taxes
City planning tax
Municipal tobacco tax
Fixed asset tax
Individual
Corporate
Prefectural tax revenues dropped from the previous fiscal year due to a decrease in revenues from individual prefectural taxes,
etc. Municipal tax revenues dropped from the previous fiscal year as revenues from individual municipal taxes, etc. decreased,
while revenues from corporate municipal taxes increased. 1020010050 150
0 200 250 30010050 150020010050 150
0 20010050 150
0 20010050 1500In order for local governments to provide public services in response to local needs on their own
responsibility and at their own discretion, it is necessary to build a less imbalanced and stable local tax system.
Comparing local tax revenue amounts, with the national average set at 100, Tokyo, the highest, was approximately
2.6 times the amount for Okinawa Prefecture, which was the lowest.
Hokkaido
Aomori
Iwate
Miyagi
Akita
Yamagata
Fukushima
Ibaraki
Tochigi
Gunma
Saitama
Chiba
Tokyo
Kanagawa
Niigata
Toyama
Ishikawa
Fukui
Yamanashi
NaganoGifuShizuoka
AichiMieShiga
Kyoto
Osaka
HyogoNaraWakayama
Tottori
Shimane
Okayama
Hiroshima
Yamaguchi
Tokushima
Kagawa
Ehime
Kochi
FukuokaSagaNagasaki
KumamotoOitaMiyazaki
Kagoshima
Okinawa
National Average
FY2010
settlement
amount
Local taxes total
Individual
inhabitant tax
Two corporate
taxes Fixed asset tax
Local consumption tax
(post settlement)
35円.2trillion 11円.3trillion 4円.6 trillion 2円.6 trillion 8円.9trillion
Max/min:2.6 Max/min:2.9 Max/min:5.4 Max/min:2.0 Max/min:2.383.871.572.388.669.374.682.493.898.693.591.995.8
165.6
108.386.592.794.898.492.587.890.3104.4
115.797.696.095.9106.396.677.277.974.274.690.496.887.684.888.879.870.788.476.869.971.780.670.070.864.8
100.077.861.163.381.459.965.869.290.288.984.5
108.9
115.5
165.6
133.875.787.487.885.382.779.987.399.7
114.492.693.996.997.1
101.495.873.867.770.482.694.082.273.183.872.068.184.567.867.866.470.562.963.257.1100.066.755.255.583.954.156.771.387.890.987.869.469.8
250.683.277.683.786.2
103.4
103.874.577.298.4117.591.8105.793.3123.079.546.462.161.665.783.798.478.694.0101.684.949.782.271.555.757.868.254.756.759.0
100.0
101.393.691.6
100.092.791.592.191.997.995.380.688.2
149.090.296.896.499.396.597.5
100.492.7101.5
108.094.581.8
101.9
108.191.076.082.294.489.192.996.791.087.799.386.591.697.989.388.992.596.590.286.775.0
100.075.772.775.385.970.775.190.695.9
104.0
100.588.091.1
156.6
104.692.797.596.8111.496.993.693.4110.9
118.2
105.399.894.4
107.899.570.682.777.477.793.297.793.892.887.688.375.287.679.268.071.086.470.273.073.0
100.0
Index of Per Capita Revenue in Local Tax Revenue (with national average as 100)
Notes:
1. "Max/min" indicates the value obtained by dividing the maximum value of per-capita tax revenue for each prefecture by the minimum value.
2. Local tax revenue amounts include local corporation special transfer tax, but do not include overassessment, discretionary tax earmarked for general use, or discretionary tax
earmarked for special use. Further, the value is the amount after settlement of local consumption tax.
3. Individual inhabitant tax revenue is the total of the prefectural individual inhabitant tax (on a per-capita basis and on an income basis) and the municipal individual inhabitant
tax (on a per-capita basis and on an income basis), and excludes overassessment.
4. Revenue from the two corporate taxes is the total of the corporate prefectural inhabitant tax, the corporate municipal inhabitant tax, and the corporate business tax, and
excludes overassessment.
5. Fixed asset tax revenues include prefectural amounts, and exclude overassessment.
6. Calculations were made in accordance with the basic resident register population as of March 31, 2011. 11Local Allocation Tax4From the perspective of local autonomy, it would be the ideal for each local government to ensure the revenue
sources necessary for their activities through local tax revenue collected from their residents. However,
there are regional imbalances in tax sources, and many local governments are unable to acquire the necessary tax
revenue. Accordingly, the central government collects revenue resources that would essentially be attributable to
local tax revenue and reallocates them as local allocation tax to local governments that have weaker financial
capabilities.
Determining the total amount of local allocation tax1The total amount of the local allocation tax is determined in accordance with estimates of standard revenue and
expenditures in local public finance as a whole, based on a fixed percentage for national taxes (32% for income tax
and liquor tax, 34% for corporate tax, 29.5% for consumption tax, and 25% for tobacco tax).
The total amount of the local allocation tax in FY2010 was 17,193円.6 billion, up 8.7% year on year.
The regular local allocation tax for each local government is calculated using the following mechanism.
How regular local allocation taxes are calculated for each local government2Notes:
1. Standard financial requirements are figured out based on the rational and appropriate service standards for each local government.
For this reason, the local share of the services, such as compulsory education, benefits for livelihood protection, and public works which are subject to national obligatory
share, is mandatorily included.
Beginning in FY2001, part of the standard financial requirements is being transferred to special local bonds (bond for temporary substitution for local allocation tax) as an
exception to Article 5 of the Local Finance Law.
2. Normal local tax revenue does not include Non-Act-based Tax or "over-taxation" that sets tax rates above the standard tax rate stipulated in the Local Tax Act.
Standard
financial requirements
Standard
financial revenues
Regular
allocation tax amount
Standard
financial requirements−Standard
financial revenues
Unit cos×ばつ
Measurement unit
(national census population, etc.)×ばつ
Correction coefficient
(gradated correction, etc.)
Standard local tax
revenue×ばつ
Calculation rate
(75%)+Local transfer tax, etc. 12Notes: A "midsize city" refers to a city with a population of 100,000 or more excluding government ordinance-designed cities, core cities, and special cities,
and a "small city" refers to a city with a population of less than 100,000.020406080100(%)Towns and villages
(population of less than 10,000)
Towns and villages
(population of 10,000 or more)
Small cities
Midsize cities
39.4 28.1 26.713.913.64.10.50.40.40.226.43.729.63.82.741.357.6% 58.6%
60.5%
58.1%
Function of the local allocation tax3The function of the local allocation tax is to adjust imbalances in revenue resources between local governments and to ensure
their financial capacity to provide standard public services and basic infrastructure to residents across the country.
Owing to the adjustment of revenue resources through the local allocation tax, elements such as the size of population do not
create significant differences in the ratio of total revenue composed of general revenue resources.
Local allocation tax
General revenue resources
Special local grants
Local transfer tax, etc.
Local taxes
Ratio of total revenue
composed of general
revenue resources
Ratio of Total Revenue for Municipalities
Composed of General Revenue Resources 13Public welfare expenses: Expenses for the construction and operation of welfare facilities for children, the elderly, the mentally and Expenses physically
disabled, etc., and for the implementation of public assistance, etc.
Education expenses: Expenses for school education, social education, etc.
Civil engineering work expenses: Expenses for the construction and maintenance of public facilities, such as roads, rivers, housing, and parks.
Debt service: Expenses for the payment of principal, interest, etc., on debts.
What are taxes spent on?
Expenses by Function1Debt service
Commerce and
industry expenses
Sanitation
expenses
Other
expenses
Agriculture, forestry
and fishery expenses
General
administration
expenses
Civil engineering
work expenses
Education
expenses
Public welfare
expenses
Share Share Share
Net total
21,316.3
16,446.7
12,979.1
11,959.2
9,999.8
6,398.4
5,812.4
3,245.8
6,617.3
6,416.1
10,911.5
6,808.6
5,717.1
3,845.2
4,393.4
1,714.2
2,362.6
6,890.8
17,002.7
5,591.3
6,241.1
6,427.3
6,753.6
2,048.1
4,266.7
1,241.4
2,551.9
94,775円.0 billion
Prefectures
49,059円.5 billion
Municipalities
52,124円.1 billion
22.5%
17.4%
13.7%
12.6%
10.6%6.8%6.1%3.4%6.9%
13.1%
22.2%
13.9%
11.7%7.8%9.0%3.5%4.8%
14.0%
32.6%
10.7%
12.0%
12.3%
13.0%3.9%8.2%2.4%4.9%
When expenses are classified by function, we see that many revenue resources are utilized for public welfare expenses,
education expenses, and debt service. In prefectures, such resources are mainly utilized for education expenses, debt
service, and public welfare expenses, in that order. In municipalities, they are primarily utilized for public welfare expenses,
general administrative expenses, and civil engineering work expenses, in that order.
(Unit: \billion)
(Unit: \billion)
(Unit: \billion)
Expenditures
Composition of Expenditure by Function (FY2010 settlement) 1430.2%
33.5%
21.3%
25.7%
23.8%
16.9%0.2%37.3%
19.9%
52.7%
17.7%
33.2%
40.9%
26.1%2.5%9.2%2.7%16.7%
10.1%
18.5%
6.6% 6.8%
9.3% 9.4%4.7%3.5%
13.5%7.3%7.1%7.5%6.6%
32.5%
18.8%
18.7%
18.8%1.1%1.5%8.6%25.5%
15.5%
12.9%3.1%19.4%
18.1%5.5%Other
Social education
Health and physical education
Senior high school
Educational general affairs
Junior high school
Elementary school
Other
Harbors
Housing
Rivers and coasts
Roads and bridges
Urban planning
Disaster relief
Public assistance
Social welfare
Elderly welfare
Child welfare
4,963.7
7,138.8
1,369.5
38.0%
6,461.4
18.7%
3,176.3
23.3%
3,963.4
19.9%0.1%3,384.117.542.9%
2,753.7
31.3%4.2%0.3%
2,006.5
266.520.05,482.3
5,063.7
3,596.734.84,457.8
1,138.8
3,385.0
2,912.0
3,975.2
2,336.3
1,680.7
162.7
2,741.8
1,205.2
1,058.3
375.4 434.4
1,112.4 412.8
1,425.6
869.0
722.0
1,087.0
1,010.1
2,223.8
1,193.9
1,165.9
1,245.6
795.8
3,541.9
2,046.2
2,044.4
2,052.6
115.2
167.6
943.6
305.9
171,7
539.5 268.8 593.6 170.9
Net total Prefectures Municipalities
Net total Prefectures Municipalities
Net total
21,316円.3 billion 6,416円.1 billion 1,7002円.7 billion
16,446円.7 billion 10,911円.5 billion 5,591円.3 billion
11,959円.2 billion 5,717円.1 billion 6,427円.3 billion
Prefectures Municipalities
Share Share Share
Share Share Share
Share Share Share
(Unit: \billion)
(Unit: \billion)
(Unit: \billion)
(Unit: \billion) (Unit: \billion)
(Unit: \billion)
(Unit: \billion)
(Unit: \billion)
(Unit: \billion)
Breakdown of Public Welfare Expenses by Purpose
Breakdown of Educational Expenses by Purpose
Breakdown of Civil Engineering Work Expenses by Purpose 150 150100509511288687485921131091181051591391771559389725561919711711580117
General administrative
expenses
Welfare expenses
Sanitation expenses
Agriculture, forestry and
fishery expenses
Commerce and
industry expenses
Civil engineering expenses
Education expenses
Debt service
Total expenditures
General administrative
expenses
Welfare expenses
Sanitation expenses
Agriculture, forestry and
fishery expenses
Commerce and
industry expenses
Civil engineering expenses
Education expenses
Debt service
Total expenditures
General administrative
expenses
Welfare expenses
Sanitation expenses
Agriculture, forestry and
fishery expenses
Commerce and
industry expenses
Civil engineering expenses
Education expenses
Debt service
Total expenditures
General administrative
expenses
Welfare expenses
Sanitation expenses
Agriculture, forestry and
fishery expenses
Commerce and
industry expenses
Civil engineering expenses
Education expenses
Debt service
Total expendituresFY2000
Of which are for social welfare
Of which are for welfare for the elderly
Of which are for child welfare
Of which are for cleaning expenses1319,156.5
13,392.0
3,641.5
3,540.3
4,029.9
Of which are for public assistance
Of which are for social welfare
Of which are for welfare for the elderly
Of which are for child welfare
Of which are for cleaning expenses
Of which are for public assistance
2,154.8
6,519.7
2,860.0
5,870.0
5,427.7
19,560.3
18,078.7
12,378.6
97,616.4
9,999.8
21,316.3
5,063.7
5,482.3
7,138.8
5,812.4
2,066.0
3,245.8
6,398.4
11,959.2
16,446.7
12,979.1
94,775.0
(Unit: \billion)1673,596.7117121104148144138161927461689198151200FY2005FY2009FY2010Of which are for social welfare
Of which are for welfare for the elderly
Of which are for child welfare
Of which are for cleaning expenses
Of which are for public assistance
Of which are for social welfare
Of which are for welfare for the elderly
Of which are for child welfare
Ofwhichareforcleaningexpenses
Of which are for public assistance
Trends in the Breakdown of Expenditures by Function
(ordinary account net total)
In recent years, welfare expenses, debt service, etc., have increased, while there has been a decline in such
items as agriculture, forestry, and fishery expenses and civil engineering work expenses.
Ratio with FY2000 set at 100. 16Composition of Expenditures by Type (FY2010 settlement)
Classified by type, expenses can be divided into "mandatory expenses" (personnel expenses, public assistance expenses,
and debt service), the payment of which is mandatory and difficult to reduce at the discretion of individual local governments,
"investment expenses," including ordinary construction expenses, etc., and "other expenses."
Expenses by Type2What are expenses used for?
Mandatory expenses
Investment expenses
Unsubsidized project expenses
6,863円.2 billion (7.2%)
Subsidized project expenses
5,620円.2 billion (5.9%)
Ordinary construction expenses
Personnel expenses
23,536円.2 billion
(24.8%)
Public assistance expenses
11,237円.3 billion
(11.9%)
Debt service
12,949円.8 billion (13.7%)
47,723円.3 billion (50.4%)
13,496円.1 billion
(14.2%)
13,333円.4 billion (14.1%)
Other expenses
33,555円.6 billion
(35.4%)
Net total
Personnel expenses
14,110円.1billion
(28.8%)
Public assistance
expenses
1,038円.2 billion
(2.1%)
Debt service
6,785円.4 billion (13.8%)
Mandatory expenses
Mandatory expenses
Ordinary construction expenses
Investment expenses Investment expenses
Ordinary construction expenses
21,933円.8 billion (44.7%)
6,942円.1billion (14.2%)
\ 6,855.1 billion (14.0%)
Unsubsidized project expenses
3,156円.0 billion (6.4%)
Subsidized project expenses
2,951円.3 billion (6.0%)
7,198円.2billion (13.8%)
7,103円.8 billion(13.6%)
Unsubsidized project expenses
3,950円.4 billion (7.6%)
Subsidized project expenses
2,912円.5 billion (5.6%)
25,859円.8billion (49.6%)
Personnel expenses
9,426円.1 billion
(18.1%)
Public assistance
expenses
10,199円.1 billion
(19.6%)
Debt service
6,234円.6 billion (12.0%)
Other expenses
20,183円.6billion
(41.1%)
Other expenses
19,066円.1billion
(36.6%)
94,775円.0billion
49,059円.5billion 52,124円.1 billion
Prefectural total Municipalities total 17(billion yen)(%)9,000
10,000
11,000
12,000
15,000
16,0000201008060400FY2001 FY2010
FY2002 FY2006
FY2005
FY2004
FY2003 FY2007 FY2008 FY2009
(Fiscal year)
25,000
26,000
27,000
28,000
Trends in Personnel Expenses
Breakdown of Personnel Expenses by Item
Employee salaries
16,220円.3 billion
68.9%
Base salaries
10,910円.4 billion
46.4%
15.0%
Other
5,309円.9 billion
3,521円.3 billion
22.5%
Net total
23,536円.2 billion 14,110円.1 billion 9,426円.1 billion
Prefectures Municipalities
Net total
Prefectures
15,797.8
15,629.6
15,344.3 15,217.6
15,008.6 15,011.3 15,086.9
14,729.7
14,286.2
26,838.3
26,394.2
25,932.3
25,613.3
25,264.3 25,135.3 25,256.3
24,605.2
23,975.6
14,110.1
23,536.2
11,040.5
10,764.6
10,587.9 10,395.7 10,255.7 10,124.0 10,169.4
9,875.5
9,689.5
9,426.1
Municipalities
Local public servant
mutual-aid associations, etc.
11.0%
2,589円.6 billion5.1%1,205円.0 billion8.8%827円.8 billion
10,111円.5 billion
71.7%
6,799円.4 billion
48.2%
15.8%
3,312円.1 billion
2,227円.8 billion
23.5%9.9%1,393円.7 billion
6,108円.9 billion
64.8%
4,111円.0 billion
43.6%
13.7%
1,997円.9 billion
1,293円.5 billion
21.2%
12.7%
1,195円.9 billion2.6%377円.1 billion
Retirement allowances
Other 18100
45,320.0
26,877.5
6,096.4
12,346.2
24,433.5
23,901.7
10,513.8
11,857.0
27,862.9
97,616.4
(Unit: \billion)946359938988565553589760595661986565
47,723.3
23,536.2
11,237.3
12,949.8
13,496.1
13,333.4
5,620.2
6,863.2
33,555.6
94,775.0
Trends in the Breakdown of Expenditures by Type
(ordinary account net total)
* Public assistance expenses: Expenses which include child welfare expenses, livelihood protection expenses, etc., aimed at assisting the needy, children,
the elderly, mentally and physically disabled, etc., as a part of the social security system.
* Ordinary construction expenses: Expenses necessary for the construction of infrastructure, such as roads, bridges, parks, schools, etc.
0 200 250
50 150
Mandatory expenses
Ordinary construction expenses
Ordinary construction expenses
Ordinary construction expenses
Ordinary construction expenses
Investment expenses
Other expenses
Total expenditures
Personnel expenses
Public assistance expenses
Debt service
Mandatory expenses
Investment expenses
Other expenses
Total expenditures
Personnel expenses
Public assistance expenses
Debt service
Mandatory expenses
Investment expenses
Other expenses
Total expenditures
Personnel expenses
Public assistance expenses
Debt service
Mandatory expenses
Investment expenses
Other expenses
Total expenditures
Personnel expenses
Public assistance expenses
Debt service
Of which are for unsubsidized
project expenses
Of which are for subsidized
project expenses
Of which are for subsidized
project expenses
Of which are for subsidized
project expenses
Of which are for unsubsidized
project expenses
Of which are for unsubsidized
project expenses
Of which are for unsubsidized project expenses
Of which are for subsidized project expenses103126101101105184105120149128104113
Ratio with FY2000 set at 100.
In recent years, mandatory expenses such as public assistance expenses, debt service, etc., have
increased, while there has been a decline in such items as ordinary construction expenses.FY2000FY2005FY2009FY2010 191
87.5 90.3 89.0 91.5 91.4 91.4 93.4 92.8 93.8 90.584.687.4 87.4
90.5 90.2 90.3 92.0 91.8 91.890.593.5
90.8 92.5 92.6 92.6 94.7 93.995.989.291.9(%)9080100Prefectural
Municipal
Net total20.336.821.637.021.536.021.937.021.536.521.436.021.536.221.535.121.534.820.732.9
Other
Personnel
expenses(%)Debt
service(%)Shifts in the ordinary balance ratio
Breakdown of the ordinary balance ratio (Net total)
Ordinary Balance Ratio
Flexibility of the Financial Structure(%)FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
(Fiscal year)
(Fiscal year)9080706050403020100100In addition to the mandatory expenses, local governments must secure revenue resources to cover projects that address properly
issues caused by changes in the social economy and in the public needs, in order to adequately meet the demands of residents. The
extent to which these revenue resources have been secured is called the "flexibility of the financial structure."
The ordinary balance ratio (the weighted average excluding special wards and special districts, etc.) showed a 3.3 percentage point
year-on-year decrease to 90.5%.
How financially capable are local governments to respond
to local demands ? 2013 14 15 16 17 18 19 20 21
FY2001 FY2010
FY2002 FY2006
FY2005
FY2004
FY2003 FY2007 FY2008 FY2009
(Fiscal year)(%)162019181715Real Debt Service Ratio and Debt Service Payment Ratio2Trends in the Debt Service Payment Ratio
State of the Real Debt Service Ratio
Because debt service (which are payments of the principal and the interest on the debts of local governments) lowers financial
flexibility in particular, it is necessary to observe closely its trend. The real debt service ratio and debt service payment ratio are
indices used to determine the extent of the burden of the debt service.
For information on the state of the real debt service ratio, please refer to the "Status of the Ratios for Determining Soundness "
(page 29).
* Debt service payment ratio: The debt service payment ratio indicates the ratio of general revenue resources allocated for debt service (general
revenue resources allocated for public service, including the principal and interest repayments on local bonds) to the total
amount of general revenue resources. This index is used to determine the flexibility of the financial structure by assessing the
degree to which debt service restrict the freedom of use of general revenue resources.18.418.416.719.819.217.319.819.417.519.919.417.319.319.217.419.419.317.518.619.117.719.319.217.618.818.918.618.417.016.5
Net total
Prefectures
Municipalities 211409010011012013070608050(trillion yen)0FY2000 FY2006 FY2007 FY2008 FY2009 FY2010 (End of FY)
138.2 137.4
142.1
Trends in Outstanding Local Government Borrowing1What is the status of debt in local public finance?
Notes:
1. Outstanding local government borrowing excludes special fund public investment bonds.
2. Figures for "economic stimulus measures" are estimates.14.87.36.515.484.1128.111.117.98.04.919.377.9
139.110.119.77.45.019.19.121.66.8 6.36.525.48.15.6
18.7 18.3
75.6 75.2
139.85.76.331.47.117.773.9
Tax revenue
supplementary bonds
Tax-reduction
supplementary
bonds, etc.
Financial resource
measures bonds, etc.
Other local bonds
Economic stimulus
measures
Outstanding local government borrowing, amounted to approximately 142円 trillion at the end of FY2010. This figure has been
increasing in recent years due to factors such as the issue of bonds for temporary substitution of local allocation tax. The figure
is 1.46 times larger than the total revenue and about 2.63 times larger than the total general revenue resources, such as local
taxes and local allocation tax.
Outstanding Local Government Borrowing76.9Bonds for temporary
substitution of local
allocation tax 2222010012014016018020060408020
Outstanding local
government bonds
(trillion yen)0FY2000 FY2006 FY2007 FY2008 FY2009 FY2010 (End of FY)
Outstanding borrowing
from special account
for local allocation tax
and transfer tax grants
Outstanding public
enterprise bonds
(included in
ordinary accounts)
Outstanding Local Finance Borrowing2Notes:
1. Outstanding local government borrowing excludes special fund public investment bonds.
2. Outstanding public enterprise bonds (borne by the ordinary accounts) are estimates based on settlement account statistics.
Outstanding local public finance borrowing—which includes borrowing in the special account for local allocation tax and trans-
fer tax for addressing revenue resource shortages, as well as the redemption of public enterprise bonds borne by the ordinary
accounts, remains at a high level, amounting to approximately 200円 trillion at the end of FY2010.
128,085.0
27,032.3
26,263.3
181,380.6
139,057.7
27,479.5
33,617.3
200,154.5
138,160.5
26,775.5
33,617.3
198,553.3
137,398.5
26,028.0
33,617.3
197,043.8
139,786.7 142,080.3
25,275.4
24,095.7
33,617.3 33,617.3
198,679.4 199,793円.3billion
billion
billion
billion
Trends in Outstanding Borrowing Borne by the Ordinary Accounts 2320406080100(%)0
Ratio of Local Public Enterprises1What is the status of local public enterprises?
Local public enterprises play a major role in improving the standard of living of residents.
Notes:
1. The graph shows the ratio of local public enterprises when the total number of business entities nationwide is set at 100.
2. Figures for the total number of enterprises nationwide have been compiled from statistical materials of related organizations. Figures for local public
enterprises have been compiled from figures for the total number of enterprises and settlements for the same fiscal year.
Current water-supply
population
Sewage disposal
population
No. of passengers
per year
No. of passengers
per year
No. of hospital beds
(99.4%)
out of 125.63million
124.93 million
(91.3%)
out of 108.90million
99.45 million
(13.2%)
out of 22,724million
3,002 million
out of 4,476million
956 million
(21.4%) (12.9%)
out of 1,593,000
206,000
Water-supply business
(including small-scale
water supply business)
Sewage business Transportation business
(railways)
Transportation business
(buses)
Hospitals
Local Public Enterprises 24Number of Businesses Operated by Local Public Enterprises2Scale of Financial Settlement3No. of businesses
8,843
Scale of
financial settlement
17,651円.9billion
(End of FY2010)
(End of FY2010)
Sewage business
3,637(41.1%)
Water supply business
1,358(15.4%)
Total water supply business
2,152(24.3%)
Small-scale
water supply business
794(9.0%)
Hospitals
654(7.4%)
Care services
597(6.8%)
Residential development
475(5.4%)
Other
1,328(15.0%)
Sewage business
5,822円.3 billion(33.0%)
Hospitals
4,431円.3 billion(25.1%)
Total water supply business
(including small-scale water supply)
4,041円.4 billion(22.9%)
Transportation
1,180円.4 billion(6.7%)
Residential development
1,043円.2 billion(5.9%)
Other 1,133円.3 billion(6.4%)
There are 8,843 businesses that are operated by local public enterprises. By type of business, sewage accounts for the largest
ratio, followed, in order, by water supply, hospitals, care services, and residential development.
The scale of total financial settlement is 17,651円.9 billion. By type of business, sewage accounts for the largest ratio, followed, in
order, by hospitals, total water supply, transportation, and residential development. 25500100200300400
(billion yen)
(billion yen)
FY 2000 FY 2010
FY 2006 FY 2007 FY 2008 FY 2009 (Fiscal year)0500600700100△しろさんかく100
△しろさんかく200
△しろさんかく300200300400Surplus
Deficit
193.3
187.9
298.6
468.6 457.9
Total balance
Other 21.5
Other △しろさんかく 81.5
△しろさんかく263.2
Sewage business
106.0
Electricity 7.624.319.7
△しろさんかく181.7
Gas 5.2
Total surplus
451.1
266.8
Other 15.4
Other△しろさんかく 47.1
△しろさんかく 154.1
Sewage business
117.6
Electricity 9.210.434.0
△しろさんかく107.0
Gas 3.4
Total surplus
452.7
262.7
Other 50.6
△しろさんかく6.1
Sewage business
123.8
Electricity 7.621.438.7
Gas 0.8
Total surplus
464.0
220.2
Other 272.2
Other △しろさんかく 13.6
Other△しろさんかく 6.1
Other △しろさんかく 25.5
△しろさんかく212.6
Sewage business
105.4
Electricity 4.4
Industrial
water supply
Industrial
water supply
Industrial
water supply
Industrial
water supply19.810.2
△しろさんかく194.7
Gas△しろさんかく 4.3
Total surplus
681.2
269.2
Other 72.4
Other △しろさんかく 17.5
△しろさんかく235.1
Sewage business89.3Electricity 12.2
△しろさんかく17.8
Transportation
Transportation
Transportation
Transportation
Transportation4.2△しろさんかく198.5
Gas△しろさんかく 1.3
Total surplus
428.4
250.3
Total deficit
Total deficit Total deficit
Total deficit
Total deficit
Total deficit
△しろさんかく322.9
Sewage business60.4Electricity 19.6
Industrial
water supply14.7Total water supply
(including small-scale
water supply)
Total water supply
(including small-scale
water supply)
Total water supply
(including small-scale
water supply)
Total water supply
(including small-scale
water supply)
Total water supply
(including small-scale
water supply)
Total water supply
(including small-scale
water supply)
Transportation
Hospitals
Hospitals
Hospitals Hospitals
Hospitals
Hospitals
△しろさんかく64.4
Gas△しろさんかく 2.0
Total surplus
273.7
△しろさんかく231.0
164.80.949.2
△しろさんかく
Other 14.2
Industrial
water supply
Note: "△しろさんかく" denotes negative figures.0Financial Status4Local public enterprises had a surplus of 457円.9 billion. By type of business, total water supply, electricity, and sewage showed a
surplus. While hospitals continued to register a deficit in recent years, it has shifted to a surplus.
Trends in the Financial Status of Local Public Enterprises 261
Overview of the Act on Assurance of Sound Financial Status of
Local Governments
Amid extremely severe financial conditions with financial inflexibility caused by such factors as the high standard of debt service
expenses concerning bonds issued in the past and the aging of society, the soundness of local public finance is an important issue
to tackle. A number of drawbacks were pointed out with the conventional system of financial reconstruction of local governments,
including the lack of a legal obligation to disclose comprehensible financial information and of rules for early warning.
Accordingly, the system of local government financial reconstruction was thoroughly revised for the first time in about 50 years, and
in June 2007, the Act on Assurance of Sound Financial Status of Local Governments (2007, Law No. 94) was enacted as a new
system to officially establish and disclose financial indexes and to strive for the early achievement of financial soundness and
rebuilding. Financial indexes have been in force since April 2008 and regulations concerning the duty to formulate financial
soundness plans, etc. have been in force since April 2009.
Promotion of the Soundness of Local Public Finance
Sound stage
Soundness Law
Previous
ReconstructionLawEarly financial soundness
Financial rebuilding
Flow indexes: Real deficit ratio,
consolidated real deficit ratio,
real debt service ratio
Formulation of financial plans
(approval by the council),mandatory
requests for external auditing
Report on progress of implementation to
the council and public announcement
every fiscal year
If the early achievement of financial
soundness is deemed to be
significantly difficult, the Minister for
Internal Affairs and Communications
or the prefectural governor makes
necessary recommendations.
Stock indexes: Future burden
ratio=indexes by realliabilities,
including public enterprises,
third-sector enterprises, etc.
Subject to auditor inspection,
reported to the council and publicly
announced
Establishment of indexes and
thorough information disclosure Formulation of financial rebuilding plans (approval
by the council), mandatory requests for external auditing
Agreement on the financial rebuilding plan can be sought
through consultation with the Minister for Internal Affairs
and Communications.
Restrictions on the issue of local bonds,
excluding disaster rehabilitation projects, etc.
Permission to issue bonds whose redemption period
comes within the plan period in order to transfer the
deficit (special bond for financial rebuilding)
If financial management is deemed not to
conform with the plan, etc., budget changes, etc.,
are recommended.
Financial soundness through
independent improvement efforts
Law on Special Measures
for the Promotion of Local Financial Reconstruction
(Previous Reconstruction Law)
Issues faced with the previous
Reconstruction Law
Corresponding reconstruction system
for public enterprises as well
(Local Public Enterprise Law)
*Prefectures with a deficit ratio of 5% or more and municipalities
with a deficit ratio of 20% or more cannot issue local construction
bonds unless they undertake financial reconstruction in
accordance with the law.
Formulation of financial reconstruction plan
through application by the local government w/deficit
(Agreement of the minister for internal affairs
and communications if necessary.)
Solid rebuilding through
involvement of the central government, etc.
(W/o agreement)
(W/agreement)
Sound
finance
Financial
deterioration
There are no rules for early warning
for public enterprises, etc.
Financial soundness
of public enterprise
Disclosure of easy-to-understand financial
information, etc.is inadequate.
There are only balance indexes centered on the
ordinary account,and even if problems relating
to the financial condition of stock (liabilities,
etc.) are cited, they are not taken up.
Comparison of the Soundness Law and Previous Reconstruction Law 27Local
governments
Previous
ReconstructionLawAct on Assurance of Sound Financial Status of
Local Governments
*Calculated for
each public
enterprise account
*Calculated for
each public
enterprise account.
General
account
General
account,etc.Public
enterprise
accounts
Special
accounts
Public
enterprise
accountsRealdeficit
ratioBadliabilitiesRealdeficit
ratio
Consolidatedrealdeficit
ratioRealdebt
service
ratio
Future
burden
ratio
Financial
shortfall
ratio
Special districts, inter-municipal/prefectural
joint authorities
Local public corporations,
third-sector enterprises, etc.
Targets of the Ratio for Determining Soundness 28Consolidated real deficit ratio =
Consolidated real deficit
Standard financial scale
Real deficit ratio =
Real deficit of general account, etc.
Standard financial scale
Real debt service ratio
(3-year average)=(Redemption of principal and interest of local bonds + quasi-redemption of principal and interest) –
(special revenue resources + amount included in standard financial requirements pertaining to redemption
and quasi-redemption of principal and interest)
(amount included in standard financial requirements pertaining to redemption
and quasi-redemption of principal and interest)
Future burden ratio =
Future burden amount – (amount of appropriable funds + estimated amount of special revenue sources +
amount expected to be included in standard financial requirements pertaining to outstanding local government bonds, etc.)
(amount included in standard financial requirements pertaining to redemption
of principal and interest and quasi-redemption of principal and interest)
Financial shortfall ratio =
Deficit of funds
Size of business
The real deficit ratio is an index of the deficit level of the general account, etc. of local governments offering
welfare, education, community-building, and other services, and represents the extent to which financial
administration has worsened.
The consolidated real deficit ratio is an index of the deficit level for all local governments by taking the sum
of the deficits and surpluses of all accounts, and represents the extent to which financial administration has
worsened for local govemments as a whole.
The real debt service ratio is an index of the size of the redemption amount of debts (local bonds) and similar
expenditure, and represents the cash-flow level.
The future burden ratio is an index of the current outstanding balance of burden, including that of debts (local
bonds) of the general account, etc. as well as other likely future payments, and represents the extent to
which finances may be squeezed in the future.
The financial shortfall ratio is an index of the deficit of funds of public enterprises compared to the size of their
profit (size of business of public enterprises), and represents the extent to which financial health has
worsened.
Standard financial scale –
Standard financial scale –
Outline of the Ratio for Determining Soundness 29〜〜1Real deficit ratio Note 1
Note 1
Note 1
Note 1
2Consolidated real deficit ratio
3Real debt service ratio
4Future burden ratio
Early financial soundness stage Financial rebuilding stage
Early financial soundness
criteria
Financial rebuilding
criteria
Local government
subject to
financial
soundness
Local government
subject to
management
soundness
Local government
subject to
financial
rebuilding
Local government targeted
similarly under reconstruction20%12 4512 4
Financial
deterioration
Real deficit ratio0%0%
Note 3
5Financial shortfall ratio
Public enterprise account
Planned target of local government
to be subject to financial soundness・1 must be balanced (0%)・2 to 4 must be less than the early
financial soundness standard・1 must be balanced (0%)・2 to 4 must be less than the early
financial rebuilding standard
Planned target of local government
to be subject to financial rebuilding
(Reference)
Old reconstruction system
Planned target・5 must be lower than the management soundness standard
Management soundness criteria051015
FY2010 FY 2009051015
(No. of local governments) (No. of local governments)
Early
financial
soundnessandfinancial
rebuilding
Soundnessofpublic
enterprise
Financia
Status of the Ratios for Determining Soundness2Real Deficit Ratio1Prefectures
Government
ordinance-designated cities
Cities Towns and villages Total Prefectures
Government
ordinance-designated cities
Cities Towns and villages Total
0 0 0 0 0 0
0 0 050 010 040 030 0813
0 0 0 080 0
The number of local governments with a real deficit
The number of those local governments with a real deficit ratio equaling or
exceeding the early financial soundness standard
The number of those local governments with a real deficit ratio equaling or
exceeding the financial rebuilding standard
Notes
1: Figures outside parentheses are the standards for municipalities. Figures inside parentheses are the standards for prefectures. The standards of the Tokyo Metropolitan
Government regarding the real deficit ratio and the consolidated real deficit ratio are specified separately.
2: Transitional standards have been established for the financial recovery standards for the consolidated real deficit ratio (2009: 40% (25%), 2010: 40% (25%), 2011: 35% (20%)).
Transitional measures have been established for the standards for the Tokyo Metropolitan Government as well.
3: Under the previous Reconstruction Law, a local government under reconstruction was required to ensure the equilibrium of the real balance.
20%(5%)
30%(15%)
35%(35%)
11.25-15%(3.75%)
16.25-20%(8.75%)
25%(25%)
350%(400%)
The following figure shows the status of the real deficit ratio based on FY2010 account settlements.
Eight local governments fall under the category of local governments with a real deficit (i.e., with a real deficit ratio that exceeds 0%). None of
these local governments have a real deficit ratio that equals or exceeds the early financial soundness standard.
State of the Real Deficit Ratio
Image of Early Financial Soundness, Financial Rebuilding,
and Soundness of Public Enterprise Management 3005101551015051015203005101520302525
Consolidated Real Deficit Ratio2Real Debt Service Ratio30 0 060 0170 020 090 0 0 0 0100 0310 020 0190 0
0 0 0 0 0 0 0 0 0013 410121 1 121
FY 2010 FY 2009
(No. of local governments) (No. of local governments)
FY 2010 FY 2009
(No. of local governments) (No. of local governments)
The following figure shows the status of the consolidated real deficit ratio based on FY2010 account settlements.
Seventeen local governments fall under the category of local governments with a consolidated real deficit (i.e., with a consolidated
real deficit ratio that exceeds 0%). None of these local government have a consolidated real deficit ratio that equals or exceeds the
early financial soundness standard.
Prefectures
Government
ordinance-designated
cities
Cities
Townsandvillages
Total Prefectures
Government
ordinance-designated
cities
Cities
Townsandvillages
Total
Prefectures Government
ordinance-designated
cities
Cities
Townsandvillages
Total Prefectures Government
ordinance-designated
cities
Cities
Townsandvillages
Total
The number of local governments with a consolidated real deficit
The number of those local governments with a consolidated real deficit
ratio equaling or exceeding the early financial soundness standard
The number of those local governments with a consolidated real
deficit ratio equaling or exceeding the financial rebuilding standard
The number of local governments with a real debt service ratio
equaling or exceeding the early financial soundness standard
The number of local governments with a real debt service ratio
equaling or exceeding the financial rebuilding standard
The following figure shows the status of the real debt service ratio based on FY2010 account settlements.
There are four local governments whose real debt service ratio equals or exceeds the early financial soundness standard.
One of these local governments has a real debt service ratio that equals or exceeds the financial rebuilding standard.
Status of the Real Debt Service Ratio
Status of Consolidated Real Deficit Ratio 310501001502000501001502000123123
Future Burden Ratio4Financial Shortfall Ratio50 0 0 002 2 213
2 3 008752198252514497 9
38 381191626 1264114The number of local governments with a future burden ratio equaling or
exceeding the early financial soundness standard
FY 2010 FY 2009
(No. of local governments) (No. of local governments)
FY 2010 FY 2009
(No. of accounts) (No. of accounts)
Prefectures Government
ordinance-designated
cities
Cities Towns and villages Total Prefectures Government
ordinance-designated
cities
Cities
Prefectures Government
ordinance-designated
cities
Cities Prefectures Government
ordinance-designated
cities
Cities
Towns and villages
Townsandvillages
Special districts Townsandvillages
Special districts
Total
Total Total
The number of accounts of public enterprises with a financial shortfall
The number of those accounts of public enterprises with a financial
shortfall ratio equaling or exceeding the financial soundness standard
The following figure shows the status of the future burden ratio based on FY2010 account settlements.
There are two local governments whose future burden ratio equals or exceeds the early financial soundness standards.
The following figure shows the status of the financial shortfall ratio based on FY2010 account settlements. The accounts of 119 public
enterprises fall under the category of accounts with a financial shortfall (i.e., with a financial shortfall ratio that exceeds 0%).
Thirty-eight of these accounts have a financial shortfall ratio that equals or exceeds the financial soundness standard.
Status of the Future Burden Ratio
Status of the Financial Shortfall Ratio
(Number of Accounts by Type of Local Governments) 32memo