Exclusive Kim Min-seok "Lashing Out," Aimed at Choo Mi-ae?

Attention is focused on whether Gyeonggi Province Governor Choo Mi-ae's claim of a 'fiscal insolvency' will become a subject of review by the Democratic Party regarding local governments.

Democratic Party Chair Kim Min-seok stated on the 11th, marking 100 days since local governments took office, "Including the Better Local Government Committee, I will gather provincial and local government heads and begin examining all budgets, projects, and policies of the provincial and local governments to date," adding "because we are from the same ruling party, we will not do things 'nicely,' but will crack the whip firmly to do things 'well.'"

As the Democratic Party specifically mentioned budgets, projects, and pledges as review targets, attention is also on whether Choo's financial restructuring initiatives since taking office will be included in the examination.

Chair Kim and Governor Choo will officially discuss Gyeonggi Province's key issues and national treasury projects for the first time since taking office at the Democratic Party-Gyeonggi Province Budget Policy Consultative Meeting scheduled to be held on the 21st at the Gyeonggi Province Government Northern Office. The meeting will also be attended by Floor Leader Han Byung-do and National Assembly Budget and Accounts Special Committee Chair Lee Kwang-jae.

The official meeting between the two was announced on the 9th. Just two days later, Chair Kim stated that he would examine budgets, projects, and pledges of local governments and crack the whip firmly on local governments from the same party.

The issue of Gyeonggi Province's finances between Chair Kim and Governor Choo had previously overlapped last month.

On the 10th of last month, during the party chair election proceedings, Chair Kim responded to the fiscal issues raised by Governor Choo at a lecture held at Ajou University in Suwon and supported making corporate local income tax a shared tax source.

He noted the structure in which corporate local income tax generated by semiconductor industry growth is concentrated in specific cities and counties, and stressed the need to improve the system so that Gyeonggi Province as a whole could share this revenue.

At the time, Governor Choo was publicly supporting Jeong Cheong-rae, who was Chair Kim's competitor in the final stage of the party convention. Despite this, although Chair Kim publicly supported Governor Choo's fiscal restructuring, Governor Choo's response was not separately confirmed.

Following Chair Kim's election as Democratic Party chair on the 17th of last month, attention has been drawn to whether the ruling party will support the fiscal restructuring being pursued by Governor Choo.

Governor Choo had defined Gyeonggi Province's finances as 'essentially in a state of insolvency,' but later changed the expression to "it will face insolvency if things continue like this," appearing to take a step back.

Subsequently, the province proceeded with expenditure restructuring, reviewing all 1,355 projects and reducing spending by 546.5 billion won.

However, the overall scale of the second supplementary budget that the province described as a 'reduced budget correction' actually increased.

The second supplementary budget totals 42.242 trillion won, an increase of 562.1 billion won, or 1.35%, compared to the first supplementary budget of 41.6799 trillion won confirmed in May. Compared to the original budget of 40.0577 trillion won confirmed at the end of last year, it is an increase of 2.1843 trillion won, or 5.45%. If 546.5 billion won was reduced, new and increased allocations amount to an additional 1.1086 trillion won when calculated in reverse.

The province explained that the result reflects the increase in national treasury subsidies and non-tax revenues, plus the shortfall in continuing projects such as long-term care benefits for the elderly and school meals where the full annual requirement was not reflected in the original budget.

The People Power Party in the Gyeonggi Province Assembly stated that spending was reduced using an allocation method by department and bureau rather than based on project feasibility or outcomes, and said it would verify the reduction basis for each project and the details of resource utilization during the supplementary budget review process.

Governor Choo is pursuing fiscal restructuring alongside expenditure restructuring.

After proposing to utilize a portion of corporate local income tax from cities and counties as a shared revenue source, on the 26th of last month, at the Central-Local Cooperation Conference, she recommended to the government a plan to raise the local consumption tax rate from the current 25.3% to 40% and allocate 5% of the national corporate income tax to provincial governments.

To date, no confirmation has been made that the government has taken follow-up actions on this. Meanwhile, as corporate local income tax shared-source policy and partial local distribution of corporate income tax also require National Assembly cooperation, attention is on whether concrete measures will be discussed at the budget policy consultative meeting on the 21st.

A political circles insider said, "If the governor has raised the word 'insolvency,' now it must be proven through solutions," and "the meeting on the 21st should not be a request for support, but rather a venue where the basis for 'insolvency' is verified and National Assembly cooperation for fiscal solutions is drawn out."