Daegu's Dalseo District declares fiscal emergency, halts 59.4 billion won in projects
Kim Yong-pan, the district's new head, declared a fiscal emergency as dwindling reserves, rising costs have driven its self-reliance ratio to below 20 percent.
Kim Yong-pan, head of Dalseo District, speaks at a press briefing after declaring a fiscal emergency on Aug. 13.YONHAP
Daegu's Dalseo District declared a fiscal emergency after its newly elected head reviewed available financial resources after taking office.
The district decided to shift to an emergency fiscal system and halt major projects worth a combined 59.4 billion won ($42 million).
“Even Gyeonggi, which has a fiscal self-reliance ratio of 44.4 percent, is publicly calling for help over its financial difficulties,” Kim Yong-pan, head of Dalseo District, said during a press conference on Thursday. Kim took office following the June 3 local elections. “So imagine the reality of Dalseo District, where the ratio is only 17.28 percent.”
Gyeonggi Gov. Choo Mi-ae also declared a fiscal emergency on Aug. 5, after taking office following a predecessor from the same party, the Democratic Party.
“Since taking office, I have reviewed Dalseo District's financial situation and major projects one by one,” Kim said. “The more I checked the numbers, the more I found the reality was far more serious than I had feared.”
The deteriorating figures prompted the district to overhaul its approach to spending.
“We cannot put this off any longer. We must correct what is wrong, boldly eliminate what is unnecessary and concentrate our finances where they are truly needed,” Kim said. “I want to announce to Dalseo residents an immediate shift to an emergency fiscal system and a sweeping overhaul of budget management to fundamentally transform the district's financial structure.”
The district's fiscal self-reliance ratio has fallen for three consecutive years from above 20 percent to around 17 percent. Its fiscal autonomy ratio has dropped to around 26 percent, making it difficult to operate the district administration with its own resources alone.
The Dalseo District office in Dalseo, Daegu is seen on the right in a file photo.DALSEO DISTRICT
The district's overall budget has surpassed 1 trillion won ($706.3 billion). But its net surplus carried forward, which represents funds actually available for discretionary use, has plunged from more than 50 billion won to around 10 billion won.
The balance of its Integrated Fiscal Stabilization Fund, a reserve fund local governments can use to manage revenue fluctuations and cover funding shortfalls, has fallen to around 300 million won.
“This is the result of using the Integrated Fiscal Stabilization Fund to make up for insufficient financial resources,” Kim said. “The fund isn't just leftover money. It is the final safeguard against disasters and unexpected crises. We have already nearly used up that safety net.”
Dalseo District identified indiscriminate construction of public facilities, the district's matching-fund burden from projects secured through competitive government programs and a surge in mandatory matching contributions for social welfare spending as major causes of the fiscal crisis.
The district spent 24.2 billion won to complete a senior welfare center, 24.4 billion won on a lifelong learning center, 3.5 billion won on the Seondol pedestrian bridge, 3.6 billion won on two wall fountains and 280 million won on a rock garden.
Visitors wave from the Seondol pedestrian bridge, which connects two parks in Dalseo District, Daegu, in a file photo.DALSEO DISTRICT
Dalseo District must also contribute 12.9 billion won in district funds to three urban regeneration projects and cover all operating and personnel costs after their completion. With looser eligibility criteria for welfare recipients and a growing older adult population adding to the burden, the district's social welfare budget this year stands at 867.8 billion won, or 73.29 percent of its total budget. The share is the third-highest among basic-level local governments.
The district will begin a sweeping overhaul of its budget management centered on restructuring and major spending cuts to overcome the fiscal emergency. It will first halt three major construction projects worth a combined 59.4 billion won that would require significant construction spending and are expected to incur substantial operating deficits. They include a 33 billion won observatory at Dalseong Marsh, a 19.9 billion won astronomy science center and a 6.5 billion won ecology center.
A render of the observatory that was set to be built at Dalseong Marsh in Dalseo District, Daegu.DALSEO DISTRICT
The district will also extensively overhaul routine, consumptive events and low-efficiency projects. It plans to consolidate or eliminate one-off entertainment events, including singing contest-style festivals, as well as other low-efficiency events. It is also considering subjecting 56 underperforming projects to a sunset review, which could lead to their termination.
Dalseo also urged the central government to readjust the district's required share of funding for welfare programs such as basic pension and livelihood benefits. It also called for raising the statutory allocation rate for local shared taxes to reflect current conditions and changing the system so autonomous districts can receive ordinary local allocation taxes directly, as cities and counties do.
“Without painful reforms, we will pass a huge fiscal burden on to future generations. Public officials will tighten their belts first and lead by example, but no matter how difficult the fiscal situation becomes, we will protect essential welfare programs for vulnerable people and funding for residents' safety to the very end,” Kim said.
BY KIM JUNG-SEOK [lee.taehee2@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
