Incheon Mayor Criticizes Central Government Over Supplementary Budget Burden

Incheon Mayor Yoo Jeong-bok has voiced strong criticism against the central government's handling of a supplementary budget, accusing it of imposing financial burdens on local governments without adequate consultation. The recent supplementary budget, designed to mitigate the economic fallout from the prolonged US-Iran conflict and its impact on oil prices, allocates 26.2 trillion won, with local governments expected to shoulder 20% of the costs.

Mayor Yoo contends that this unilateral decision-making process undermines the principles of local autonomy. He specifically pointed out the government's suggestion to use local transfer taxes to cover the local share, emphasizing that these funds are not the central government's money but belong to the local entities. Yoo argued that the central government's directive on how to spend these self-generated revenues infringes upon the fiscal sovereignty of local governments, a cornerstone of effective decentralization.

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The government, this time as well, unilaterally notified us that local governments must bear 20% of the support funds without any prior consultation with local governments.

However, Yoo's current stance has drawn scrutiny, with some pointing out his apparent silence during a similar, and arguably more severe, fiscal dispute under the previous Yoon Suk-yeol administration. In 2023, the Yoon administration controversially withheld approximately 7.17 trillion won in local transfer taxes, leading to a significant decrease in the revenue of local governments nationwide. Mayor Yoo's current emphasis on 'local fiscal sovereignty' is seen by some as selective, raising questions about consistency in his approach to intergovernmental fiscal relations. Despite these criticisms, Incheon City plans to proceed with its own supplementary budget of 578.2 billion won to support local livelihoods, funded through various means including local bonds and surplus funds.

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The government says to use the increased local transfer taxes for the supplementary budget. However, local transfer taxes are not the central government's money.