Gyeonggi Province's accumulated debt surpasses 7 trillion won, facing fiscal emergency before new administration begins

Gyeonggi Province is confronting a severe fiscal emergency, with accumulated debt surpassing 7 trillion won and over 300 billion won in essential projects unfunded for the current year. This dire financial situation was revealed by the policy briefing committee for the incoming governor, Choo Mi-ae.

Kim Young-jin, deputy chairman of the committee, described the situation as "finding only debt documents in the treasury." He likened the structural crisis to the one faced by former Seongnam Mayor Lee Jae-myung when he declared a moratorium. The province has relied on fund borrowing and issuing local bonds over the past three years to cover declining tax revenues and increasing expenditures. Last year, Gyeonggi Province issued local bonds for the first time in 20 years, leading to a rapid accumulation of debt.

The province's available financial resources, including 1 trillion won in hastily secured debt, total approximately 3.5 trillion won. However, these funds are already allocated to existing projects. Compounding the issue, 313.2 billion won for confirmed projects has not even been included in the budget proposal, leaving the province with a negative effective available resource balance. The integrated fiscal stabilization fund, meant for emergencies, has dwindled to just over 130 billion won, forcing the province to consider unprecedented budget cuts since the full implementation of local autonomy in 1995.

The primary cause of this financial deterioration is the decline in tax revenue due to the real estate market slump. The acquisition tax, which accounts for half of Gyeonggi Province's total local tax revenue (approximately 16 trillion won), plummeted from 11 trillion won in 2022 to 8.1 trillion won this year, a decrease of 2.9 trillion won. Additionally, the province's status as a "non-recipient of general grants", meaning it is excluded from the distribution of national tax revenues even when overall national tax income increases due to booms like the semiconductor industry, has exacerbated the fiscal difficulties.

To overcome this crisis, the transition committee recommended emergency austerity measures and established three core principles for the 9th Gyeonggi Provincial Government's budget. These include drastic expenditure restructuring, mandatory "pay-as-you-go" principles requiring self-funding plans for all new legislation and projects, and strengthening support for municipal projects based on standard criteria. Kim emphasized the need to cooperate with the central government and the National Assembly to improve the grant allocation system and pledged to do his utmost to ensure the provincial administration continues to serve its residents without faltering amidst the severe crisis.