Basic Report

  
  
  
   With the start of President Roh's Participatory Government, the Administration has adopted the decentralization as one of four national policy agendas. In particular, fiscal decentralization is the key factor for achieving the goal of decentralization. Fiscal decentralization roadmap by Roh Administration represents three important policy directions which have been discussed in several decades. First, the size of local public sector relative to the central government needs to be increased significantly. Second, the local revenue structure has to be revised toward enhancing fiscal accountabilities of heads of local governments. Third, in expenditure management, the autonomous decision making and the performance management by local governments should be emphasized rather than the standardized control by central government.
   The purpose of this study is twofold. First, we want to evaluate the performance of Participatory Government's fiscal decentralization policies. Second, we want to measure the change in fiscal decentralization during the period of Participatory Government in Korea(Feb. 2003 - Feb. 2008).
   Total 14 policies focused on fiscal decentralization have been undertaken during the past five years. In 2005, with the abolitions of incremental grants and local transfer fund, the rate of financing local shared tax from domestic tax revenue was increased from 15% to 19.13%. Also, the Shared Tax for Local Decentralization was introduced to support financial resources related the 149 programs transferred to local governments.
   For improving the local finance autonomy, Local Budgeting Directives considered as a control of central government was abolished and the overall ceiling system of outstanding local borrowing was introduced with the removal of individual approving system of local bond issuance. In addition, for enhancing local fiscal accountabilities, new systems have been introduced or considered, such as annual local government fiscal analysis, accrual and double-entry accounting system, resident participatory budget system, and program budget system.
   Based on our quantitative measurement and qualitative survey, it's hard to say that the changes of fiscal arrangements during Roh Administration have achieved their intended goals.
   While the local tax share and local taxing power have been remained stable over the last five years, the fiscal gap between local government expenditures and tax revenue has widened.