논문

This paper attempts to address the following questions: 1) What are the major structural and managerial problems inherent in local government expenditures?; 2) What are the major factors causing such problems?; 3) What measures should be taken to provide more/better services without increasing tax burden? As exemplary cases of misdirected resources, this paper presents a variety of data indicating over-allocation of budget to ‘general administration expenditures’, ‘personnel expenditures’, and ‘local council operation’. As expected, disproportionately high percentage of the total budget is executed around the end of the fiscal year. This is largely due to the current budget system postulating very specific budget categories and applying nation-wide standard of budget preparation. Major reform ideas suggested in this paper are such as following: 1) increased provision of the traditionally ‘public’ services by private and third sectors; 2) utilization of the ‘capital budgeting’; 3) reinforcement of the incentives to expend less without costing services provided (‘mission-driven’ and flexible budgeting); 4) introduction of an effective financial monitoring system; 5) reform of the governmental accounting system, and 6) improvement of the capital investment analysis system. Several strategies for implementing such reform ideas are also included.