As Jeonju City, North Jeolla Province, faces a financial shortfall of more than 26 billion won next year, it is expected to undertake financial innovation by reorganizing large-scale facility projects worth more than 1 trillion won and drastically reducing private subsidies and cleaning agency costs.
On the 12th, the Jeonju City Financial Innovation Special Committee, led by private experts in accounting and taxation, announced comprehensive recommendations in four directions, including fiscal management principles, revenue expansion, expenditure innovation, and large-scale facility investment adjustment based on these contents.
◇ Next year’s self-funding shortfall of 26.7 billion won… Debt ratio 22.5% ‘warning light’
According to the Special Committee on Finance, Jeonju City's independent financial resources in 2027 were estimated at KRW 1.259 trillion, but the expenditure, which includes essential expenses such as welfare and labor costs (KRW 1.1885 trillion) and repayment of local bond principal and interest (KRW 44.1 billion), amounts to KRW 1.2326 trillion.
Accordingly, Jeonju City will experience a net financial shortfall of 26.7 billion won in 2027, effectively running out of available financial resources to invest in investment projects.
The reason is that while mandatory expenditures such as welfare and labor costs increased by an average of 2.5% per year, independent financial resources decreased by 2.2%.
So far, we have been responding by tinkering by reducing discretionary spending, but we have reached the limit and even the surplus resources accumulated in 2022, the peak year of the grant tax, have disappeared.
Moreover, as local bonds accumulate due to simultaneous large-scale facility investments, Jeonju City's management debt ratio is expected to soar to 22.53% by the end of this year, making it impossible to issue additional local bonds.
◇ Out of 104 projects, 53 were put on hold or cancelled… 1.09 trillion won reduction in municipal expenditures
The Special Finance Committee put 104 large-scale facility investment projects worth more than 2 billion won on the operating table.
As a result of a comprehensive review of the obligation, progress rate, loss in case of interruption, and operating cost burden, it was recommended that only 51 projects be reflected, and that the remaining 53 projects be postponed from start (D grade) or suspended or canceled (E grade).
If the recommendations are implemented, the burden of municipal expenses according to the investment plan for 2027-2030 will be reduced by KRW 1.09 trillion (61.9%) from the existing KRW 1.7604 trillion to KRW 670.4 billion.
The Western Community Welfare Center, Independent Film House, Ajungcheon Ecological River Restoration, and Bus Rapid Transit (BRT) system, etc., which are nearing completion or with a high progress rate, received an A grade and will continue to be promoted.
On the other hand, for the construction of the Jeonju Convention Center (B grade), which has a huge construction cost burden, the change in the agreement with Lotte was completed quickly to minimize losses, and the expansion of the library (Geonji, Hyoja, Seosin, etc.), the construction of sports facilities (outdoor inline stadium, etc.), the opening of an underpass on Baekje-daero (E grade), and the construction of a culture and arts center (E grade) were included in the list of postponements and cancellations.
◇ Private subsidies are cut by 20% every year... Promoting the realization of public utility charges
A strong expenditure restructuring will also be carried out.
The Special Committee on Finance recommended improving finances worth 19.6 billion won by gradually reducing private business, event, and capital assistance projects by 20% each year by 2030.
Cleaning agency costs were reduced by 5 billion won by lowering the profit rate from 9% to 6% when selecting a new private consignment company, and for bus financial support, the standard transportation cost cap system was introduced and the recovery of illegal supplies was stipulated.
It also presented a plan to gradually realize public charges, such as the volume-based bag price, which is significantly lower than that of other local governments (460 won for 20 liters, resident burden rate 16.5%), sports facility usage fees, per-enshrine usage fees (15,000 won per year), and water and sewage fees.
However, it was preconditioned to take measures to protect the vulnerable and to sufficiently collect opinions from residents.
In addition, Jeonju City plans to establish a 'responsible financial management plan' for five fiscal years every year and create an 'integrated financial risk ledger' containing potential debt risks to transparently disclose the city's financial status.
Vice Chairman Kim Gap-ryong of the Special Committee on Finance emphasized, “Looking at the current financial situation, it is reasonable to completely suspend large-scale projects, but Jeonju’s future investments could not be ignored,” adding, “We must first protect essential services necessary for citizens’ lives and manage finances within the range we can afford.”
Based on this comprehensive recommendation, Jeonju City plans to examine the possibility of securing financial resources for each project and citizen opinions, and prepare a specific direction in consultation with the city council.
