Basic Report

Decentralization has been expanded, and the budget scale of local governments is increasing year by year. However, it has been pointed out that such an increasing budget is being executed inefficiently; the unused-spending is for example. Therefore, the purpose of this study is to present alternatives reducing the unused-spending by analyzing the budgeting process in local government. To analyze, we include internal factor and external factor into local budgeting process.
   First, we found the internal factors drive the increase of the unused-spending as follows: first, the local project departments’ behaviors are more likely to increase budget amount using by receiving subsidies from central government or central department. Second, the inertia of budgeting formulation that increases budget amount without the secure budget plan generates the unused-spending. Third, local council member’s log-rolling behavior, rather than compromise, is the normal pattern of relationship that produces more the unused-spending. Last, the personnel-rotation system in budget department opposes raising a budget expertise who considers the balanced budget.
   Second, we found the external factors increasing the unused-spending at the relationship between local government and central government’s department. Local governments’ financial autonomy depends largely on the amount of subsidy from central government’s project. This relationship influences the growth of the unused-spending by rapid project process short time lag to spend budget implementation. Also, it reduces local government’s creative budget plan before receiving the subsidy.
   Therefore, we suggest policy alternatives to manage the unused-spending amount at local government. Our suggestions is about the improvement of the special fund account by using sunset law that designate the termination of governmental program unless the legislature affirmatively acts to renew it. Also, the elaboration of financial performance evaluation system promotes effective monitors.