White Paper on Local Public Finance,2005 -Illusted-

FY 2003 Settlement
White Paper on Local
Public Finance, 2005
─ Illustrated ─
Ministry of Internal Affairs
and Communications
...................................................... 1
Scale of Account Settlement ... 4
Revenue and Expenditure
Settlement .................................... 4
Revenue .......................................... 5
1 Revenue Breakdown .................. 5
2 Revenue Trends ........................ 6
3 Local Taxes................................. 7
4 Local Allocation Tax .................. 9
Expenditure ................................. 11
1 Expenses by Function ............... 11
2 Expenses by Character ............ 14
Flexibility of the Financial
Structure....................................... 17
1 Ordinary Balance Ratio ............ 17
2 Debt Service Payment Ratio Used for
Permission to Issue Local Bonds ... 18
Outstanding Local
Government Borrowing
(Ordinary Account)
................................................... 19
1 Trends in Outstanding Local
Government Borrowing ............ 19
2 Outstanding Borrowing of Local
Finance .................................... 20
Local Public Enterprises ......... 21
1 Ratio of Local Public Enterprises... 21
2 Number of Businesses Operated
by Local Public Enterprises ...... 22
3 Scale of Financial Settlement ... 22
4 Management Conditions ......... 23
1 Number of Public Employees......... 24
2 Salary Level ................................. 25
3 Administrative Transparency ......... 26
4 Examples of Administrative Reform
Efforts .......................................... 28
5 Promotion of Local Administrative
Reform Through the New Local
Administrative Reform Guidelines... 29
1 The Trinity Reform ........................ 30
2 Expansion of the Financial Base ... 33
3 Promotion of Municipal Mergers ... 371Prefectures and municipalities (cities, towns, and villages) are principal actors in
various administrative areas, including school education, welfare and public
health, police and fire services, and the construction of such public works as
roads and sewerage systems. They play a major role in national life.
This brochure will introduce the state of local public finance, which is an
assemblage of the finances of individual local governments, with particular focus
on the state of settlements for fiscal 2003 and efforts toward financial soundness
of the local public entities centered on the ordinary account.
Classification of the Accounting of Local Governments
Applied in the Settlement Account Statistics
Although the accounts of local governments are divided into ordinary accounts and special
accounts, the account classification of each local government is not uniform. Therefore, we have
adopted a uniform method in the settlement account statistics by classifying accounts as an
ordinary account, which covers the general administrative sector, and other accounts (public
business accounts). This enables us to clarify the financial condition of local governments as a
whole and to make a statistical comparison among local governments.
Account of general administrative sector
Ordinary
account
Other
accounts
(Public business
accounts)
Public enterprise account
Water supply business, Transport business,
Electricity business, Gas business, Hospital,
Sewerage business,
Residential land development projectEtc.National health
insurance
account
Elderly medical
care account
Nursing care
insurance
accountEtc.Accounts of Local Governments
The Role of Local Public FinanceTheRoleofLocal
Public
Finance2Gross Domestic Expenditure and Local Public Finance
Looking at the scale of local public finance to gross domestic expenditure, we see that the ratio
of the local government sector is 12.4%, which is about three times larger than the ratio of the
central government.
How large is local public finance compared with central
government finance?
62円.0862 trillion
(12.4%)
115円.1640 trillion
(23.0%)
Central
government
21円.6205 trillion
(4.3%)
Ordinary account
53円.4951 trillion
(10.7%)
Social security fund
31円.4574 trillion
(6.3%)
Gross domestic
expenditure
(nominal)
501円.2535 trillion
Enterprise sector
76円.4127 trillion
(15.2%)
Household sector
300円.4816 trillion
(59.9%)
376円.8943 trillion
(75.2%)
Net export of financial
goods and services
9円.1952 trillion
(1.8%)
Shares of National and Local Governments in Main Expenditures by
Function (final expenditure base)
In which fields are local expenditure ratios high?
Local expenditure ratios are higher in the areas that have a close relationship with our daily
lives, such as public health and sanitation, school education, social education, and police and
fire services.3Ratio of
expenditures
by function
Local ratio National ratio
Sanitation expenses
School education
expenses
Social education
expenses, etc.
Judicial, police, fire
service expenses
Land development
expenses
Commercial and
industrial expenses
Land preservation
expenses
Public welfare
expenses
(except pension expenses)
Housing expenses,etc.Disaster reconstruction
expenses, etc.
Agriculture, forestry
and fishery industry
expenses
Defense expenses
Pension expenses
(of public welfare expenses)
General administration
expenses, assembly
expenses, etc.
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.
Rivers and coast
Child welfare, elderly care
and welfare, livelihood
protection, etc.
Family register,
basic residents’
register, etc.TheStateofLocal
Public
Finance(FY2003
Settlement)4
As a result of such factors as a decline in ordinary construction project spending and personnel
expenses on the expenditure side and a decrease of local taxes and local allocation tax on the
revenue side, both revenue and expenditure have shrunk for four consecutive years.
Although both the single fiscal year balance and the real single fiscal year balance moved into
the black, the number of local government bodies with a real balance deficit are increasing.
Scale of Account Settlement
Revenue and Expenditure
Settlement
The State of Local Public Finance
(FY2003 Settlement)
Notes:
1. Real single FY balance: Calculated by adding reserves to the fiscal adjustment fund and advanced redemption of local loans to the single
FY balance and subtracting the used part of the fiscal adjustment fund.
Single FY balance: Calculated by subtracting the real balance of the previous fiscal year from the real balance of the fiscal year concerned.
Real balance: 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 organizations with real singe FY balance deficits or single FY balance deficits does not include partial administrative
associations and wide-area federations; the figures in parentheses are the number of organizations including partial administrative
associations and wide-area federations.
3. The number of organizations with a real balance deficit excludes entities with a deficit resulting from discontinued settlement (entities
with no income or expenditure in the account settlement period because of a merger, etc.).
(Scale of account settlement)110(\ trillion)1009080706050
Total revenue
Total expenditure
FY1998 FY1999 FY2000 FY2001 FY2002 FY2003
102.8689
100.1975
104.0065
101.6291
100.2751
97.6164
100.0041
97.4317 97.1702
94.8394 94.8870
92.5818
Settlement figure
Category
FY 2003 FY 2002 FY 2003 FY 2002
Real single FY
balance 91円.8 billion −97円.8 billion 1,448 (2,435) 2,055 (2,932)
Single FY
balance 139円.7 billion −55円.4 billion 1,347 (2,356) 1,949 (2,845)
Real balance 1204円.6 billion 1078円.3 billion 28 25
No. of deficit organizations5Revenue
Local taxes account for about one-third of the revenue of local governments, followed by the
local allocation tax, local bonds, and national treasury disbursements.
Local transfer tax Collected as a national tax and transferred to local governments. Includes local road transfer tax, etc.
Special local grant A revenue source with the character of a substitute for local taxes, introduced to supplement a part of the decrease of
local tax caused by a tax cut since FY 1999 and grants from the central government to local governments as a result of a revision of national
treasury subsidies.
Local allocation tax An intrinsic revenue source shared by local governments in order to adjust imbalances in tax revenue among local
governments and to guarantee revenue sources so that local governments in whatever region can provide a certain level of administrative
services. Calculated as a certain ratio of five national taxes. (See page 9 for details.)
National treasury disbursements A general name for funds disbursed from the central government to local governments for specified uses.
Local bonds These refer to the debts of local governments for which fulfillment continues for more than one fiscal year.
Where does the funds for local government activities come
from?
Notes:
1. The figures here are mainly for the ordinary account. (For the accounts of public enterprises, such as water supply and sewerage
businesses, transportation businesses, and hospitals, see page 21.)
2. The figures for each item are rounded off under the given unit. Therefore, they do not necessarily add up exactly to the total.
Revenue Breakdown1Revenue Breakdown (FY 2003)
General Revenue Resources
Revenue resources for which the use is not specified, like local taxes and the local allocation tax, are called general revenue
resources. Here, the total of local taxes, local transfer tax, special local grants, the local allocation tax, and so on is treated as
the general revenue resource. It is extremely important for local governments to ensure sufficient general revenue resources
in order to handle various administrative needs properly.
Municipalities
Total
51,195円.8
billion
Local allocation tax
8,090円.8 billion
(15.8%)
Local taxes
17,239円.7 billion
(33.7%)
Local transfer tax
519円.9 billion
(1.0%)
Special local grants
654円.9 billion
(1.3%)
General revenue
resources
28,333円.8 billion
(55.3%)
National treasury
disbursements
5,218円.1 billion
(10.2%)
Local bonds
6,205円.6 billion
(12.1%)
Other revenue
resources
11,438円.3 billion
(22.4%)
Other general revenue
resources
1,828円.5 billion (3.5%)
Prefectures
Total
49,811円.0
billion
Local allocation tax
9,978円.5 billion
(20.0%)
Local taxes
15,426円.0 billion
(31.0%)
Local transfer tax
174円.2 billion
(0.3%)
Special local grants
351円.3 billion
(0.7%)
General revenue
resources
25,929円.9 billion
(52.1%)
National treasury
disbursements
7,842円.4 billion
(15.7%)
Local bonds
7,652円.1 billion
(15.4%)
Other revenue
resources
8,386円.6 billion
(16.8%)
Net total
94,887円.0
billion
Local allocation tax
18,069円.3 billion
(19.0%)
Local taxes
32,665円.7 billion
(34.4%)
Local transfer tax
694円.0 billion
(0.7%)
General revenue
resources
52,435円.2 billion
(55.3%)
National treasury
disbursements
13,060円.5 billion
(13.8%)
Local bonds
13,789円.4 billion
(14.5%)
Other revenue
resources
15,601円.9 billion
(16.4%)
Special local grants
1,006円.2 billion
(1.1%)6In recent years, while the ratios of local taxes and local allocation tax in total revenue are on a
downward trend, the ratio of local bonds is increasing.
Revenue Trends2The
StateofLocal
Public
Finance(FY2003
Settlement)FY1992FY1997Local transfer tax 2.1%
(1円.9 trillion)
Local taxes 37.8%
(34円.6 trillion)
Local allocation tax 17.2%
(15円.7 trillion)
National treasury
disbursements
14.1% (12円.9 trillion)
Local bonds 11.2%
(10円.2 trillion)
Other revenue
resources 17.7%
(16円.2 trillion)
Net Total 91円.4 trillion
General revenue resources 57.0% (52円.1 trillion)
99円.9 trillion
54.4% (54円.4 trillion)
36.2%
(36円.2 trillion)
1.1% (1円.1 trillion)
17.1%
(17円.1 trillion) 14.3%
(14円.3 trillion)
14.1%
(14円.1 trillion)
17.2%
(17円.1 trillion)FY2001FY2002
100円.0 trillion
57.4% (57円.4 trillion)
35.5%
(35円.5 trillion)
0.6% (0円.6 trillion)
20.3%
(20円.3 trillion) 14.5%
(14円.5 trillion)
11.8%
(11円.8 trillion)
16.3%
(16円.3 trillion)
Special local grants 0.9% (0円.9 trillion)
0.9% (0円.9 trillion)FY2003
97円.2 trillion
56.0% (54円.5 trillion)
34.4%
(33円.4 trillion)
0.7% (0円.6 trillion)
20.1%
(19円.5 trillion) 13.5%
(13円.1 trillion)
13.7%
(13円.3 trillion)
16.8%
(16円.3 trillion)
1.1% (1円.0 trillion)
94円.9 trillion
55.3% (52円.4 trillion)
34.4%
(32円.7 trillion)
0.7% (0円.7 trillion)
19.0%
(18円.1 trillion) 13.8%
(13円.1 trillion)
14.5%
(13円.8 trillion)
16.4%
(15円.6 trillion)
Composition of Revenue from Prefectural Taxes (FY 2003 settlement)
Composition of Revenue from Municipal Taxes (FY 2003 settlement)
Local taxes consist of prefectural taxes and municipal taxes. (In the case of the special wards of
Tokyo, the Tokyo Metropolitan Government collects some municipal taxes.)7Local Taxes3Prefectural
residents tax
3,273円.4 billion
(23.9%)
Enterprise tax
3,845円.8 billion
(28.1%)
Total
13,693円.1
billion
On Interests
263円.3 billion (1.9%)
Individual
2,231円.1 billion
(16.3%)
Corporate
779円.0 billion
(5.7%)
Corporate
3,629円.3 billion
(26.5%)
Individual
216円.5 billion (1.6%)
Local consumption tax
2,393円.6 billion
(17.5%)
Automobile tax
1,746円.3 billion
(12.8%)
Light oil delivery tax
1,102円.5 billion (8.1%)
Real property
acquisition tax
480円.5 billion (3.5%)
Automobile acquisition tax
447円.3 billion (3.3%)
Prefectural tobacco tax
277円.8 billion (2.0%)
Other taxes
125円.9 billion (0.8%)
Municipal
residents tax
7,636円.6 billion
(40.3%)
Total
18,972円.6
billion
Individual
5,635円.8 billion
(29.7%)
Corporate
2,000円.8 billion
(10.5%)
Other taxes 476円.1 billion (2.5%)
Fixed asset tax
8,766円.9 billion
(46.2%)
Municipal tobacco tax
853円.8 billion (4.5%)
City planning tax
1,239円.2 billion (6.5%)8Among prefectural taxes, the ratios of the two corporate taxes (corporate business tax and
corporate prefectural residents tax) are high. Among municipal taxes, the ratios of the fixed
asset tax and individual municipal residents tax are high.
The two corporate taxes are impacted by the business cycle, so the tax revenue from prefectural
taxes is less stable.
On the other hand, municipal tax revenue has been relatively stable, although it has been on a
downward trend since fiscal 2001.
Prefectural Taxes Trend
Municipal Taxes TrendTheStateofLocal
Public
Finance(FY2003
Settlement)Figures in parentheses
are the component
ratios of the business
tax and prefectural
residents tax.
Figures in parentheses
are the component
ratio of the municipal
residents tax.
14.8330
\ trillion
\ trillion
14.9478
14.5863
15.5850 15.5303
13.8035 13.6931 trillion
19.7353
21.2077
20.4399
19.9614 20.0185
19.5750
18.9726 trillion
FY 1992 FY 1997 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
FY 1992 FY 1997 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
Other taxes
Light oil delivery tax
Automobile acquisition tax
Automobile tax
Prefectural tobacco tax
Real property acquisition tax
Local consumption tax
Individual
Individual
Corporate
Corporate
Interest
EnterprisetaxPrefectural
residentstaxIndividual
Corporate
Fixed asset tax
Municipal tobacco tax
City planning tax
Other taxes
Municipal
residentstax9 Standard financial
requirements
−
Standard financial
revenues
Regular allocation
tax amount
Standard financial
revenues
Standard local tax revenue
×ばつ
Calculation rate
(75%)+ Local transfer tax, etc.
Standard financial
requirements
Unit cost
×ばつ
Measured unit
number /amount
(population national census, etc.)
×ばつ
Adjustment coefficient
(scale modification, etc.)
Notes:
1. Standard financial requirements are calculated as the financial requirements of each local government based on rational and appropriate
standards. It is required to include the local share of the national treasury projects, such as compulsory education, livelihood protection,
and public works, work project in calculating the standard financial requirements. From FY 2001 to FY 2006, part of the standard
financial requirements is being transferred to special deficit-financing local bonds (extraordinary financial countermeasures bonds) under
Article 5 of the Local Finance Law.
2. Normal local tax revenue neither includes "non-statutory ordinary taxes"and"non-statutory special purpose taxes" imposed independently
by the local government nor "excess tax" that exceeds the standard tax rate stipulated in the Local Tax Law.
From the perspective of local autonomy, it would essentially be the ideal for each local
government to ensure the revenue sources necessary for administrative activities through local
taxes collected from their residents. However, there are regional imbalances in tax revenue, and
many local governments are unable to acquire necessary tax revenue. Therefore, the central
government collects financial sources that should fundamentally be attributable to local tax
revenue through national taxation and reallocates them as the local allocation tax to local
governments where financial sources are insufficient.
Determination of total amount of local allocation tax
The total amount of the local allocation tax is determined on the basis of certain ratios for
national taxes (32% for income tax and liquor tax, 35.8% for corporate tax, 29.5% for
consumption tax, and 25% for tobacco tax) as well as estimates of standard revenue and
expenditure of local public finance as a whole.
The total amount of local allocation tax in fiscal 2003 was 18円.0693 trillion, down 7.5% from
the initial figure for the previous fiscal year.
Method of calculation of regular local allocation tax for each local
government
The regular local allocation tax for each local government is calculated by the following
mechanism:21
Local Allocation Tax410
Function of the local allocation tax
The function of the local allocation tax is to adjust imbalances in revenue among local
governments in order to guarantee revenue so that local governments can provide standard
administrative services and basic social infrastructure to their residents in whatever region.
Accordingly, as a result of the revenue adjustment mechanism through the local allocation tax,
few differences in such factors as size of population have been found in the ratio of general
revenue resources to total revenue.3Notes:
1. A "large city" refers to a city with a population of more than 100,000 persons according to the national census of 2000; a "small city"
refers to a city with a population of less than 100,000.
2. A "large town or village" refers to a town or village with a population of more than 10,000; a "small town or village" refers to a town or
village with a population of less than 10,000.
Ratio of General Revenue Resources to Total
Revenue for MunicipalitiesTheStateofLocal
Public
Finance(FY2003
Settlement)Ratio of general
revenue resources
to total revenue
LargecitySmallcityLarge
town or village
Small
town or village
Local
transfer
tax, etc.
Special
local
grant
Local
allocationtaxLocal
taxes
General
revenue
resources11Expenditure
When expenses are classified by function, we see that a lot of revenue is expended for such items
as education expenses, civil engineering work expenses, and public welfare expenses. In
prefectures it is mainly expended for education expenses, civil engineering work expenses, and
debt servicing, in that order. In municipalities it is primarily expended for public welfare
expenses, civil engineering work expenses, and debt servicing, in that order.
Education expenses: Expenses for school education, social education, etc.
Civil engineering work expenses: Expenses for the construction and improvement of public facilities,
such as roads, housing and parks.
Public welfare expenses: Expenses for the construction and operation of welfare facilities for children,
the elderly, the mentally and physically disabled, etc. and for the implementation of livelihood protection,etc.Public debt payment: Expenses for the payment of principal, interest, etc. on debts.
What is revenue being expended for?
Expenses by Function1Composition of Expenditure by Function (FY 2003)
Net total
Other expenses
Public debt
payments
Education
expenses
Civil engineering
work expenses
Commerce and
industry expenses
Sanitation expenses
Public welfare
expenses
Agriculture, forestry
and fishery expenses
General administration
expenses
Share(%)Prefectures
Share(%)Municipalities
Share(%)Unit: 100円 million12Breakdown of Educational Expenses by Purpose
Breakdown of Civil Engineering Work Expenses by Purpose
Breakdown of Public Welfare Expenses by PurposeTheStateofLocal
Public
Finance(FY2003
Settlement)Net total Share(%)Prefectures
Municipalities
Share
(%) Share(%)Net total Share(%)Prefectures
Municipalities
Share
(%) Share(%)Net total Share(%)Prefectures
Municipalities
Share
(%) Share(%)Other
Health and physical education
Educational
general affairs
Social education
Senior high school
Junior high school
Elementary school
Unit: 100円 million
Other
Housing
Urban planning
Harbors
Rivers and coast
Roads and bridges
Unit: 100円 million
Disaster relief
Livelihood protection
Child welfare
Elderly welfare
Social welfare
Unit: 100円 million
172,014
116,445
56,344
12,932
24,946
12,985
14,843
25,914
29,157
51,237
164,391
82,893
84,382
11,529
14,171
60,457
5,579
18,667
53,988
145,402
39,667
119,3067526,043
43,699
37,799
37,786
Trends in Expenditures by Function (ordinary account net total)13Unit: Ratio with FY 1992 as 100.
In recent years, while there has been a decline in such items as agriculture, forestry and fishery
expenses and civil engineering work expenses, public debt payments have been increasing.FY1992
General administration expenses
Welfare expenses
Of which, social welfare expenses
Of which, elderly welfare expenses
Of which, child welfare expenses
Sanitation expenses
Of which, cleaning expenses
Agriculture, forestry and fishery expenses
Commerce and industry expenses
Civil engineering work expenses
Education expenses
Public debt payments
Total expenditure
unit: 100円 millionFY1999
General administration expenses
Welfare expenses
Of which, social welfare expenses
Of which, elderly welfare expenses
Of which, child welfare expenses
Sanitation expenses
Of which, cleaning expenses
Agriculture, forestry and fishery expenses
Commerce and industry expenses
Civil engineering work expenses
Education expenses
Public debt payments
Total expenditureFY2003
General administration expenses
Welfare expenses
Of which, social welfare expenses
Of which, elderly welfare expenses
Of which, child welfare expenses
Sanitation expenses
Of which, cleaning expenses
Agriculture, forestry and fishery expenses
Commerce and industry expenses
Civil engineering work expenses
Education expenses
Public debt payments
Total expenditure14Expenditure by Character (FY 2003)
What are expenses for?
Classified by character, expenses can be divided into "obligatory expenses" (personnel expenses,
maintenance and relief expenses and public debt payments), which are mandatory and difficult to
cut down at the discretion of individual local governments; "investment expenses," including
ordinary construction expenses, etc.; and "other expenses."
Expenses by Character2The
StateofLocal
Public
Finance(FY2003
Settlement)Net total
92,581円.8
billion
Personnel
expenses
25,932円.3 billion
(28.0%)
Obligatory expenses
46,122円.1 billion
(49.8%)
Ordinary
construction expenses
18,250円.3 billion
(19.7%)
Maintenance and relief
expenses
7,034円.9 billion
(7.6%)
Public debt
payments
13,154円.9 billion
(14.2%)
Subsidized ordinary
construction expenses
7,873円.5 billion (8.5%)
Other expenses
27,888円.9 billion
(30.1%)
Investment expenses
18,570円.8 billion
(20.1%)
Unsubsidized ordinary
construction expenses
9,107円.7 billion (9.8%)
Prefectures
Total
48,917円.0
billion
Personnel
expenses
15,344円.3 billion
(31.4%)
Obligatory expenses
23,042円.4 billion
(47.1%)
Ordinary
construction expenses
10,398円.1 billion
(21.3%) Maintenance and
relief expenses
1,038円.7 billion
(2.1%)
Public debt
payments
6,659円.4 billion
(13.6%)
Subsidized ordinary
construction expenses
5,294円.9 billion (10.8%)
Other expenses
15,271円.1 billion
(31.2%)
Investment expenses
10,603円.5 billion
(21.7%)
Unsubsidized ordinary
construction expenses
3,977円.4 billion (8.1%)
Municipalities
Total
49,784円.6
billion
Personnel
expenses
10,587円.9 billion
(21.3%)
Obligatory expenses
23,177円.8 billion
(46.6%)
Ordinary
construction expenses
8,837円.4 billion
(17.8%)
Maintenance and
relief expenses
5,996円.2 billion
(12.0%)
Public debt
payments
6,593円.6 billion
(13.2%)
Subsidized ordinary
construction expenses
2,958円.6 billion (5.9%)
Other expenses
17,623円.5 billion
(35.4%)
Investment expenses
8,983円.3 billion (18.0%)
Unsubsidized ordinary
construction expenses
5,456円.7 billion (11.0%)15Trends in Personnel Expenses
Breakdown of Personnel Expenses by Item
Personnel expenses
Total expenditures
Share(%)=
Prefectures
Municipalities
Net total
FY 1970 FY 1975 FY 1980 FY 1985 FY 1990 FY 1995 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
Net total
25円.9323
trillion
Prefectures
15円.3443
trillion
Municipalities
10円.5879
trillion
Other
Retirement
allowances
Temporary
worker wages
Subsides for local
government
employee mutual-aid
associations, etc.
Unit: 100円 million
Other
allowances
Basic
salaries
Employee
salaries
13,064 (5.0%)
34,400 (13.3%)
22,790 (8.8%)
65,257
(25.2%)
123,632
(47.7%)
180 (0.1%)
189,069
(72.9%)
(2.6%)
(14.1%)
(8.5%)
(25.9%)
(48.9%)
(74.8%)
(0.0%)
(8.7%)
(12.0%)
(9.2%)
(24.0%)
(46.0%)
(70.1%)
(0.2%)16Trends in Breakdown of Expenditures by Character
(ordinary account net total)
Unit: Ratio with FY 1992 as 100.
In recent years, while there has been a decline in such items as ordinary construction expenses
and personnel expenses, maintenance and relief expenses, public debt payments and so on have
been increasing.
Maintenance and relief 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 social capital, such as roads, bridges, parks, schools, etc.TheStateofLocal
Public
Finance(FY2003
Settlement)FY1992Obligatory expenses
Personnel expenses
Maintenance and relief expenses
Public debt payments
Ordinary construction expenses
Subsidized ordinary construction expenses
Unsubsidized ordinary construction expenses
Reserves
Total expenditureFY1999
Obligatory expenses
Personnel expenses
Maintenance and relief expenses
Public debt payments
Ordinary construction expenses
Subsidized ordinary construction expenses
Unsubsidized ordinary construction expenses
Reserves
Total expenditureFY2003
Obligatory expenses
Personnel expenses
Maintenance and relief expenses
Public debt payments
Ordinary construction expenses
Subsidized ordinary construction expenses
Unsubsidized ordinary
construction expenses
Reserves
Total expenditure
unit: 100円 million17Flexibility of the Financial
Structure
How can local finance respond to the demand toward local
governments?
Ordinary Balance Ratio1In addition to revenue sources allocated to obligatory expenses required every year, it is
necessary for local governments to ensure revenue sources for measures to respond properly to
social and economic trends and changes in the demand of the residents. The extent to which
these revenue sources can be ensured is called the flexibility of the financial structure.
The ordinary balance ratio (the ratio of ordinary revenue allotted to expenses recurring every
fiscal year to the total of ordinary revenue recurring every fiscal year, centered on local taxes
and the local allocation tax, as well as tax reduction supplementary bonds and extraordinary
financial countermeasures bonds [see note]) is declining, both on a prefectural average and
national average, because of such factors as a decrease in personnel expenses and an increase in
tax-reduction supplementary bonds and extraordinary financial countermeasures bonds.
Note:
Tax-reduction supple-
mentary bonds and
extraordinary financ-
ial countermeasures
bonds have been add-
ed since fiscal 2001.
Prefectures
Municipalities
Nationwide
FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
Public debt payments (%)
Personnel expenses (%)
Other expenses18It is necessary to keep a close watch on trends in public debt payments at all times, since public
debt payments, payments of principal and interest on the debts of local governments, are
expenses especially lacking flexibility.
The debt service payment ratio used to restrict the issue of local bonds, which is an index that
takes into consideration the local allocation tax calculated for debt payments and indicates the
actual degree of debt payment burden, has been continuing to maintain a high level; the national
average, for example, was the same as the record high figure of the previous fiscal year.
Trends in the Debt Service Payment Ratio Used for Permission
to Issue Local Bonds
Debt Service Payment Ratio Used for Permission to Issue Local Bonds2The
StateofLocal
Public
Finance(FY2003
Settlement)Debt service payment
ratio used for permission
to issue local bonds
The debt service payment ratio
used for permission to issue
local bonds is an index show-
ing the ratio of local debt prin-
cipal and interest repayment
(excluding advanced redemp-
tion and the amount of general
revenue resources calculated
for this purpose that includes
the local allocation tax) to the
total of standard financial
amount (excluding the amount
of local allocation tax calculat-
ed for service payment) and
possible issue of extraordinary
financial countermeasures
bonds. This index is one of the
criteria to limit the issue of
local bonds. In principle, the
issue of local bonds relating to
general unsubsidized projects,
etc. is prohibited in the case of
local governments with a ratio
of 20% or over.
Prefectures
Municipalities
Nationwide
FY 1993
FY 2003
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 200219Outstanding Local Government
Borrowing (Ordinary Account)
Outstanding local government borrowing, the debts of local governments, amounted to
approximately 138円 trillion at the end of fiscal 2003. This figure has been increasing in recent
years because of such factors as the need to supplement tax revenue as a result of the decrease in
local tax revenue and tax cuts, the added public investment by economic-stimulus measures, and
the issue of extraordinary financial countermeasures bonds. The figure is 1.5 times larger than
total revenue and 2.6 times larger than general revenue resources, such as local taxes and local
allocation tax.
What is the state of debts in local public finance?
Trends in Outstanding Local Government Borrowing
Notes:
1. Outstanding local government borrowing excludes special fund public works bonds and special fund public investment bonds.
2. Economic-stimulus figures are estimates.
Trends in Outstanding Local Government Borrowing1FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
\ trillion
Economic-
stimulus
measures
Tax revenue
supplementary
bonds
Tax-reduction
supplementary
bonds, etc.
Financial aid
bonds
Other local
bonds
Extraordinary
financial
countermeasures
bonds20The outstanding borrowing of local finance, including the local burden of borrowing from the
special account for local allocation tax and transfer tax grants and those public enterprise bonds
borne by the ordinary account, as well as current outstanding local government bonds, has been
increasing sharply in recent years. The figure reached about 198円 trillion at the end of fiscal
2003 and is expected to reach 205円 trillion at the end of fiscal 2005.
Notes:
1. Outstanding local government borrowing excludes special fund public works bonds and special fund public investment bonds.
2. Outstanding public enterprise bonds (borne by the ordinary account) are estimates based on settlement statistics.
Trends in Outstanding Borrowing That Should Be Shouldered by the
Ordinary Account and Ratio of Outstanding Borrowing to Gross
Domestic Product
Outstanding Borrowing of Local Finance2The
StateofLocal
Public
Finance(FY2003
Settlement)\ trillion
FY 1992
61.1313
15.8279
2.1859
79.1451
FY 1997
111.4971
23.1823
15.2137
149.8931
FY 1999
125.5986
25.9714
22.2192
173.7892
FY 2000
128.0850
27.0323
26.2633
181.3806
FY 2001
130.8615
28.3228
28.5303
187.7146
FY 2002
134.1007
28.2435
30.7243
193.0685
FY 2003 (End of FY)
138.0980
28.3465
31.8357
198.2802
Outstanding borrowing from special
account for local allocation tax and
transfer tax grants (local burden)
Outstanding local government
bonds
Ratio of outstanding
borrowing that should be
shouldered by the ordinary
account to GDP
Outstanding public enterprise bonds
(borne by the ordinary account)21Local Public Enterprises
What is the state of local public enterprises?
Local public enterprises are managed directly by local governments for the purpose of social
and public benefit. They provide social infrastructure and services indispensable for local
residents and the development of the community, including water supply, sewerage, transport
and hospitals.
Local public enterprises play a major role in improving the standard of living of residents.
Ratio of Local Public Enterprises1*The graph shows the
ratio of local public
enterprises when the
total number of
business entities
nationwide is taken as100.*Figures for the total
number of enterprises
nationwide are
compiled from
statistical materials of
related organizations;
figures for local
public enterprises are
compiled from figures
for the total number
of enterprises and
settlements for the
previous fiscal year.
Water-supply
population
of 124.051
million persons
Sewage disposal
facility population
of 98.54
million persons
No.of passengers
a year
of 4.812
billion persons
No.of passengers
a year
of 4.726
billion persons
No.of hospitalbedsof 1,643,000 beds
123.129
million persons
89.25
million persons
2.738
billion persons
1.193
billion persons
238,000bedsWater-supply
business
(including small-scale
water supply business)
Transport
business
(subways)
Transport
business
(buses)
Hospitals
Sewerage
business
The number of businesses is 12,476. By type of business, sewerage accounts for the largest
ratio, followed in order by water supply, care services, and hospitals.22The total financial settlement scale is 20円.3070 trillion. By type of business, sewerage accounts
for the largest ratio, followed in order by hospitals, water supply, and transport.
Number of Businesses Operated by Local Public Enterprises2Scale of Financial Settlement3The
StateofLocal
Public
Finance(FY2003
Settlement)No. of businesses
12,476
Sewerage
business
4,956
(39.7%)
Water-supply
business
including small-scale
water supply
3,542
(28.4%)
End of FY2003
Care services845(6.8%)
Hospitals754(6.0%)
Tourist
facilities 551
(4.4%)
Others
1,828
(14.7%)
203,070
100円 million
Sewerage
business
69,878
(34.4%)
Water-supply
business
including small-scale
water supply
46,018
(22.7%)
FY2003
Hospitals
47,355
(23.3%)
Transport
13,330
(6.6%)
Others
26,489
(13.0%)23Local public enterprises had a surplus of 148円.2 billion. By type of business, while water
supply, industrial water supply, electricity, and sewerage showed a surplus, transport and
hospitals are continuing to register a deficit.
Management Conditions4Trends in Management Conditions of Local Public Enterprises
\ 100 million
Others
Sewerage business
HospitalsGasElectricity
Transport
Industrial water supply
Water supply
(including small-scale water supply)
Total
balance
Surplus
Deficit
FY 1992
FY 1997
FY 1999 FY 2000 FY 2001 FY 2002
FY 2003
Total surplus
2,702
Total deficit
△しろさんかく2,359
Others 1,175
Water supply962Transport
△しろさんかく1,472
Hospitals
△しろさんかく887
Total deficit
△しろさんかく2,314
Transport
△しろさんかく1,712
Hospitals
△しろさんかく578
Sewerage 225
Gas 48
Electricity 170
Industrial
water supply 122
Total surplus
2,392
Others 242
Water supply
1,567
Sewerage 324
Electricity 177
Industrial
water supply 82
Total surplus
2,388
Water supply
1,533
Sewerage 556
Electricity 152
Industrial
water supply 147
Gas △しろさんかく24
Total deficit
△しろさんかく2,784
Transport
△しろさんかく1,677
Total surplus
2,595
Water supply
1,648
Sewerage 604
Electricity 196
Industrial
water supply 147
Total surplus
3,927
Water supply
1,286
Sewerage 799
Electricity 123
Industrial
water supply 153
Transport
△しろさんかく2,310
Hospitals
△しろさんかく952
Gas △しろさんかく19
Others △しろさんかく136
Total deficit
△しろさんかく3,087
Hospitals
△しろさんかく644
Gas △しろさんかく20
Others △しろさんかく113
Transport
△しろさんかく1,452
Total deficit
△しろさんかく2,934
Hospitals
△しろさんかく1,264
Gas △しろさんかく15
Others △しろさんかく203
Transport
△しろさんかく754
Total deficit
△しろさんかく1,867
Hospitals
△しろさんかく1,013
Gas 2
Others △しろさんかく100
Transport
△しろさんかく1,598
Total deficit
△しろさんかく2,225
Hospitals
△しろさんかく627
Gas 5
Others 1,561 Total surplus
3,013
Water supply
1,599
Sewerage 755
Electricity 114
Industrial
water supply 180
Others 365
Total surplus
3,349
Water supply
1,871
Sewerage 765
Electricity 106
Industrial
water supply 164
Others 441
Efforts
Toward
Sound
Financial
Conditions24While local public finance is certainly in an extremely severe situation, the role of the local
government, which is clarified as the comprehensive administrative entity of the region, is
becoming increasingly important. For this reason, various efforts for administrative reform are
being made with the aim of making administrative organizations simpler, more efficient and
more responsible to new administrative issues.
The number of local public employees has declined for 10 consecutive years since 1995. The
number of employees has fallen for nine consecutive years in the general administrative sector
and 13 consecutive years in the special administrative sector and has also dropped for three
consecutive years in the public enterprise sector.
The background of this trend lies the efforts, which have been made to restrain the increase of
the total number of employees through the setting of numerical targets and scrap-and-build
policies, although the number of employees has increased in some areas because of such factors
as the enhancement of public-security and disaster-prevention measures.
What efforts have been made toward sound local finance?
Number of Local Public Employees
Efforts Toward Sound Financial
Conditions
Number of Public Employees1(1,000 persons)
Total number of local
public employees
General administrative sector
FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 200425Trends in the Number of Staff in Local Governments by Sector
Unit: Ratio against 100 as the number of staff as of April 1, 1995.
When the salary level of local public employees is shown on the Laspeyres Index, the average
for all local governments is 97.9.
More than 1,400 local governments have implemented their own salary-reduction measures, as a
result of which personnel expenses in fiscal 2004 were expected to be cut by approximately
140円 billion.
Salary Level2Laspeyres Index
The Laspeyres Index is used to compare price levels,
wage levels and so on. Here it is used to show the
salary level of local public employees when the salary
level of national public employees is taken as 100.
Trends in the Laspeyres Index
(Trends in the Average for All Local Governments)
April 1,1995General administrative sector
Excluding welfare
welfare
Special administrative sector
Education
Police and fire services
Public enterprises, etc.
All local governments
April 1,2004General administrative sector
Excluding welfare
welfare
Special administrative sector
Education
Police and fire services
Public enterprises, etc.
All local governments
1974 1978 1983 1988 1993 1998 2003 200426Amid the increasing severity of local public finance, various efforts are being made to fulfill
accountability. Since October 2004 the Ministry of Internal Affairs and Communications has
been posting "settlement cards" on its homepage showing the settlement data (since fiscal 2001)
for all prefectures and municipalities by individual organization.
Administrative Transparency3140,447
135,579
3.6% 4,1685.912,91118.452,57675.05,0787.313,12519.050,76173.4Category
Population density
(persons)
356.90394Name of prefecture
Name of local government
State of revenues (units: \ thousand; %)
State of municipal taxes (unit: \ thousand; %)
Settlement for FY ×ばつ ×ばつ ×ばつ ×ばつ ×ばつ
○しろまる ×ばつ
○しろまる
○しろまる
○しろまる
○しろまる ×ばつ ×ばつ
○しろまる 1111112815.12.01
15.12.01
15.12.01
15.12.01
8.04.01
8.04.01
8.04.01
9,120
7,458
6,508
6,555
5,400
4,650
4,350
3,195
2,989
3,92100
3,2278161513700853
45,332,028
44,447,623
884,405
249,482
634,923
-3,2939680
200,000
-202,325
49,773,432
48,606,781
1,166,651
528,435
638,216
-153,4834620
500,000
-653,021
2,607,150
451,370
145,06000
2,752,210
5,691,249
1,947,170
1,167,96700
803,676
1,772,436
611,799
386,831
23,188
40,1388167133Note: Supplementary business expenses of ordinary construction project expenses include the supplementary business expenses of commissioned project expenses; single
project expenses include same-level group travel project expenses and the single project expenses of commissioned project expenses.
138,661
137,9280.5%18,030,921
455,452
172,256
1,311,209
28,4230259,3760647,171
6,767,801
5,602,792
1,165,009
27,672,609
26,032
400,22039.81.00.42.90.10.00.60.01.414.912.42.661.00.10.916,550,070
455,452
172,256
1,311,209
28,4230259,3760647,171
5,602,792
5,602,792025,026,749
26,0320125,627
5,349,122
405,609
1,298,083
8,322,096
8,198,549
206,931
771,332091
16,478,89101,552,030
1,552,030
71,17901,480,85100018,030,921
6,975,183
4,802,591
5,353,509
5,904,228
5,902,785
1,443
18,232,920
5,302,917
201,854
4,971,590
2,948,997
4,523,282
298,199
1,676,65609,240,205
248,779
9,076,963
2,622,352
6,306,477
163,242044,447,623
333,173
6,271,805
9,690,126
4,946,836
104,774
1,468,399
1,407,149
7,877,409
1,317,851
4,961,934
163,242
5,904,92500044,447,62301,067,145
74,063
204,023
5,116
646,454
90,459
5,208,061
34,417
1,747,225000009,076,963
333,173
5,246,072
5,079,284
4,408,112
67,081
1,038,736
569,949
3,842,387
1,290,471
3,416,666
61,339
5,783,92100031,137,1910.714.121.811.10.23.33.217.73.011.20.413.30.00.00.010015.710.812.013.313.30.041.011.90.511.26.610.20.73.80.020.80.620.45.914.20.40.0
100.022.0-6.120.720.70.048.812.00.713.610.29.10.00.0
6,217,962
4,145,009
1,697,881
5,783,224
5,781,781
1,443
13,699,067
4,516,381
182,586
4,689,436
2,888,953
4,165,553
281,893
696,19102,906,084
219,128
2,844,745
111,805
2,687,306
61,339031,137,191
6,122,249-1,696,650
5,781,615
5,780,172
1,443
13,600,514
3,343,389
182,586
3,796,891
2,829,946
2,535,637000.729.72.27.246.245.51.14.30.00.091.40.08.68.60.40.08.20.00.00.0
100.000426211,295000000
211,721000000000211,72165.71.80.75.20.10.01.00.02.622.222.20.099.30.10.014,635,451
20,274,073
19,359,163
24,961,9550.722.5
101.018.118.712.32,091,975
1,207,658
6,630,887
66,257,787
35,760,606
669,21901,405,23400
2,048,740
96.8 88.6
98.4 91.9
95.4 ×ばつ ×ばつ ×ばつ ×ばつ
○しろまる ×ばつ ×ばつ ×ばつ ×ばつ ×ばつ
○しろまる ×ばつ ×ばつ
○しろまる ×ばつ
2000 national census
1995 national census
Rate of change
Population
Basic residents' register population
March 31, 2004
March 31, 2003
Rate of change
Industrial structure
2000 national
census
1995 national
census
Primary
Secondary
Tertiary
Type of
municipality
Local allocation
tax areaArea(km2)
Share
Share
Settlement
figure
Current general revenue
resources, etc.
Category
Local taxes
Local transfer tax
Interest apportionment grant
Local consumption tax grant
Golf course utilization tax grant
Special local consumption tax grant
Automobile acquisition tax grant
Light oil delivery tax grant
Local special grant
Local allocation tax
Ordinary
Special
(General revenue resources total)
Special grant for traffic safety measures
Charges, burdens
Share
Share
Settlement
figure
Current general revenue
resources, etc.
Category
Usage fees
Handling charges
National treasury disbursements
National provision grant
(special ward fiscal adjustment grant)
Prefectural disbursements
Property revenue
Donations
Money transferred
Money carried over
Various revenues
Local bonds
Of which, tax-reduction supplementary bonds
Of which, extraordinary financial countermeasures bonds
Total revenues Collected
amount
Category Share Excess tax
portion
Municipal resident's tax
Individual equal apportionment
Income apportionment
Corporate equal apportionment
Corporate tax apportionment
Fixed asset tax
Of which, net fixed asset tax
Light motor vehicle tax
Municipal tobacco tax
Mining tax
Special land-holding tax
(Statutory ordinary tax total)
Nonstatutory ordinary taxes
Earmarked taxes
Statutory earmarked taxes
Spa tax
Business office tax
City planning tax
Water utility and land profit tax
Nonstatutory earmarked taxes
Taxes from defunct laws
Total
Breakdown FY2002
(\ thousand)
FY2003
(\ thousand)
Total revenues
Total expenditure
Revenues minus expenditures
Revenue resources that should be
carried over to the next fiscal year
Real balance
Single FY balance
Reserve
Advanced redemption of local loans
Reserve breakup amount
Real single FY balance
Category
State of
income‐
expenditure
balance
Per capita average
monthly salary
(\ hundred)
monthly salary
(\ hundred)
No. of
employees
(persons)
General staff
Of which, skilled workers
Education-related government employees
Fire-fighting staff
Temporary staff
Total
General
staff, etc.Category
Per capita average
monthly salary
(compensation \ hundred)
Applicable
beginning date
No. of
seats
Mayor
Deputy mayor
Treasurer
Chairperson of board of education
Speaker of assembly
Deputy speaker of assembly
Members of assembly
Special staff, etc.
Raw sewage disposal
Garbage disposal
Crematories
Reserve fire service
Elementary schools
Junior high schools
Other
Accidents to assembly members in course of duty
Accidents to part-time staff in course of duty
Retirement allowance
Joint office equipment
Tax administration
Elderly welfare
Infectious diseases
State of membership of
partial administrative associations
State of designated
organizations, etc.
Former new industrial city
Former industrial development special area
Underdeveloped area
Former mining area
Rural development area
Underpopulated area
Peninsula development area
Metropolitan Tokyo area
Kinki area
Chubu area
Wide-area municipality
Special rural area
Fiscal reconstruction organization
Fiscal index reference organization
Revenue-surplus organization
State of expenditures by character (unit: \ thousand; %)
Ordinary balance ratio
Current expenses appropriated general
revenue resources, etc.
Total of current expenses appropriated general
revenue resources, etc.
\ 23,459,017,000
Ordinary balance ratio
84.2%
(Excluding tax-reduction supplementary bonds and
emergency financial countermeasures bonds)
93.1%
Income general revenue resources, etc.
\ 32,003,480,000
Appropriated general
revenue resources, etc.
Share
Settlement amount
Personnel expenses
Of which, employee salaries
Maintenance and relief expenses
Public debt payments
Principal and interest repayments
Temporary loan interest
(Total of obligatory expenses)
Nonpersonnel expenses
Maintenance and repair expenses
Supplementary expenses, etc.
Of which, burden of partial administrative associations
Transfers
Reserve
Investment, capital, loans
Appropriations carried over from previous FY
Investment expenses
Of which, personnel expenses
Ordinary construction expenses
Of which, subsidized expenses
Of which, unsubsidized expenses
Disaster reconstruction expenses
Unemployment countermeasures expenses
Total expenditure
Breakdown
Breakdown
Category
State of expenditures by purpose (unit: \ thousand; %)
Assembly expenses
General administration expenses
Public welfare expenses
Sanitation expenses
Labor expenses
Agriculture, forestry and fishery expenses
Commerce and industry expenses
Civil engineering work expenses
Fire-service expenses
Education expenses
Disaster reconstruction expenses
Public debt payments
Various expenses
Appropriations carried over from the previous FY
Special ward fiscal adjustment grant
Total expenditure
Category Settlement
amount (A) Share Of A, ordinary construction
project expenses
Of A, appropriated general
revenue resources, etc.
(\ thousand)
Category
Standard financial revenue
Standard financial requirement
Standard tax revenue amount, etc.
Standard fiscal scale
Fiscal power index (2001-2003)
Real revenue-expenditure ratio(%)
Current general revenue resources, etc. ratio(%)
Debt service expenses burden ratio(%)
Debt service expenses ratio(%)
Debt service payment ratio used for permission to issue local bonds(%)
Current reserve outstanding
Fiscal adjustment
Debt payments
Special purposes
Outstanding local government bonds
Of which, government funds
Contract authorization amount (scheduled expenditure)
Purchase of supplies, etc.
Guarantee, compensation
Other
Other items accruing from real debt burden acts
Profit-generation business income
Current land development fund outstanding
Collection rate(%)[Current year, total]
Total
Municipal resident's tax
Net fixed asset tax
FY2003
Total
Sewerage business
Water supply
Industrial water supply
Transport
National health insurance
Other
Transfers to public business, etc. State of the national health insurance program account
Real balance
Resubtracted balance
No. of subscriber households (households)
No. of insured persons (persons)
Amounted of collected insurance fees
National treasury expenditure
Insurance benefit expenses
Per capita
insured
persons
Example of Settlement Card (City A)
Efforts
Toward
Sound
Financial
Conditions27Example of Balance Sheet (City A)
FY 2003 Ordinary Account Balance Sheet
Information relating to contract authorization
(1)Matters relating to the purchase of property, etc. 669,219
(2)Matters relating to guarantee of obligation and loss compensation 5,073,577
(3)Matters relating to compensation for paid interest, etc. 1,403,984
Credit
(As of March 31, 2004; unit: 1,000円)
Debit
(Liabilities)
1. Fixed liabilities
(1)Local government bonds
58,864,797
(2)Contract authorization
〔1〕Purchase of property, etc.0〔2〕Guarantee of obligation or loss compensation0Total 0
(3)Retirement allowance reserve
5,991,639
Total 64,856,436
2.Liquid liabilities
(1)Scheduled redemption in next fiscal year
7,373,172
(2)Appropriation mode in advance0Total 7,373,172
Total liabilities 72,229,608
(Net assets)
1. National treasury disbursements
19,888,897
2. Prefectural disbursements
5,473,103
3. General revenue sources, etc.
61,383,240
Total net assets 86,745,240
Total of liabilities and net assets 158,974,240
In the meantime, in recent years an increasing number of local governments have been
compiling balance sheets as a means of disclosing and analyzing financial conditions in order to
grasp the state of their assets and liabilities in a comprehensive manner.
State of Compilation of Balance Sheets (no. of organizations)
(Assets)
1. Tangible fixed assets
(1) General administration expenses
11,988,830
(2) Welfare expenses
2,896,302
(3) Sanitation expenses
4,638,834
(4) Labor expenses
375,522
(5) Agriculture, forestry and fishery expenses
4,969,931
(6) Commerce and industry expenses
2,227,833
(7) Civil engineering work expenses
57,481,118
(8) Fire service expenses
544,254
(9) Education expenses
52,306,962
(10) Others
273,934
Total 137,703,520
(of which, land 46,861,437)
Total 137,703,520
2. Investment, etc.
(1)Investment and equity funds
4,590,696
(2)Loan
895,408
(3)Funds
〔1〕Special purpose funds
6,630,887
〔2〕Land development funds
2,048,740
〔3〕Fixed-in investment
4,000
Total 8,683,627
Total 14,169,731
3.Liquid assets
(1)Cash, deposits
〔1〕Adjustment fund for finance
2,091,975
〔2〕Sinking funds
1,207,658
〔3〕Cash in yearly account
884,405
Total 4,184,038
(2)Receivables
〔1〕Local taxes
2,187,109
〔2〕Others
730,450
Total 2,917,559
Total 7,101,597
Total assets 158,974,848
Prefectures
(as of August 31, 2001)
Prefectures
(as of March 31, 2004)
Municipalities
(as of August 31, 2001)
Municipalities
(as of March 31, 2004)
0 20 40 60 80 100(%) Compiled (including being compiled and scheduled to be compiled)
Not compiled4747
1,214
1,769
2,033
1,38600
*Number of municipalities at time of survey: as of August 31, 2001, 3,247; as of March 31, 2004, 3,155.28Local governments are making various administrative reform efforts with the aim of achieving
sound financial conditions. The following are some of them:
Examples of Specific Efforts
※(注記)[ ]内はこれまでの実績
Examples of Administrative Reform Efforts4Efforts
Toward
Sound
Financial
Conditions
●くろまる Greater efficiency in the payment of travel expenses and salaries
through establishment of the General Affairs Administration Center
In fiscal 2002 established, for the first time in the country, a General Affairs
Administration Center for the comprehensive processing of administrative
work relating to the payment of travel expenses, salaries, etc. of main office
staff and commenced the consignment of administrative work to the private
sector. The number of staff was reduced by 41 persons through integration
and outsourcing. This move has the effect of cutting expenses by about
350円 million a year.
●くろまる Implementation of administration evaluation utilizing administrative
inventory sheets
Since fiscal 1997 has compiled administrative inventory sheets to fully clarify
the work of the prefecture and uses them in administration evaluation. In
fiscal 2003 the inventory sheets, with additional information for evaluation,
were submitted to the special committee on settlement of the prefectural
assembly and also reflected in the budget and business. Is building a
purpose-oriented administrative management system that can be called the
Japanese version of New Public Management (NPM).
●くろまる Building of a speedy and flexible administrative work processing setup
through the streamlining of the organization
In fiscal 1998, for the first time in the country, abolished sections and
established purpose-oriented offices. Abolished middle management posts
and trimmed ranking classes. This contributed to reducing the time take for
the standard processing of license applications to an average of about 5.2
days and a reduction in the number of staff by 100 persons.
●くろまる Reduction of number of staff by about 20% (about 3,000 persons) in
the 10 years from fiscal 1999−2008 (reduction of 2,540 persons in the
six years from fiscal 1999−2004)
●くろまる Reduction of managerial allowances (10% reduction from fiscal 2001–04)●くろまる Reduction of number of prefecture-related organization staff by about
20% (about 600 persons) in the nine years from fiscal 2000−08
through a review of prefecture-related organizations (reduction of 516
persons in the five years from fiscal 2000−04)
●くろまる A review of public facilities to abolish, privatize, etc. more than 26
facilities (about 20%) in the seven years from fiscal 2002−08
●くろまる Reduction of number of staff by 1,000 persons (about 5.9%) in the five
years from fiscal 2004−08. (Reduction of 202 persons in fiscal 2004.)
●くろまる Reduction of salaries for special posts. (15% reduction for mayor and
10% reduction for deputy mayor, etc. in fiscal 2002−04.)
●くろまる In the five years from fiscal 2004−08 the number of auxiliary
organizations (45 organizations) will be reduced by more than 10% (5
organizations).
●くろまる In the five years from fiscal 2004−08 the number of full-time staff
dispatched from the city to auxiliary organizations will be reduced by
more than 30% (78 persons) from the total of 259 persons in fiscal
2003. (In fiscal 2004, the number was reduced by 8.5%, or 22 persons.)
●くろまる Raising the municipal tax collection rate from 94.8% in the settlement
of fiscal 2002 to the 96% level in the fiscal 2008.
●くろまる Revision of administrative work using the administration assessment
system. (In fiscal 2003 the revision of 430 projects had a fiscal effect of
approximately 10円.2 billion; in fiscal 2004 the revision of 352 projects had a
fiscal effect of approximately 5円.6 billion.)
PrefectureAPrefectureBCityC29
Administrative Reform Outline and Intensive
Reform Plan
Promotion of Local Administrative Reform Through
the New Local Administrative Reform Guidelines5In order to solidly promote local administrative reform, the Ministry of Internal Affairs and
Communications compiled the New Guidelines for the Promotion of Administrative Reform in
Local Governments (the New Local Administrative Reform Guidelines) and notified local
governments of them on March 29, 2005.
These guidelines indicate important items in the promotion of administrative reform and, in
order to promote administrative reform in an intensive manner, requests local governments
during fiscal 2005 to disclose intensive reform plans showing specific efforts from fiscal 2005 as
the starting point to around fiscal 2009.
Adoption of numerical targets,
easy-to-understand indicators, etc.
Disclosure of intensive reform plans showing
specific efforts from fiscal 2005 as the starting
point to around fiscal 2009.
・Reorganization and arrangement of administrative work and
projects
・Promotion of private-sector consignment, etc. (including
utilization of the designated manager system)
・Rationalization of staff management (show prospects for
numbers of retirees and recruits and staff target for April 1, 2010)
・Rationalization of salaries, including thorough inspection of
allowances (operation of wage table, revision of various
allowances, including retirement allowance and special work
allowance)
・Revision of third sector
・Fiscal effect through reducing expenses, etc.Etc.During FY 2005
*Also disclosure concerning local public enterprises
Regarding the intensive reform plans submitted by
prefectures, designated cities, and municipalities, the Ministry
of Internal Affairs and Communications will give advice to the
local government concerned as necessary and disclose the
plan in an easy-to-understand manner.
In the light of severe criticism from the public concerning,
among other things, the payment of inappropriate allowances
in some local government bodies, efforts will be aggressively
made to correct such conditions.
▲さんかく
▲さんかく30IssuesofLocal
Finance
Background of the Reform
Amid a situation in which local finance is suffering a severe shortage of resources, in
order to further promote decentralization, under the principle of "entrusting to local
governments what they can do," it is necessary to increase the degree of freedom of local
governments in terms of both income and expenditure and to foster the true
independence of the regions. From this perspective, it was decided to mutually connect,
study, and revise, in a uniform manner, the reform of national treasury subsidies, the
distribution of tax resources, including the transfer of tax resources, and the local
allocation tax.
Taxation (total amount: 78円.0 trillion)
National taxes
(45円.4 trillion)
34円.1 trillion
58.1%
43.6%
38.0% 62.0%
44円.0 trillion
56.4%
41.9%
National : local
58 : 42
(≒3 : 2)
Local taxes
(32円.7 trillion)
Local allocation tax, etc.
National treasury expenditure
National : local
44 : 56
National
expenditure
(net budget)
55円.9 trillion
Local expenditure
(net budget)
91円.3 trillion
National : local
38 : 62
(≒2 : 3)
Return through services to the public
Total national and local expenditure (net budget)
= 147円.2 trillion
Issues of Local Finance
The Trinity Reform1●くろまる Realization of an income structure based mainly on local taxes
Further clarification of correspondence between benefit and
burden of administrative services
Reduce the gap between the expenditure scale and tax revenue of
local governments as much as possible.
Expenditure state : local = 2 : 3
Tax revenue state : local = 3 : 2
●くろまる Revision of involvement of the central government through national
treasury subsidies, legislation, etc.
●くろまる Promotion of administrative reform and fiscal structure reform in the
national and local governments
The Trinity Reform
R eference
Distribution of Financial Resources Between the National
and Local Governments (FY 2003)31Overall Picture of the Trinity Reform Until FY 2006
Reform of national
treasury subsidies
Revision of tax
resource distribution,
including the transfer
of tax resources
Reform of the
local allocation tax
Aim to transfer tax resources
totaling around 3円 trillion in
scale, including FY 2004
measures.
In the tax revision of FY
2006, realize the full-fledged
transfer of tax resources
from the income tax to the
individual resident’s tax.
Ensure the total amount of general
revenue resources, such as the local
allocation tax and local taxes,
necessary for the stable fiscal
management of local governments.
Study reforms toward the expansion
of the number of local governments
(population) that do not receive
grants and continue to tackle the
simplification and transparency of the
allocation tax calculation method.
*The income transfer tax for FY 2005 is
1,115円.9 billion, including the amounts
resulting from the national treasury
subsidy reforms in FY 2003 and 2004.
*FY 2005 reform amount 1,768円.1 billion
・Reforms linked to transfer of tax
resources 1,123円.9 billion
・Reforms for streamlining 301円.1 billion
・Reforms for increased grants 343円.0
billion
*Items to be studied and to reach a
conclusion during FY 2005:
・Reform of subsidies relating to the
livelihood protection and child assistance
allowances
・Treatment of facility expenses that are
eligible for government bonds for
construction purposes, such as public
educational facilities
・Others
Abolish and reduce national
treasury subsidies by around 3円
trillion in FY 2005 and 2006.32Image of National Treasury Subsidy Reform
Linked to the Transfer of Tax Resources
FY 2005 base
(unit:100円 million)
2,344 2,440 2,309 (FY 2005
= 1,540) 6,851
(FY 2005 = 5,449) 8,500
(FY 2005 provisional = 4,250) 24,655
23,743※(注記)
17,562
17,452
※(注記)2,042
4,249
15,243
6,291
2,101
(FY 2005
= 1,461) 6,851
(FY 2005= 5,449) Transfer of tax resources
8,500
(Provisional)
(Measures through special
grants for the scheduled
transfer of tax resources)
(of which, FY 2005 = 11,239)
(FY 2005 provisional
= 4,250)
Approx.
19,490
Notes:
1. Of the above, the required value of national treasury subsidies for compulsory education expenses (retirement allowance and child allowance) that is being
implemented through special grants for the scheduled transfer of tax resources from FY 2004 fluctuates depending on the fiscal year.
2. The figures for "other national treasury subsidy reforms" for FY 2005 and 2006 are calculated on the basis of an agreement between the government and
the ruling parties on November 26, 2004.
3. In addition to the above, in FY 2003 tax resources of 93円 billion were transferred to the automobile tonnage transfer tax through the introduction of a new
direct-control formula in the construction of national highways.
Approx. 10,680
(Reference)
Other national treasury subsidy reforms
1,330 Streamlining;
approx. 4,700;
FY 2005 = 3,011
Grants;
approx. 6,000;
FY 2005 = 3,430
2,211
Special grants
for the scheduled
transfer of tax
resources
(of which, FY 2005 = 11,160)
Value of
transfer
of tax
resources
*Regarding special grants for the scheduled transfer of
tax resources relating to national treasury subsidies for
compulsory education expenses (retirement allowance
and child allowance), the calculation has been made
on the basis of the required value for FY 2005.
(Including provisional)
National treasury subsidies related
to public works, incentives, etc.
FY 2005/06 FY 2003─06
FY 2004─06
National treasury subsidies
for compulsory education
expenses (mutual-aid long-term
subsidies, etc.), etc.
Public child day-care
center management
expenses, etc.
National treasury subsidies
for compulsory education
expenses (retirement
allowance, child allowance)
Subsidies for public housing
rent countermeasures
(public housing rent income subsidy)
Subsidies for care expenses
at elderly nursing homes, etc.
National treasury subsidies
for national health insurance
National treasury subsidies for
compulsory education expenses
(provisional)
Value of national treasury
subsidy reform linked to the
transfer of tax resources
Income
transfer tax
FY 2003 FY 2004
FY 2005/06 FY 2003─06
FY 2003 FY 2004
National treasury subsidies
related to public works,
incentives, etc.
Streamlining;
about 3,281
Streamlining;
about 4,197
Incentive-type national
treasury subsidies
National treasury subsidies
related to public works, etc.
Community-building grants Value of other national
treasury subsidy reforms
IssuesofLocal
Finance
R eference330 50 100 150 200 0 50 100 150 2007862638059656585848111011717613971858785817987991178890971011031047169707891777482677182636464665961551008371719169758592999188921731098694961049189959494777676758895868787757074876976666758100659411189107126
Local taxes revenue total Individual resident’s tax
FY 2003
settlement amount
32円.7
trillion
FY 2003
settlement amount
7円.9
trillion
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
Index
Notes:
The tax revenue from the individual resident’s tax is the total of the individual prefectural resident’s tax and the
individual municipal resident’s tax.
Expansion of the Financial Base2Local Taxes
In order for local governments to provide administrative services in response to local
needs with responsibility and at their own discretion, it is necessary to expand and secure
local taxes so as to build a local tax system in which the uneven distribution of tax
sources is limited and the stability of tax revenue is ensured.
R eference
Index of Per Capita Revenue from the Local Tax Revenue Total
and the Individual Resident’s Tax
(with national average as 100; FY 2003)340 50 100 150 200 250 300 0 50 100 150 2001059497979910399921019681881388410010310610210711195103105938811011191758710395929794951059299969892949591927310063475791535977869580646225586798589988476979565516460687685739988674865805662505446100478412671112166
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
Index
Two corporate taxes Local consumption tax (after settlement)
FY 2003
settlement amount
6円.4
trillion
FY 2003
settlement amount
2円.4
trillion
Notes:
The tax revenue from the two corporate taxes is the total of the corporate prefectural resident’s tax, the corporate
municipal resident’s tax, and the corporate business tax.
IssuesofLocal
Finance
R eference
Index of Per Capita Revenue from Two Corporate Taxes and the
Local Consumption Tax (After Settlement)
(with national average as 100; FY 2003)35Other
6,000
5,000
4,000
3,000
2,000
1,0000Population:1,496,929 Population:2,869,555278Prefecture A Prefecture B
100円 million
General revenue
resources, etc.
(396円.1 billion)
Breakdown of general
revenue resources, etc.
earmarked for
specific-purpose expenditures
(total of 396円.1 billion)
General revenue
resources, etc.
(620円.9 billion)
Breakdown of general
revenue resources, etc.
earmarked for
specific-purpose expenditures
(total of 620円.9 billion)
Local
taxes
1,259
Local
allocationtax1,952
Other335Extraordinary
financial
countermeasures
bonds415Tax-related
grants to
municipalities174Publicdebtpayments756Police
expenses298Of which,
senior high
school
expenses
Of which,
compulsory
education-related
expenses
Education
expenses275527
1,000
Welfare
expenses391Of which,
child welfare
expenses
Of which,
elderly care
and welfare
expenses,
livelihood
protection
expenses70239
Sanitation
expenses160Civil
engineering
expenses
Of which,
road and bridge
expenses439141
General
administration
expenses
Labor expenses,
commerce
and industry
expenses
Agriculture,
forestry, and fishery
expenses221133248Local
taxes
2,810
Local
allocationtax2,336
Other468Extraordinary
financial
countermeasures
bonds595Publicdebtpayments
1,388
Other 86
General
administration
expenses437Labor expenses,
commerce
and industry
expenses120184
Agriculture,
forestry, and
fishery
expenses
Civil
engineering
expenses321Of which,
road and bridge
expenses132Sanitation
expenses
164 Of which,
child welfare
expenses135Of which,
elderly care
and welfare
expenses,
livelihood
protection
expenses391Welfare
expenses628Of which,
senior high
school
expenses435Of which,
compulsory
education-related
expenses988Education
expenses
1,846
Police
expenses595Tax-related
grants to
municipalities440Local Allocation Tax
The local allocation tax fulfills an extremely important role in view of the fact that there
are differences in economic strength and financial strength among the regions and that in
Japan, with regard to a large part of domestic administrative affairs, local governments
are required through legislation, etc. to ensure a certain administrative level in the
regions.
R eference
State of Financial Resource Guarantees (Micro) through the
Local Allocation Tax (Prefectural Examples) FY 2003 settlement
General Revenue Resources, Etc.36(%) 80.060.040.020.00.0100.0
Population: 108,255 Population: 10,571
Town B
City A
General revenue
resources, etc.
(22,155円 million)
Breakdown of general
revenue resources, etc.
earmarked for
specific-purpose expenditures
(total of 22,155円 million)
General revenue
resources, etc.
(3,430円 million)
Breakdown of general
revenue resources, etc.
earmarked for
specific-purpose expenditures
(total of 3,430円 million)
Local
taxes
48.0%
10,644円 million
Local
allocationtax25.2%
5,574円 million
Other
17.9%
3,959円 million
Extraordinary
financial
countermeasures
bonds8.9%1,978円 million
Local
taxes
30.0%
1,030円 million
Local
allocationtax39.8%
1,364円 million
Other
19.7%
676円 million
Extraordinary
financial
countermeasures
bonds
10.5%
360円 million
Publicdebtpayments
21.2%
4,690円 million
Fire-defense
expenses3.7%822円 million
Education
expenses
12.2%
2,713円 million
Of which,
compulsory
education-related
expenses6.3%1,386円 million
Of which,
social education
expenses2.9%646円 million
Welfare
expenses
20.0%
4,431円 million
Of which,
elderly care
and welfare
expenses,
livelihood
protection
expenses7.3%1,625円 million
Of which,
child welfare
expenses5.9%1,317円 million
Sanitation
expenses
11.1%
2,465円 million
Of which,
waste
disposal
expenses8.3%1,835円 million
Of which,
health and
sanitation
expenses2.8%628円 million
Civil
engineering
expenses
13.5%
2,999円 million
Of which,
urban planning
expenses9.7%2,158円 million
Of which,
road and bridge
expenses3.4%750円 million
Agriculture,
forestry, and fishery
expenses0.4%78円 million
Labor expenses,
commerce
and industry
expenses2.6%570円 million
General
administration
expenses
12.0%
2,667円 million
Other3.3%720円 million
Publicdebtpayments
20.2%
693円 million
Other
11.0%
371円 million
General
administration
expenses
17.3%
594円 million
Labor expenses,
commerce
and industry
expenses2.7%94円 million
Agriculture,
forestry, and
fishery
expenses2.6%90円 million3.1%106円 million
Civil engineering
expenses
Sanitation
expenses
10.4%
358円 million
Of which,
road and bridge
expenses0.9%32円 million
Of which,
urban planning
expenses0.1%2円 million
Of which,
health and
sanitation
expenses3.4%115円 million
Of which,
waste
disposal
expenses7.1%243円 million
Welfare
expenses
17.0%
584円 million
Of which,
child welfare
expenses3.0%104円 million
Of which,
elderly care
and welfare
expenses,
livelihood
protection
expenses6.8%234円 million
Education
expenses
11.6%
399円 million
Of which,
social education
expenses5.2%180円 million
Of which,
compulsory
education-related
expenses3.7%126円 million
Fire-defense
expenses4.1%141円 million
IssuesofLocal
Finance
R eference
State of Financial Resource Guarantees (Micro) through the
Local Allocation Tax (Municipal Examples) FY 2003 settlement
General Revenue Resources, Etc.37As the role of the municipality becomes increasingly important amid the advance of
decentralization, in order to strengthen the administrative and financial bases of municipalities
and to maintain and improve the administrative services of municipalities even in the present
condition of severe fiscal conditions both centrally and locally, it is necessary to expand
administrative scale and efficiency through municipal mergers.
Promotion of Municipal Mergers3500
1,000
1,500
2,000
2,500
3,000
3,500
Towns
Cities
Villages
Apr. 2006
(estimate)
Apr. 2005
Apr. 2004
Apr. 2003
Apr. 2002
Apr. 1999
3,229 3,218 3,190
3,100
1,990 1,981 1,961
1,872
1,317847568
671 675 677552562533695739339777198
2,395
1,822
No. of municipalities
Total
State of Progress of Municipal Mergers38What are the advantages of Ex.In Niigata City, after the merger it has become
possible to go beyond municipal boundaries and
make use of the vacancies in child day-care
centers.Ex.In Asagiri Town in Kumamoto Prefecture, there was
an increase in the number of staff with qualifications
as public health doctors after the merger, so it has
become possible to organize vaccinations for infants
and health courses for adults, which previously had
almost not been implemented at all.
"Now I can go to a school
near my home."
School
School
Day-care
center
Day-care
center
"It has become
possible to use
buses with a
uniform fare, and
the day-care
center is near my
work, which is a
great help."
After
merger
After
merger
Before
merger
Before
merger
Company
Boundary
before merger
After
merger
Two or three tasks for
one person. Help!
"How incredibly slow!"
A lot of people
waiting.
Better and faster
counter services
New services can be
introduced, too.
If a merger is implemented, it becomes possible for residents to use public facilities
and services beyond the borders of the former municipalities, making life becomes
even more convenient.
Improvement in the convenience of residents1.
Diversification and upgrading of administrative services2.
Through the establishment of specialized organizations and staff, which had been
difficult to implement before, it becomes possible to provide more specialized and
high-level administrative services.
Are there any disadvantages?
Before
merger
After
merger
A City Office
C Village Office
B Town Office
D City Office
B District Branch
C District Branch
Network
C District Council
B District CouncilQA
&
IssuesofLocal
Finance
Won’t the municipal
office be farther away for
some people?
After a merger, the old city,
town, or village offices can still
be used as branches or
outposts of the new municipal office. In
addition, a law has been enacted to
ensure that certain specific
administrative business for which there is
much local need, such as the issue of
residence certificates, can be handled by
post offices, which have deep roots in
the local community.
Furthermore, with the development of
information communication technology,
the government plans to make it
possible for people to submit online
applications and so on without even
leaving them home, so in the not too
distant future we are going to have a
society in which distance is no longer a
problem.QA
As well as things like local
public meetings and local
administration monitors that
have existed before the merger, district
councils will be established in the former
municipal localities after the merger so
that the wishes of residents can be
taken into consideration. Also, the
government is providing support for
community-development efforts with the
independent participation of residents,
for example in elementary school zones.
In addition, arrangements for information
disclosure and accountability will be
strengthened, and new forms of
participation by residents will become
possible through, for example, utilization
of the Internet, which has interactive
functions.
Won’t it become more
difficult for residents to
make their voices heard?QA
Before a merger, there might
have been differences between
the municipalities concerned in
terms of the level of services to
residents, rates for using facilities, fees,
and so on. The settlement of such
problems will be decided through
consultations between the municipalities
concerned before the merger. The usual
approach is to coordinate such things as
the level of services and the burden in a
manner that is acceptable to residents
by increasing the efficiency of
administrative processing and so on.
In addition, legislation
has been implemented
so that the burden on
residents does not
increase suddenly as
the result of a merger.
Won’t there be a
deterioration in service?QA39 municipal merger?Ex.In Mito City, regarding housing estates, land readjustment projects,
industrial estate readjustment projects, and so on, integrated land use
from a wide perspective has become possible.
"The school is located
in a green zone."
"I’d like to see town
building that brings
out the features of
the district."
"It’s important to think
about the community in
the community."
"It would be nice to
have roads where we
could enjoy pleasant strolls."
"It’s going to be
a wonderful
community."
Green Zone
Cultural Zone
Welfare Zone
Industrial Zone
Residential Zone
Commercial Zone
Since the same jobs
can be put together
to avoid overlapping,
expenses can be reduced.
Greater administrative and financial efficiency4.
Greater administrative and financial efficiency becomes possible after a merger by bringing together
the work and business that was previously carried out by the separate municipalities and constructing
and operating public facilities in a more efficient manner.
Wide-area community development3.
It becomes possible to implement more effective community development from a wide-area
perspective, including the construction of roads and public facilities, land use, and zoning that takes
advantage of local characteristics.Ex.In Sasayama City, expenses of about 200円 million a year were saved by cutting
the number of assembly members from 57 in the old municipal assemblies to 26.
In Nishitokyo City, as a result of a merger, it has become possible to reduce
expenses by an estimated 19円 billion over 10 years.
Comparison of the Old and New Municipal Merger Laws
●くろまるSpecial measures to eliminate
obstacles relating to mergers
Old law New law
Interim measures
period
Abolished under new law
Mergers
Imbalance of local taxes: taxation, special
appointment of assembly members, etc.
March 31, 2005
19 20 21
March 31, 2006 March 31, 2010
Special period of 10 years for merger
computation change (plus 5 years for
easing dramatic changes)
●くろまるFinancial assistance
measures through
special merger bonds
Merger
applicationsbyMarch 31, 2005
Merger applications after April 1, 2005
●くろまるOn the basis of fundamental guidelines stipulated by the minister of internal affairs and
communications, prefectures formulate concepts relating to the promotion of municipal
mergers.
●くろまるPrefectural governors can appoint members of a municipal merger coordination
committee and have them engage in conciliation and mediation with the merger
consultation committee.
●くろまるPrefectural governors promote municipal mergers through the establishment of a merger
consultation committee and recommendations on the promotion of merger consultations.
Mergers by March 31, 2010
●くろまるEstablishment of special merger areas, etc.
(At the time of a merger, through consultations among the merger-
related municipalities, a special merger area, etc. can be established
for a certain period. (*This was also possible under the old law.))
●くろまるContinuation
(Addition and continuation of 30,000 city designations by lawmaker
amendments)
●くろまるShortened in phases to 5 years (plus 5 years for easing
dramatic changes)
(The special period is 9 years for mergers in FY 2005 and 2006, 7
years for mergers in FY 2007 and 2008, and 5 years for mergers in
FY 2009.)
Mergers by March 31, 2006
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
White PaperonLocal Public
Finance2005Illustrated
FY 2003 Settlement