Gyeonggi cuts 546.5 billion won as fiscal emergency reshapes 2026 budget

Gyeonggi’s “fiscal emergency” led the province to free up 546.5 billion won ($391 million) in existing spending on Wednesday. The province is making deep cuts while trying to shield essential spending on livelihoods, care facilities and public safety.

The province is scheduled to submit its second supplementary budget for 2026, totaling 42.24 trillion won, to the Gyeonggido Assembly, the provincial parliament. 

The drastic measure follows Gyeonggi Gov. Choo Mi-ae's declaration of the province's “fiscal emergency” on Aug. 5, when she announced that the region's finances had deteriorated to the point where the province could no longer sustain its ongoing projects, let alone new ones.

The general account stands at 37.647 trillion won, while special accounts total 4.595 trillion won. The overall budget is 562.1 billion won, or 1.35 percent, larger than the first supplementary budget of 41.68 trillion won.

The increase, however, comes from higher central government subsidies and nontax revenue. In practice, the proposal represents a supplementary budget built around spending cuts.

“We expect a local tax revenue shortfall of around 300 billion won due to difficult fiscal conditions, including a slowdown in real estate transactions,” the province’s Planning and Coordination Office chief Jeong Du-seok said. “Most of the funds available to us have also been depleted because of accumulated debt, so we have few resources left to draw on. We prepared this budget to deal with those constraints and ensure that essential programs for residents can continue without disruption.”

The desperation left the province searching for savings across more than 1,300 programs.

It ultimately freed up 546.5 billion won by cutting one-off projects, similar or overlapping programs and adjusting the scale and schedules of some projects. Despite the efforts, the amount freed up was less than the 770 billion won initially estimated.

Major reductions include 23.65 billion won in funds that have yet to be disbursed to the National Election Commission, 19 billion won in compensation costs for the construction of the Bugok Local Road and 16.35 billion won in contributions to the Gyeonggi Credit Guarantee Foundation.

The province will also cut 22.2 billion won in administrative operating expenses, including office management costs. Business expenses for senior officials at Grade 3 or above will be reduced by 400 million won.

Internal spending is also on the chopping block. The province plans to cancel or minimize nonessential overseas business trips and training programs.

The Gyeonggido Assembly has made its own cuts. It has reduced overseas travel expenses for provincial council members and secretariat staff by 1.4 billion won and personnel expenses by 900 million won.

But the money saved will not simply disappear from the budget. The province plans to redirect it to programs that directly affect residents.

Funds freed up by the restructuring will first go to livelihood programs that were left out of the original 2026 budget.

The allocations include 123.4 billion won for long-term care facilities and home-care benefits for senior citizens; 58.4 billion won for kindergarten, elementary, middle and high school meals through its Office of Education; 21.5 billion won for Gyeonggi’s basic income subsidy program for farmers and fishers; 16.3 billion won for the province’s basic income program for young adults; and 7.5 billion won for meals for food-insecure children.

Another 86.3 billion won will go toward essential welfare and medical programs, as well as measures to address the low birthrate. That amount includes 22.3 billion won for fertility treatment support.

The proposal also allocates 38.9 billion won for medical assistance and 29.8 billion won for urgent rail and road infrastructure projects.

“With resources so limited, there is virtually no room for new projects, even Gov. Choo Mi-ae’s campaign pledges,” Jeong said. “We plan to review every program from scratch when we draw up the 2027 budget.”

The supplementary budget proposal will undergo review during the 393rd extraordinary session of the Gyeonggido Assembly from Sept. 1 through Sept. 18.

The sweeping cuts have already run into political resistance.

The lawmakers from the main opposition People Power Party (PPP) say Gyeonggi is “cutting to meet quotas rather than based on the urgency of the programs.”

“Gyeonggi assigned spending-cut targets to each bureau and department in advance and ordered cuts of up to 80 percent for projects classified as underperforming, overlapping or slow to execute,” PPP members of the Gyeonggido Assembly and local councils across the province’s 31 cities and counties said on Tuesday. “This isn’t restructuring. It’s filling a quota.”

The lawmakers argued that the biggest cuts also undermine the province’s stated rationale for the overhaul.

“Despite the stated goal of eliminating event-related, wasteful and one-off spending, the Transportation Bureau took the largest cut [at 130.9 billion won], followed by the Welfare Bureau [at 76 billion won], the Culture, Sports and Tourism Bureau [at 75.7 billion won] and the Agriculture, Fisheries & Life Sciences Bureau [at 69.6 billion won],” the lawmakers said.

They warned that the cuts could do more than shrink individual budgets — they could derail entire projects.

“If the province unilaterally cuts its share of funding for projects that require matching funds, some projects could fall through altogether,” the lawmakers said. “In some cases, central government funding that has already been received may even have to be returned.”

BY CHOI MO-RAN [lee.jiwon10@joongang.co.kr]