Choo Kyung-ho, the Daegu mayor, said on the 3rd regarding the future response fund the government released on the 1st, "We must not take away the future of the regions."
Choo issued a statement that day and said, "According to the '2027 future response fund operation plan,' the government plans to raise about 162 trillion won by using additional tax revenue that exceeds the trend line of national tax over the past 10 years as the source, and to make expenditure of 53 trillion won in four areas—youth, growth engines, regions, and education and talent."
She added, "I agree on the need for strategic investment to prepare for the future, and I think whether to establish a separate fund is for the central government to decide," but also noted, "I oppose using, for the future response fund, even the resources from increases in national tax that should be sent down to local governments as grant-in-aid (non-earmarked tax)."
Choo also said, "The establishment of the future response fund must not reduce the independent resources that, under the current grant-in-aid (non-earmarked tax) allocation criteria, should be distributed to local governments," adding, "With a semiconductor boom and other factors, national tax such as corporate tax and income tax has increased significantly, so the size of next year's grant-in-aid (non-earmarked tax) under current standards is expected to be 100 trillion won, about 32 trillion won more than this year. However, under the government's plan to raise resources for the future response fund, grant-in-aid (non-earmarked tax) nationwide is estimated to decrease by about 30.5 trillion won compared with current standards, and in Daegu's case, ordinary grant-in-aid is projected to decrease by about 700 billion won."
She continued, "This is a scale that could impose a serious burden on the operation of local government finance, which is already facing difficulties due to excessive liability," and said, "For non-capital regions whose fiscal conditions are strained by population decline and a slump in the real estate market, there is a strong concern that this will lead to cutbacks in local pending projects, a decline in the quality of essential administrative services, and additional issuance of local government bonds."
Choo argued that among national tax, resources to be allocated to the regions under the current Local Grant-in-Aid Act should be distributed first, and that it is reasonable for the central government to operate the future response fund based on the remaining increase in national tax revenue.
She said, "Amending laws related to local government finance to take away the local share of resources, move them to the future response fund, and then reallocate them to projects set by the central government seriously undermines the purpose of local autonomy and the independence of local government finance."
Choo also said, "Creating a regional account within the future response fund cannot be an alternative to the decrease in grant-in-aid (non-earmarked tax)." She said the government plans to allocate 15.3 trillion won to a regional account in the future response fund and pursue various regional projects, but that this cannot be a fundamental solution to the decrease in grant-in-aid (non-earmarked tax).
Choo said, "The government should transparently disclose the impact on each local government's finances compared with current standards due to the establishment of the future response fund, fully gather the voices of local governments, including provincial governors and mayors, and strongly reconsider an operational plan that enables co-prosperity," adding, "We will always stand together with a responsible attitude on the path to opening a bright future for the Republic of Korea and the regions."