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Park Heong-joon, Mayor of Busan, Calls for a Paradigm Shift in Local Fiscal Management at the 9th Central-Local Cooperation Council Meeting

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Park Heong-joon, Mayor of Busan Metropolitan City, attended the 9th Central-Local Cooperation Council Meeting held in Yongsan this morning (November 12) to discuss major local issues in depth and propose measures to enhance local fiscal autonomy in line with the expansion and restructuring of block grants.

The Central-Local Cooperation Council is the highest decision-making body for discussing policy issues between local and central governments. It was established in January 2022 to strengthen the role of local governments as partners in national governance. This meeting marked the first session convened under the new administration.

Participants included Prime Minister Kim Min-seok, Mayor Park Heong-joon, provincial governors, ministers of central government ministries, and the chairpersons of the four national local government associations.

At today’s meeting, four agenda items were submitted:
① A plan to amend the Central-Local Cooperation Council Act;
② Measures to promote fiscal decentralization for the realization of genuine local autonomy;
③ Plans to innovate national subsidy programs and strengthen fiscal cooperation between central and local governments; and
④ Expansion of local participation in national committees to reinforce the national-local cooperation framework.

These topics have been key issues repeatedly discussed within the Governors’ Association. In particular, the items on “promotion of fiscal decentralization” and “innovation in national subsidies and strengthening central-local fiscal cooperation” carry significant meaning as they aim to move away from the existing centralized fiscal structure and expand local autonomy.

During the meeting, participants discussed specific measures to strengthen fiscal cooperation, including:

• ●Increasing the local allocation tax rate, which has remained unchanged since 2006;

• ●Expanding local revenue sources; and

• ●Expanding the scope of block grants.

Additionally, various measures were proposed to ensure local government autonomy, such as introducing a mandatory prior consultation system when central government policies require local financial contributions.

Mayor Park stated, “I welcome the new government’s fiscal policy of ‘Local Priority and Local Advantage.’ However, under the expanded block grant system, many projects and rigid expenses that do not align with local circumstances have been transferred to local governments. As a result, paradoxically, the share of discretionary investment budgets has declined.”

He added, “It is time to fundamentally shift the paradigm of local fiscal management. The central government should abolish its prescribed list of programs and transition to a ‘negative regulatory system’ based on the principle of ‘permitted in general, prohibited by exception,’ enabling each region to pursue strategies that fully leverage its comparative advantages.”