White Paper on Local Public Finance, 2007 FY 2005 …...4 Outline of FY 2005 Account Settlement 1. Decline in expenditure due to decreases in personnel expenses, ordinary construction

Ministry of Internal Affairsand Communications

FY 2005 Settlement

White Paper on LocalPublic Finance, 2007

Illustrated

��地方財政の現況（英）07Ver00 07.10.9 5:08 PM ページ2

The Role of Local Public Finance………………………………………… 1

The State of Local Public Finance(FY 2005 Settlement)

Outline of FY 2005 Account Settlement……………………………… 4Scale of Account Settlement……… 5Revenue and Expenditure Settlement……………………………… 5Revenue ………………………………… 6

1 Revenue Breakdown ……………… 62 Revenue Trends……………………… 73 Local Taxes ………………………… 84 Local Allocation Tax………………… 11

Expenditure 131 Expenses by Function……………… 132 Expenses by Character …………… 16

Flexibility of the Financial

Structure ……………………………… 191 Ordinary Balance Ratio …………… 192 Real Debt Service Ratio and Debt Service

Payment Ratio Used for Permission to IssueLocal Bonds…………………………… 20

Outstanding Local GovernmentBorrowing (Ordinary Account) 21

1 Trends in Outstanding LocalGovernment Borrowing …………… 21

2 Outstanding Borrowing of LocalFinance ……………………………… 22

Local Public Enterprises 231 Ratio of Local Public Enterprises …… 232 Number of Businesses Operated

by Local Public Enterprises 243 Scale of Financial Settlement 244 Management Conditions 25

Trends and Issues in Local PublicFinance

1 Promotion of DecentralizationReform 26(1) Enactment of the Law for the

Promotion of DecentralizationReform …………………………… 26

(2) Promotion of Municipal Mergers………………………………………… 27

2 Promotion of Administrative Reform………………………………………… 29

(1) State of Efforts Through IntensiveReform Plans …………………… 29

(2) Further Promotion ofAdministrative Reform ………… 30

3 Promotion of Information Disclosure………………………………………… 33

4 Revision of ReconstructionLegislation …………………………… 38

5 Reform of Local Allocation TaxComputation ………………………… 40(1) Introduction of New Type of

Local Allocation Tax …………… 40(2) Support Program for Local

Governments Making Efforts…… 43


1

The Role of Local Public FinancePrefectures and municipalities (cities, towns, and villages) are principal actors invarious administrative areas, including school education, welfare and publichealth, police and fire services, and the construction of such public works asroads and sewerage systems. They play a major role in national life. This brochure will introduce the state of local public finance, which is anassemblage of the finances of individual local governments, with particular focuson the state of settlements for fiscal 2005 and efforts toward financial soundnessof the local public entities centered on the ordinary account.

Classification of the Accounting of Local GovernmentsApplied in the Settlement Account Statistics Although the accounts of local governments are divided into general accounts and specialaccounts, the account classification of each local government is not uniform. Therefore, we haveadopted a uniform method in the settlement account statistics by classifying accounts as anordinary account, which covers the general administrative sector, and other accounts (publicbusiness accounts). This enables us to clarify the financial condition of local governments as awhole and to make a statistical comparison among local governments.

Accounts of Local Governments

Ordinaryaccount

Account of general administrative sector

Other accounts(Public business accounts)

National healthinsuranceaccount

Elderly medicalcare account

Nursing careinsuranceaccount

Public enterprise accountWater supply business, Transport business,Electricity business, Gas business, Hospital,

Sewerage business, Residential land development project

Etc.

Etc.


Ordinary account¥51.7663 trillion

(10.3%)

Local government

Net export of financialgoods and services

¥6.5020 trillion (1.3%)

¥60.7979 trillion(12.1%)

Government sector¥114.9252 trillion

(22.8%)

Centralgovernment

¥21.2415 trillion (4.2%)

Private sector¥381.9396 trillion

(75.9%)

Household sector ¥303.9192 trillion

(60.4%)

Enterprise sector ¥78.0203 trillion

(15.5%)

Social security fund¥32.8859 trillion

(6.5%)

Gross domesticexpenditure

(nominal)¥503.3668 trillion

Gross Domestic Expenditure and Local Public Finance

2

Looking at the scale of local public finance to gross domestic expenditure, we see that the ratioof the local government sector is 12.1%, which is about three times larger than the ratio of thecentral government.

How large is local public finance compared with centralgovernment finance?

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Judicial, police and fireservice expenses

Land developmentexpenses

Commercial andindustrial expenses

Land preservationexpenses

Public welfareexpenses(except pension expenses)

Housing expenses,etc.

Disaster reconstructionexpenses, etc.

Agriculture, forestryand fishery industryexpensesDefense expenses

Pension expenses(of public welfare expenses)

General administrationexpenses, assemblyexpenses, etc.

Public health centers, garbage and human waste disposal, etc.

Elementary and junior high schools, kindergartens, etc.

Community centers, libraries, museums, etc.

Urban planning, roads and bridges, public housing, etc.

Rivers and coast

Child welfare, elderly care and welfare, livelihood protection, etc.

Family register, basic residents’ register, etc.

94％

85％

77％

79％

70％

60％

63％

63％

55％

46％62％

77％

4.0％

10.3％

2.8％

4.3％

12.0％

5.1％

2.0％

16.9％

1.5％

0.7％1.9％

3.2％

4.2％

8.2％

6％

15％

23％

21％

30％

40％

37％

38％45％

54％

37％

100％

100％

23％

Sanitation expenses

National ratioLocal ratioRatio ofexpendituresby function

Shares of National and Local Governments in Main Expenditures byFunction (final expenditure base)

School educationexpenses

Social educationexpenses, etc.

3

In which fields are local expenditure ratios high?

Local expenditure ratios are higher in the areas that have a close relationship with our dailylives, such as public health and sanitation, school education, social education, and police andfire services.


4

Outline of FY 2005 Account Settlement

1. Decline in expenditure due to decreases in personnel expenses, ordinary construction expenses, etc.

Total expenditure declined for the sixth consecutive year to 90.6973 trillion.

Real expenditure, excluding special causes involving the Large Earthquake

Rehabilitation Fund, amounted to 89.8004 trillion, a decline of approximately

1.1421 trillion.

The reasons for this decline were, among other things, decreases in personnel

expenses (down 349 billion, or 1.4%, compared with the previous fiscal year)

and ordinary construction expenses (down 1.2324 trillion, or 7.5%).

The State of Local Public Finance (FY2005 Settlement)

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2. Decline in revenue

Total revenue declined for the sixth consecutive year to 92.9365 trillion.

While local tax revenue increased by 1.2656 trillion (up 3.8% over the

previous fiscal year), national treasury disbursements (down 4.6%), local bonds

(down 16.2%),* and so on declined.

*Due to declines in emergency financial countermeasures bonds, ordinary construction

expenses, etc.

3. Increase in number of deficit organizations

The number of organizations with a deficit in their real balances increased by

1 from fiscal 2004 to reach a total of 26 (2 prefectures [Hokkaido and Osaka] and

24 municipalities).

4. Financial structure remains highly rigid

The ordinary balance ratio remained at a high level of 91.4%, almost the same

as the previous fiscal year.

The debt service payment ratio (used for permission to issue local bonds) was

11.7%, the same as the previous fiscal year.

The amount of outstanding borrowing that should be shouldered by the

ordinary account remained at a high level of approximately 201 trillion.


5

100

95

90

85

0

(￥ trillion)(Scale of account settlement)

FY1992 FY2001 FY2002 FY2003 FY2004

91.4238

89.5597

99.8878

97.6738

100.0041

97.431397.4313

97.1702

94.8394 94.8870

92.581893.4422

91.2479

Total revenue

Total expenditure

FY2005

92.9365

90.6973

FY1997

92.037692.0376

89.800489.8004

97.4317

94.839094.839094.839092.581492.5814

93.137293.1372

90.942590.942590.9425

As a result of the fact that, on the revenue side, local bonds and national treasury disbursementsdeclined and, on the expenditure side, personnel expenses, ordinary construction expenses, and soon declined, both revenue and expenditure decreased for the sixth consecutive year. Excludingspecial causes involving the Large Earthquake Rehabilitation Fund, revenue and expendituredeclined from the previous fiscal year by 1.0996 trillion and 1.1421 trillion, respectively.

Note: The lower column shows amounts excluding special causes involving the Large Earthquake Rehabilitation Fund.

Scale of Account Settlement

Although the real single fiscal year balance showed a surplus, the number of real balance deficitorganizations increased.

Revenue and ExpenditureSettlement

Category

Real single FYbalance

Single FYbalance

Real balance

FY 2004

11.7 billion

127.6 billion

1220.8 billion

FY 2004

1,528 (2,498)

1,330 (2,288)

25 (26)

923 (1,693)

876 (1,644)

26 (28)

Settlement figure No. of deficit organizations

FY 2005

429.2 billion

237.0 billion

1316.4 billion

FY 2005

Notes:1. Real single FY balance: Calculated by adding reserves to the fiscal adjustment fund and advanced redemption of local loans to the single

FY balance and subtracting the used part of the fiscal adjustment fund. Single FY balance: Calculated by subtracting the real balance of the previous fiscal year from the real balance of the fiscal year concerned. Real balance: Calculated by subtracting the revenue resources that should be carried over to the next fiscal year from the income-expenditure balance.

2. The number of deficit organizations does not include partial administrative associations or wide-area local public bodies; the figures inparentheses are the number of organizations including partial administrative associations and wide-area local public bodies.

3. The number of organizations with a real balance deficit excludes entities with a deficit resulting from discontinued settlement (entitieswith no income or expenditure in the account settlement period because of a merger, etc.).


6

General revenueresources

¥28,981.9 billion(57.4%)

Local taxes

¥17,667.0 billion (35.0%)

MunicipalitiesTotal

¥50,478.6 billion

Local transfer tax¥995.4 billion

(2.0%)

Special local grants¥645.4 billion (1.3%)

Local allocation tax ¥7,737.1 billion

(15.3%)

Other general revenueresources

¥1,937.0 billion (3.8%)

National treasury disbursements

¥5,226.0 billion (10.4%)

Local bonds ¥4,719.0 billion

(9.3%)

Other revenueresources

¥11,551.7 billion (22.9%)

(0.0%)

General revenueresources

¥28,087.0 billion (57.7%)

Local taxes ¥17,137.4 billion

(35.2%)

PrefecturesTotal

¥48,694.5 billion

Local transfer tax¥853.6 billion

(1.8%)

Special local grants¥872.6 billion

(1.8%)

Local allocation tax ¥9,221.6 billion

(18.9%)

National treasury disbursements

¥6,583.6 billion (13.5%)

Local bonds ¥5,709.5 billion

(11.7%)

Other revenue resources

¥8,314.4 billion (17.1%)

Other generalrevenue resou rces

1.9 billion (0.0%)

Other revenueresources ¥15,620.5 billion (16.8%)

Local taxes ¥34,804.4 billion

(37.4%)Local bonds ¥10,376.3 billion (11.2%)

National treasury disbursements ¥11,809.6 billion

(12.7%) Local allocation tax ¥16,958.7 billion

(18.2%) Special local grants¥1,518.0 billion

(1.6%)

Local transfer tax¥1,849.0 billion

(2.0%)

General revenue resources

¥55,130.1 billion(59.3%)

Net total¥92,936.5

billion

Revenue Breakdown (FY 2005 settlement)

RevenueWhere does the funds for local government activities comefrom?

Revenue Breakdown1The revenue of local governments comes mainly from local taxes (about one-third), localallocation tax, national treasury disbursements, and local bonds, in that order.

Local transfer tax Collected as a national tax and transferred to local governments. Includes local road transfer tax, etc.

Special local grant A revenue source with the character of a substitute for local taxes, introduced to supplement a part of the decrease of localtax caused by a tax cut since FY 1999 and grants from the central government to local governments as a result of a revision of national treasurysubsidies.

Local allocation tax An intrinsic revenue source shared by local governments in order to adjust imbalances in tax revenue among localgovernments and to guarantee revenue sources so that local governments in whatever region can provide a certain level of administrativeservices. Calculated as a certain ratio of five national taxes. (See page 11 for details.)

National treasury disbursements A general name for funds disbursed from the central government to local governments for specified uses. Local bonds The debts of local governments for which fulfillment continues for more than one fiscal year.

General Revenue ResourcesRevenue resources for which the use is not specified, like local taxes and the local allocation tax, are called general revenueresources. Here, the total of local taxes, local transfer tax, special local grants, the local allocation tax, and so on is treated as thegeneral revenue resource. It is extremely important for local governments to ensure sufficient general revenue resources in orderto handle various administrative needs properly.

Notes:1. The figures here are mainly for the ordinary account. (For the accounts of public enterprises, such as water supply and sewerage businesses,

transportation businesses, and hospitals, see page 23.)

2. The figures for each item are rounded off under the given unit. Therefore, they do not necessarily add up exactly to the total.

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FY1992

Net Total ¥91.4 trillion

¥99.9 trillion

FY1997

FY2004

Local transfer tax 2.1%

Local taxes 37.8%

Local allocation tax 17.2% National treasurydisbursements

14.1%

Local bonds 11.2%

Other revenue resources 17.7%

(¥16.2 trillion)

1.1%

36.2% 17.1%14.3% 14.1% 17.2%

General revenue resources 57.0% (¥52.1 trillion)

54.4%(¥54.4 trillion)

20.1%

¥97.2 trillion

0.7%

13.5% 13.7% 16.8% 56.0% (¥54.5 trillion)

0.9%

18.2%(¥17.0 trillion)

¥93.4 trillion

1.2% (¥1.2 trillion)35.9%

13.2% (¥12.4 trillion )

13.2% (¥12.4 trillion)

17.1% (¥15.8 trillion)56.5%(¥52.8 trillion)

1.2% (¥1.1 trillion)

19.0%

¥94.9 trillion

0.7%34.4%

13.8% (¥13.1 trillion)

14.5% (¥13.8 trillion)

16.4% (¥15.6 trillion)55.3% (¥52.4 trillion)

1.1%

FY2005

FY2003

FY2002

FY2001

20.3%

¥100.0 trillion

0.6%35.5%

14.5% 11.8% 16.3% 57.4% (¥57.4 trillion)

Special local grants 0.9%

18.2%(¥17.0 trillion)

¥92.9 trillion

2.0% (¥1.8 trillion)37.4%

12.7% (¥11.8 trillion )

11.2% (¥10.4 trillion)

16.8% (¥15.6 trillion)59.3% (¥55.1 trillion)

1.6% (¥1.5 trillion)

(¥1.1 trillion)

(¥15.7 trillion)

(¥12.9 trillion)(¥10.2 trillion)

(¥34.6 trillion)

(¥36.2 trillion) (¥17.1 trillion)(¥14.3 trillion) (¥14.1 trillion) (¥17.1 trillion)

(¥0.6 trillion) (¥0.9 trillion)




34.4%



(¥33.5 trillion)

(¥34.8 trillion)

(¥1.9 trillion)

7

While the shares of local taxes, local transfer tax and special local grants to total revenueincreased, the shares of local allocation tax, national treasury disbursements and local bonds areon a downward trend.

Revenue Trends2


8

Composition of Revenue from Prefectural Taxes (FY 2005 settlement)

Total¥15,226.9

billion

Prefectural residents tax ¥3,585.4 billion

(23.5%)

Corporate¥966.1 billion

(6.3%)

Enterprise tax¥4,914.2 billion

(32.3%)

Individual¥215.8 billion (1.4%)

Corporate¥4,698.4 billion

(30.9%)

Individual¥2,442.0 billion

(16.0%)

On Interests¥177.4 billion (1.2%)

Other taxes¥132.7 billion (0.9%)

Prefectural tobacco tax¥275.2 billion (1.8%)

Automobile acquisition tax¥452.8 billion (3.0%)

Real property acquisition tax

¥476.7 billion (3.1%)

Light oil delivery tax¥1,085.9 billion (7.1%)

Automobile tax¥1,752.8 billion

(11.5%)

Local consumption tax¥2,551.2 billion

(16.8%)

Composition of Revenue from Municipal Taxes (FY 2005 settlement)

Other taxes ¥481.6 billion (2.4%)

Municipal tobacco tax¥845.3 billion (4.3%)

City planning tax¥1,233.0 billion (6.3%)

Fixed asset tax¥8,862.1 billion

(45.3%)

Corporate¥2,457.0 billion

(12.6%)

Individual¥5,698.5 billion

(29.1%)

Municipal residents tax ¥8,155.5 billion

(41.7%)Total

¥19,577.5billion

The municipal tax revenue figure includes municipal taxes collected by Metropolitan Tokyo.

Local taxes consist of prefectural taxes and municipal taxes. (In the case of the special wards ofTokyo, the Tokyo Metropolitan Government collects some municipal taxes.)

Local Taxes3

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(38.4) (34.1) (27.9) (26.6) (28.1) (30.0) (32.3%)

Prefectural Tax Revenue Trend

Figures in parentheses are the component ratios of the business tax and prefectural residents tax.

¥ trilliontrillion

Other taxes

Light oil delivery tax

Automobile acquisition tax

Automobile tax

Prefectural tobacco taxReal property acquisition tax

Local consumption tax

Individual

Corporate

Corporate Interest

Individual

Enterprisetax

Prefecturalresidents

tax

16

14

12

10

8

6

4

2

0

FY 1992

14.83302.0

6.1

3.9

9.5

2.54.51.9

36.5

5.5

7.7

19.9

FY1997

14.94781.6

8.9

3.8

11.4

1.74.9

5.41.8

32.3

6.4

3.0

18.8

FY 2002

13.8035

16.8

0.9

8.3

3.0

12.8

2.03.8

17.6

1.6

25.0

5.32.9

FY 2003

13.6931

16.3

0.8

8.1

3.3

12.8

2.03.5

17.5

1.6

26.5

5.71.9

FY 2004

14.4870

15.6

0.8

7.6

3.1

11.8

2.03.2

18.0

1.5

28.5

6.01.9

FY 2005

15.22690.9%

7.1%

3.0%

11.5%

1.8%3.1%

16.8%

1.4%

30.9%

6.3%1.2%

16.0%

FY 2001

15.53030.7

7.7

11.4

1.83.5

15.9

1.5

26.4

5.4

7.6

15.3

2.9

(33.1) (28.2) (28.2) (25.0) (23.9) (25.3) (23.5%)

Municipal Tax Revenue Trend¥ trillion

trillionOther taxes

City planning tax

Municipal tobacco tax

Fixed asset tax

Individual

Corporate

Municipalresidents

tax

Figures in parentheses are the component ratio of the municipal residents tax. The municipal tax revenue figure includes municipal taxes collected by Metropolitan Tokyo.

16

14

12

10

8

6

4

2

0

22

20

18

FY 1992

19.7353

37.7

3.15.6

3.3

36.4

13.9

FY1997

21.2077

33.8

2.5

6.3

3.8

41.6

11.9

FY 2001

20.0185

30.0

2.5

6.6

4.3

45.7

10.9

FY 2002

19.5750

30.1

2.6

6.7

4.2

46.8

9.6

FY 2003

18.9726

29.7

2.5

6.5

4.5

46.2

10.5

FY 2004

19.0518

28.7

2.4

6.5

4.6

46.2

11.6

FY 2005

19.5775

29.1%

2.4%

6.3%

4.3%

45.3%

12.6%

(51.6) (45.8) (40.9) (39.7) (40.3) (40.3) (41.7%)

9

Revenue from prefectural taxes, in which the share of the two corporate taxes (corporatebusiness tax and corporate prefectural resident's tax) is high, increased for the secondconsecutive year due to such factors as buoyant corporate earnings. Furthermore, municipal tax revenue also rose for the second consecutive year due to suchfactors as an increase in municipal resident's tax.


10

Hokkaido

Aomori

Iwate

Miyagi

Akita

Yamagata

Fukushima

Ibaraki

Tochigi

Gunma

Saitama

Chiba

Tokyo

Kanagawa

Niigata

Toyama

Ishikawa

Fukui

Yamanashi

Nagano

Gifu

Shizuoka

Aichi

Mie

Shiga

Kyoto

Osaka

Hyogo

Nara

Wakayama

Tottori

Shimane

Okayama

Hiroshima

Yamaguchi

Tokushima

Kagawa

Ehime

Kochi

Fukuoka

Saga

Nagasaki

Kumamoto

Oita

Miyazaki

Kagoshima

Okinawa

National Average

Index

Local taxes revenue total

Individual resident’s tax

Index of Per Capita Revenue in Local Tax Revenue (with national average as 100; FY 2005)

Two corporate taxes

Local consumption tax (after settlement)

Notes: 1. The local tax revenue total amounts do not include excess taxation, non-statutory ordinary taxes, or non-statutory special purpose taxes. 2. The revenue of the individual resident's tax is the total of the prefectural individual resident's tax (taxation on per capita basis and taxation on income basis) and the municipal individual resident's tax (taxation on per capita basis and taxation on income basis) and excludes excess taxation. 3. The revenue of the two corporate taxes is the total of the corporate prefectural resident's tax, the corporate municipal resident's tax and the corporate business tax and excludes excess taxation. 4. Calculations are made from the basic residents' register population as of March 31, 2006.

settlement amount

¥34.2trillion

FY 2005 settlement amount

¥8.0trillion


¥7.6trillion


¥2.6trillion

FY 2005

In order for local governments to provide administrative services in response to localneeds with responsibility and at their own discretion, it is necessary to expand and securelocal taxes so as to build a local tax system in which the uneven distribution of taxsources is limited and the stability of tax revenue is ensured.

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　　　 Standard financial requirements

　－ Standard financial

revenues

Regular allocation tax amount

Standard financial revenues

Standard local tax revenue

Calculation rate (75%)

Local transfer tax, etc.

Standard financial requirements

Unit cost

Measured unit number /amount

(population national census, etc.)

Adjustment coefficient(scale modification, etc.)

×

× ×

＋

From the perspective of local autonomy, it would essentially be the ideal for each localgovernment to ensure the revenue sources necessary for administrative activities through localtaxes collected from their residents. However, there are regional imbalances in tax revenue, andmany local governments are unable to acquire necessary tax revenue. Therefore, the centralgovernment collects financial resources that should fundamentally be attributable to local taxrevenue through national taxation and reallocates them as the local allocation tax to localgovernments where financial resources are insufficient.

Determination of total amount of local allocation taxThe total amount of the local allocation tax is determined on the basis of certain ratios fornational taxes (32% for income tax and liquor tax, 35.8% [34.0% from fiscal 2007] for corporatetax, 29.5% for consumption tax, and 25% for tobacco tax) as well as estimates of standardrevenue and expenditure of local public finance as a whole. The total amount of local allocation tax in fiscal 2005 was ¥16.9587 trillion, down 0.4% fromthe previous fiscal year.

Method of calculation of regular local allocation tax for each localgovernment

The regular local allocation tax for each local government is calculated by the followingmechanism:

Local Allocation Tax4

Notes:1. Standard financial requirements are calculated as the financial requirements of each local government based on rational and appropriate

standards. It is required to include the local share of the national treasury projects, such as compulsory education, livelihood protection,and public works, work project in calculating the standard financial requirements. From FY 2001 to FY 2009, part of the standardfinancial requirements is being transferred to special deficit-financing local bonds (extraordinary financial countermeasures bonds) as anexception to Article 5 of the Local Finance Law.

2. Normal local tax revenue neither includes “non-statutory ordinary taxes”and “non-statutory special purpose taxes” imposed independentlyby the local government nor “excess tax” that exceeds the standard tax rate stipulated in the Local Tax Law.


12

Ratio of General Revenue Resources to TotalRevenue for Municipalities

Speciallocalgrant

Localallocationtax

Localtaxes

Generalrevenue

resources

Ratio of generalrevenue resources

to total revenue

Localtransfertax, etc.

Smallcity

Largetown or village

Midsizecity

Smalltown or village

Function of the local allocation taxThe function of the local allocation tax is to adjust imbalances in revenue among localgovernments in order to guarantee revenue so that local governments can provide standardadministrative services and basic social infrastructure to their residents in whatever region. Accordingly, as a result of the revenue adjustment mechanism through the local allocation tax,few differences in such factors as size of population have been found in the ratio of generalrevenue resources to total revenue.

Notes:1. A “midsize city” refers to a city with a population of more than 100,000 persons according to the national census of 2005; a “small city”

refers to a city with a population of less than 100,000. 2. A “large town or village” refers to a town or village with a population of more than 10,000; a “small town or village” refers to a town or

village with a population of less than 10,000.

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Composition of Expenditure by Function (FY 2005)

Unit:¥100 million

Other expenses

Public debtpayments

Educationexpenses

Civil engineeringwork expenses

Commerce andindustry expensesAgriculture, forestryand fishery expenses

Sanitation expenses

Public welfareexpenses

General administrationexpenses

Net totalPrefectures

MunicipalitiesShare

(%) Shar

e

(%) Shar

e

(%)

Expenditure

When expenses are classified by function, we see that a lot of revenue is expended for such itemsas education expenses, public welfare expenses, and civil engineering work expenses. Inprefectures it is mainly expended for education expenses, debt servicing, and civil engineeringwork expenses, in that order. In municipalities it is primarily expended for public welfareexpenses, civil engineering work expenses, and debt servicing, in that order.

Education expenses: Expenses for school education, social education, etc. Civil engineering work expenses: Expenses for the construction and improvement of public facilities,such as roads, housing and parks.Public welfare expenses: Expenses for the construction and operation of welfare facilities for children,the elderly, the mentally and physically disabled, etc. and for the implementation of livelihood protection,etc. Public debt payment: Expenses for the payment of principal, interest, etc. on debts.

What is revenue being expended for?

Expenses by Function1


14

Breakdown of Public Welfare Expenses by Purpose

Disaster relief Livelihood protection

Child welfare

Elderly welfare

Social welfare

Net totalPrefectures

Municipalities Share(%

)

Share(%

)

Share(%

)

44,100128,135211

41,928

39,560

46,964

28,264

156,9270.1

18.0

29.9

25.2

26.7

0.3

6.7

19.8

41.7

31.5

0.1

20.1

32.6

20.9

26.3

Breakdown of Civil Engineering Work Expenses by Purpose

Share(%

) Prefectures Share(%

)

Share(%

)

74,91971,723

144,1749,285

12,176

54,731

16,504

46,760

4,718

OtherHousing

Urban planning

HarborsRivers and coast

Roads and bridges

MunicipalitiesNet total

8.2

14.9

1.11.9

20.4

19.3

34.2

6.6

12.2

20.9

3.520.

7

13.0

23.1

6.5

8.4

38.0

3.3

11.4

32.4

6.1

7.9

20.6

4.4

20.5

40.5

6.6

9.1

54.7

2.52.8

24.3

Unit:¥100 million

Unit:¥100 million

Breakdown of Educational Expenses by Purpose

Share(%

)

Share(%

)

Share(%

)PrefecturesMunicipalities

Net total

Unit:¥100 million

OtherEducationalgeneral affairs Health and physical education

Social education

Senior high school

Junior high school

Elementary school

165,77853,067

113,37812,80023,10112,12912,98624,988

28,782

50,992

7.7

13.9

7.3

7.8

15.1

17.4

30.8

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Trends in Expenditures by Function (ordinary account net total)Unit: Ratio with FY 1992 as 100.

FY1992

FY2001

FY2005

General administration expensesWelfare expensesOf which, social welfare expensesOf which, elderly welfare expensesOf which, child welfare expensesSanitation expensesOf which, cleaning expensesAgriculture, forestry and fishery expensesCommerce and industry expensesCivil engineering work expensesEducation expensesPublic debt payments Total expenditure

FY1997

General administration expenses 86Welfare expenses 128Of which, social welfare expenses 125Of which, elderly welfare expenses 145Of which, child welfare expenses 119Sanitation expenses 120Of which, cleaning expenses 120Agriculture, forestry and fishery expenses 114Commerce and industry expenses 121Civil engineering work expenses 99Education expenses 102Public debt payments 145 Total expenditure 109

General administration expenses 88Welfare expenses 142Of which, social welfare expenses 136Of which, elderly welfare expenses 138Of which, child welfare expenses 144Sanitation expenses 119Of which, cleaning expenses 129Agriculture, forestry and fishery expenses 98Commerce and industry expenses 121Civil engineering work expenses 86Education expenses 98Public debt payments 181 Total expenditure 109

100

101,087 99,353 27,922 26,728 29,561 56,143 23,398 56,762 44,454216,332184,060 71,150895,597

General administration expenses 86 87,372Welfare expenses 158 156,927Of which, social welfare expenses 150 41,928Of which, elderly welfare expenses 148 39,560Of which, child welfare expenses 159 46,964Sanitation expenses 102 57,067Of which, cleaning expenses 98 22,845Agriculture, forestry and fishery expenses 70 39,783Commerce and industry expenses 104 46,260Civil engineering work expenses 67 144,174Education expenses 90 165,778Public debt payments 196 139,635 Total expenditure 101 906,973

Unit:¥100 million

In recent years, while there has been a decline in such items as agriculture, forestry and fisheryexpenses and civil engineering work expenses, welfare expenses, public debt payments and soon have been increasing.


16

Subsidized ordinary construction expenses

¥4,040.7 billion (8.4%)

Social assistance expenses

¥952.9 billion (2.0%)

Public debtpayments

¥7,222.2 billion(15.1%)

Unsubsidized ordinaryconstruction expenses ¥3,379.4 billion (7.1%)

Other expenses ¥15,627.9 billion

(32.6%)

Personnelexpenses

¥15,008.6 billion (31.4%)

Obligatory expenses¥23,183.7 billion

(48.4%)

Investment expenses¥9,061.7 billion

(18.9%)

Ordinary construction expenses

¥8,559.3 billion (17.9%)

PrefecturesTotal

¥47,873.3 billion

Subsidized ordinaryconstruction expenses

¥2,380.7 billion (4.9%)


(36.1%)


(15.5%)


(48.4%)

Personnelexpenses

¥10,255.7 billion (20.9%)

Social assistanceexpenses

¥6,714.9 billion(13.7%)

Public debtpayments

¥6,792.1 billion(13.8%)


¥7,270.1 billion (14.8%)

MunicipalitiesTotal

¥49,060.7 billion

Unsubsidized ordinary construction expenses ¥4,542.2 billion (9.3%)


(30.8%)


¥15,104.3 billion (16.7%)

Unsubsidized ordinary construction expenses

¥7,663.9 billion (8.4%)

Subsidized ordinary construction expenses ¥6,176.2 billion (6.8%)

Personnelexpenses

¥25,264.3 billion (27.9%)


(51.7%)

Social assistance expenses

¥7,667.8 billion (8.5%)

Public debtpayments

¥13,923.3 billion(15.4%)


(17.5%)

Net total¥90,697.3

billion

Expenditure by Character (FY 2005 settlement)

What are expenses for?

Classified by character, expenses can be divided into "obligatory expenses" (personnel expenses,social assistance expenses and public debt payments), which are mandatory and difficult to cutdown at the discretion of individual local governments; "investment expenses," includingordinary construction expenses, etc.; and "other expenses."

Expenses by Character2

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Municipalities

Prefectures

FY1997 FY1996 FY2000 FY1999 FY1998 FY2003 FY2002 FY2001

Net total

FY2004 FY2005

Unit:¥100 million

Breakdown of Personnel Expenses by Item

Unit:¥trillion

Other

Subsides for localgovernmentemployee mutual-aid associations, etc.

1.2556 (5.0%)

3.3831 (13.4%)

Retirementallowances 2.0324 (8.0%)

Temporaryworker wages0.0130 (0.1%)

Otherallowances6.4650(25.6%)

Employeesalaries

18.5932 (73.6%)Basic

salaries12.1153 (48.0%)

Net total¥25.2643

trillion

Prefectures¥15.0086

trillion

Municipalities¥10.2557

trillion

14.3%

2.6%

26.5%

7.3%

0.0%

75.8%

49.3%

0.1%

8.4%

12.1%

9.1%

24.3%

70.4%

45.9%

100(%)

80

60

40

20

0

sesn


18

Trends in Breakdown of Expenditures by Character (ordinary account net total)

FY1992

FY2005

Obligatory expenses 359,087

Personnel expenses 241,194

Social assistance expenses 47,065

Public debt payments 70,828

Ordinary construction expenses 285,684

Subsidized ordinary construction expenses 102,436

Unsubsidized ordinary construction expenses 170,645

Reserves 36,109

Total expenditure 895,597

Obligatory expenses 121

Personnel expenses 112

Social assistance expenses 131

Public debt payments 145

Ordinary construction expenses 97

Subsidized ordinary construction expenses 108

Unsubsidized ordinary construction expenses 91

Reserves 43

Total expenditure 109

Unit: Ratio with FY 1992 as 100.

Unit:¥100 million

FY2001

FY1997

100

Obligatory expenses 128

Personnel expenses 111

Social assistance expenses 138

Public debt payments 181

Ordinary construction expenses 79

Subsidized ordinary construction expenses 97

Unsubsidized ordinary construction expenses 65

Reserves 56

Total expenditure 109

Obligatory expenses 130 468,553

Personnel expenses 105 252,643

Social assistance expenses 163 76,678

Public debt payments 197 139,233

Ordinary construction expenses 53 151,043Subsidized ordinary construction expensesUnsubsidized ordinary construction expensesReserves 51 18,566

Total expenditure 101 906,973

60 61,762

45 76,639

In recent years, while there has been a decline in such items as ordinary construction expenses,social assistance expenses, public debt payments and so on have been increasing.

Social assistance expensesExpenses which include child welfare expenses, livelihood protection expenses, etc., aimed at assisting the needy, children, the elderly,mentally and physically disabled, etc., as a part of the social security system.

Ordinary construction expensesExpenses necessary for the construction of social capital, such as roads, bridges, parks, schools, etc.

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Nationwide

Municipalities

Prefectures

Other expenses

Personnel expenses (%)

Public debt payments (%)

FY2002FY2001FY2000FY1999FY1998FY1997FY1996 FY2003 FY2004 FY2005

Flexibility of the FinancialStructureHow can local finance respond to the demand toward localgovernments?

In addition to revenue sources allocated to obligatory expenses required every year, it isnecessary for local governments to ensure revenue sources for measures to respond properly tosocial and economic trends and changes in the demand of the residents. The extent to whichthese revenue resources can be ensured is called the flexibility of the financial structure.

The national average of the ordinary balance ratio (the ratio of ordinary revenue allotted toexpenses recurring every fiscal year to the total of ordinary revenue recurring every fiscal year,centered on local taxes and the local allocation tax, as well as tax reduction supplementary bondsand extraordinary financial countermeasures bonds [see note]) remained at a high level of 91.4%,almost the same as the previous fiscal year.

Ordinary Balance Ratio1

Note:Tax-reduction supplementary bonds and extraordinary financial countermeasures bonds have been added since fiscal 2001.


Real Debt Service Ratio and Debt Service PaymentRatio Used for Permission to Issue Local Bonds

It is necessary to keep a close watch on trends in public debt payments at all times, since publicdebt payments, payments of principal and interest on the debts of local governments, areexpenses especially lacking flexibility. The real debt service ratio, which is an index indicating the extent of the real debt paymentburden, was calculated for the first time on the basis of fiscal 2005 account settlements. Pasttrends can be seen in the debt service payment ratio used for permission to issue local bonds.The national average is the same ratio for the previous fiscal year and remains at a high level.

20

2

Trends in the Debt Service Payment Ratio Used for Permissionto Issue Local Bonds

Prefectures

Nationwide

Municipalities

FY 1996FY 1997

FY 1998FY 1999

FY 2000

FY 2004FY 2003

FY 2002FY 2001

FY 2005

State of the Real Debt Service Ratio

under18%

over 18%,under 25%

over 25%,under 35%

over35%

National(1,891 organizations)

Prefectural(47 organizations)

Municipal(1,844 organizations)

78.0%(1,475 organizations)

91.5%(43 organizations)

77.7%(1,432 organizations)








*Debt service payment ratio used for permission to issue local bondsThe debt service payment ratio used for permission to issue local bonds indicates the ratio of the total of local debt principal and interest andexpenditure relating to debt-burden acts corresponding to debt service expenses, excluding the amount of advanced redemption, and alsoexcluding the amount of general revenue resources calculated for this purpose that includes the local allocation tax, to the total of thestandard financial amount and possible issue of extraordinary financial countermeasures bonds (excluding the amount of local allocation taxcalculated for service payment).

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*Real debt service ratioThe real debt service ratio indicates the ratio of the principal and interest repayments on local bonds (excluding advanced redemption,etc.)and the real debt service amount, including items corresponding to debt service expenses, such as disbursements to public enterprise bonds,minus that portion of the local allocation tax allotted for this purpose to the total of the standard financial amount and the issuableextraordinary financial countermeasures bond amount. It is used to determine organizations that require consultations or permission to issuebonds. If the ratio is over 18%, the organization needs permission to issue bonds; if it is over 25%, the issue of certain kinds of local bondsis restricted; and if it is over 35%, the restrictions are tightened even more.


21

140

130

120

110

100

90

80

70

60

50

0FY 1992 FY 2001 FY 2002 FY 2003 FY 2004FY 1997 FY 2005

2.92.1

3.2

52.9

61.1

9.9

5.4

6.0

80.3

111.5

9.9

15.4

1.2

6.3

83.6

130.9

7.5

16.9

15.2

3.8

6.5

83.0

134.1

7.6

18.0

14.2

9.1

5.9

82.3

138.1

7.9

18.7

13.2

12.9

5.7

81.4

140.6

8.2

19.2

12.1

15.7

5.3

79.2

139.9

8.2

19.4

Trends in Outstanding Local Government Borrowing

Economic-stimulusmeasures

Extraordinaryfinancialcountermeasuresbonds

Tax revenuesupplementarybonds

Tax-reductionsupplementarybonds, etc.

Financial aidbonds, etc.

Other localbonds

¥ trillion

Outstanding Local GovernmentBorrowing (Ordinary Account)What is the state of debts in local public finance?

Trends in Outstanding Local Government Borrowing1Outstanding local government borrowing, the debts of local governments, amounted toapproximately ¥140 trillion at the end of fiscal 2005. This figure has been increasing in recentyears because of such factors as the need to supplement tax revenue as a result of tax cuts andthe issue of extraordinary financial countermeasures bonds. The figure is 1.5 times larger thantotal revenue and about 2.5 times larger than the total sum of general revenue resources, such aslocal taxes and local allocation tax.

Notes:1. Outstanding local government borrowing excludes special fund public investment bonds.2. Economic-stimulus figures are estimates.


22

Trends in Outstanding Borrowing That Should Be Shouldered by the Ordinary Account and Ratio of Outstanding Borrowing to Gross Domestic Product

¥trillion

FY 1992 FY 1997 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 (End of FY)

79.14512.1859

15.8279

61.1313

149.8931

15.2137

23.1823

111.4971

187.7146

130.8615

28.3228

28.5303

193.0685

30.7243

28.2435

134.1007

201.2943

33.6142

27.7509

139.9292

Ratio of outstanding borrowing that should be shouldered by the ordinaryaccount to GDP

Outstanding borrowing from special account for local allocation tax and transfer tax grants (local burden)

Outstanding public enterprise bonds (borne by the ordinary account)

Outstanding local government bonds

140.6158

28.0539

32.8177

201.4874198.2831

138.1009

28.3465

31.8357

50(%)

40

30

20

10

0

40.0%40.0%40.640.639.639.638.838.837.437.4

28.828.8

16.816.8

210

200

180

160

140

120

100

80

60

40

20

0

Also, the outstanding borrowing of local public finance, which includes the local burden ofborrowing from the special account for local allocation tax and transfer tax grants and thosepublic enterprise bonds borne by the ordinary account, as well as current outstanding localgovernment bonds, remains at a high level, amounting to approximately ¥201 trillion at the endof fiscal 2005.

Outstanding Borrowing of Local Finance2

Notes:1. Outstanding local government borrowing excludes special fund public works bonds and special fund public investment bonds.2. Outstanding public enterprise bonds (borne by the ordinary account) are estimates based on settlement statistics.

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Water-supplybusiness

(including small-scalewater supply business)

Seweragebusiness

Transportbusiness

(railways)

Transportbusiness

(buses)

Hospitals

Water-supplypopulation

of 124.71million persons

Sewage disposalfacility population

of 102.82million persons

No.of passengersa year

of 21.954billion persons

No.of passengersa yearof 4.626

billion persons

No.of hospitalbeds

of 1,632,000 beds

123.83million persons

93.25million persons

2.870billion persons

1.063billion persons

235,000beds

Local Public EnterprisesLocal public enterprises are managed directly by local governments for the purpose of socialand public benefit. They provide social infrastructure and services indispensable for localresidents and the development of the community, including water supply, sewerage, transportand hospitals.

Local public enterprises play a major role in improving the standard of living of residents.

Ratio of Local Public Enterprises1

Notes:1.The graph shows the ratio of local public enterprises when the total number of business entities nationwide is taken as 100.

2.Figures for the total number of enterprises nationwide are compiled from statistical materials of related organizations; figures for localpublic enterprises are compiled from figures for the total number of enterprises and settlements for the previous fiscal year.

What is the state of local public enterprises?


24

FY2005

Seweragebusiness

65,635(32.3%)

Hospitals47,599(23.4%)


including small-scalewater supply

44,560(21.9%)

Residential development

18,470(9.1%)

Others26,918(13.3%)

203,182¥100 million

End of FY2005

Seweragebusiness

3,699(39.4%)


including small-scalewater supply

2,334(24.9%)

Care services651

(6.9%)

Hospitals672

(7.2%)

Residential development

531(5.7%)

Others1,492

(15.9%)

No. of businesses

9,379

The number of businesses is 9,379. By type of business, sewerage accounts for the largest ratio,followed in order by water supply, hospitals, and care services.

Number of Businesses Operated by Local Public Enterprises2

The total financial settlement scale is ¥20.3182 trillion. By type of business, sewerage accountsfor the largest ratio, followed in order by hospitals, water supply, and Residential development.

Scale of Financial Settlement3

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0

Others

Sewerage business

Hospitals

Gas

Electricity

TransportIndustrial water supplyWater supply(including small-scale water supply)

5,000

4,000

3,000

2,000

1,000

1,000

2,000

3,000

¥100 million

Surplus

Deficit

Totalbalance

Trends in Management Conditions of Local Public Enterprises

Total surplus2,702

Others 1,175

Sewerage 225Gas 48

Electricity 170Industrial

water supply 122

Water supply962

Transport1,472

Hospitals887

Total deficit2,359

343

Total surplus4,690

Others 1,155

Sewerage 931

Electricity 99Industrialwater supply 194

Water supply2,311

Transport638

Hospitals1,261

Others 148Gas 53

Total deficit2,100

2,590

Total surplus3,013

Others 365

Sewerage 755


water supply 180

Water supply1,599

Transport1,452

Hospitals1,264

Others 203

Gas 15

Total deficit2,934

79

Total surplus3,927

Others 1,561

Sewerage 799


water supply 153

Water supply1,286

Transport1,598

Hospitals627

Total deficit2,225

1,702

Total surplus2,392

Others 242

Sewerage 324


water supply 82

Water supply1,567

Transport1,712

Hospitals578

Total deficit2,314

78

Gas 24

Total surplus3,349

Others 441

Sewerage 765


water supply 164

Water supply1,871

Transport754

Hospitals1,013

Others 100Total deficit

1,867

1,482

Gas 2

Gas 5

Electricity 93

FY1992 FY2001 FY2004FY2002FY1997 FY2003 FY2005

Total surplus5,102

Others 1,512

Sewerage 805

Industrialwater supply 239

Water supply2,453

Transport640

Hospitals1,476

Others 197

Gas 22

Total deficit2,335

2,767

Local public enterprises had a surplus of ¥276.7 billion. By type of business, while watersupply, industrial water supply, electricity, and sewerage showed a surplus, transport andhospitals are continuing to register a deficit.

Management Conditions4


26

Trends and Issues in Local PublicFinance

The Law for the Promotion of Decentralization Reform, which aimed to clarify the basic

philosophy for the promotion of decentralization and the responsibilities of the central and local

governments, to stipulate fundamental matters, and to promote decentralization in a

comprehensive and planned manner by establishing the necessary system, was enacted on

December 8, 2006, and enforced on April 1, 2007. On the basis of this law, efforts are being

made to promote new decentralization reforms, thoroughly review the role sharing between the

central and local governments, advance the transfer of authority and financial resources to local

governments, and establish the independence and responsibility of the regions.

Promotion of Decentralization Reform1Enactment of the Law for the Promotion of Decentralization Reform

"Through the comprehensive revision of related laws andordinances and so on toward decentralization, efforts will bemade to review the role sharing between the central and localgovernments, abolish or reduce state involvement and nationaltreasury subsidies, etc."

Establishment of a setup within the government to promotedecentralization reform (Decentralization Reform PromotionCommittee)

To study the form of role sharing between the central andlocal governments, etc.

The government shall compile a Decentralization ReformPromotion Plan.

The law shall be valid for a limited period of three years fromits enforcement.

O u t l i n e o f L a w

Law for the Promotion of Decentralization Reform(enacted on December 8, 2006)

Comprehensive

revision of individual

laws

Basic Policy 2006 (approved by the cabinet on July 7, 2006; extract)

Compilation of Decentralization Reform Promotion Plan

Comprehensive Law on Decentralization

Reform (tentative name)

Trendsand

Issuesin

LocalPublic

Finance


0

500

1,000

1,500

2,000

2,500

3,000

3,500No. of municipalities

3,229

1,990

671

568 562 552 533339

197

675 677 695 739

779

1,981 1,961 1,872

1,317

844

3,218 3,190 3,100

2,395

1,820 1,804

827

782

195

Total

State of Progress of Municipal Mergers

Towns

Cities

Villages

Apr. 2006Apr. 2005Apr. 2004Apr. 2003Apr. 2002Apr. 1999 Apr. 2007

27

As decentralization advances and the role of the municipality becomes increasingly important,in the present situation of severe fiscal conditions both centrally and locally, the promotion ofmunicipal mergers is important in order to strengthen the administrative and financial bases ofmunicipalities and to maintain and improve their administrative services.

Promotion of Municipal Mergers


28

Community Development Efforts of Merged Municipalities

In many merged municipalities, positive efforts have begun toward building an energetic and

individualistic community in response to local issues.

Improvement in the convenience of residents!

Upgrading and diversification of administrative services!

Wide-area community development!

Greater administrative and financial efficiency!

A clinic was opened for the first time in about 30 years in themountainous district of Besshiyama, which previously did nothave a doctor. (Niihama City, Ehime Prefecture; formerly themountainous area of Besshiyama)

A new fire station has been established in the town, whichpreviously did not have any emergency fire-prevention serviceor a fire station, and the ambulance and fire-preventionservices have been expanded and strengthened. (KibichuoTown, Okayama Prefecture)

A Children's Comprehensive Support Office has been established as a key station forassisting and coordinating enhancement of the child-raising, health, and educationalenvironment in a comprehensive manner, and more specialist services are now provided.(Kameyama City, Mie Prefecture)

In addition to the former Takayama City area, which boasts thepopular Takayama Festival and a historical townscape, suchattractions as the former Kamitakara area of the Northern Alpsand the Oku-Hida Hot Springs Village have been added to themunicipality, making it possible to aim for the establishment ofa new Hida-Takayama brand by, among other things,launching an accommodation- and tour-style tourist strategylinking urban and rural areas. (Takayama City, Gifu Prefecture)

As a result of a survey of 557 local governments that merged between April 1999 and March2006, it is estimated that after fiscal 2016 (that is, about 10 years after the mergers) efficiencywill amount to about 1.8 trillion a year.

Examples

Through mergers, it has become possible to go beyond municipalboundaries and use child day-care centers that have vacancies.(Niigata City, Niigata Prefecture)

n order to facilitate the efficient use of libraries, library systemshave been integrated so that it is now possible at any library tosearch the books stocked at other libraries and to request,borrow, and return them. (Tahara City, Aichi Prefecture)

Trendsand

Issuesin

LocalPublic

Finance


29

Reduction of number of employeesReduction of number of employees by about 1,700 persons (about 11.4%) through efforts in the five years from FY 2005to FY 2009 (Reduction of 687 persons by April 2007 due to efforts in FY 2005 and 2006)

Formation of new salary systemRevision of pay scale in response to work stages and shift to salaries that reflect job and work responsibility (Salary structurereform implemented in April 2007 and special work allowances, employee health and welfare systems, etc. under continuousreview.)

Formation of new personnel systemPromotion of personnel system reform to make maximum use of the abilities of employees through the operation of a newpersonnel evaluation system, compilation of a human resource development plan, etc. (New personnel evaluation systemintroduced in April 2006, and second human resources development basic plan formulated in June 2007.)

Promotion of private-sector consignment, etc.Promotion of shift to method of providing public services through utilization of the private sector through utilization of thedesignated manager system, etc. (system introduced at about 179 facilities as of April 2007)

Promotion of equity corporation reformClarification of new reform targets for equity corporations, including their integration and abolition, and steady promotion ofreform (one corporation abolished in FY 2005)

Promotion of soundness of public enterprisesRegarding the four projects for the full operation of the Local Public Enterprise Law, compilation of individual new medium-termmanagement plans and promotion of efforts toward establishment of financial structure to enable management throughindependent settlement

Efforts toward financial soundnessEfforts to build a sustainable financial structure to achieve an account balance without borrowing from the sinking-fund in FY2009

Reduction of number of employeesReduction of 7.8% (about 2,800 persons) in the six years from FY 1999 to FY 2004Reduction of 6.9% (about 2,300 persons) in the five years from FY 2005 to FY 2009

Restraint of salary expensesPay-rise period extension measure (12-month extension)

Period: FY 1999-2003Salary-cut measure

Period: FY 2004-2006 (7% for department heads and bureau heads, 5% for office heads, 3% for other staff): FY 2007 (7% for department heads and bureau heads, 5% for office heads)

Promotion of private-sector consignment, etc.Fundamental revision of all nonclerical work (17 businesses, 361 persons)

Private-sector consignment, etc. of security work, road inspection work, kitchen work, telephone operator work, etc. Introduction of designated manager system

149 facilities as of April 1 2007 (of which, prefectural housing: 113 facilities)Reduction of internal management expenses

Reduction based on the results of the comprehensive inspection of administrative work, which was implemented in fiscal 2006and individually inspected all administrative work of prefectures, etc.

Revision of facility management standards, curbing of expenses, etc.Revision of travel expenses, commodity procurement methods, etc.

Reduction of ordinary construction project expenses, etc.Planned reduction of public works

35% reduction of subsidized public works compared with the fiscal 2006 initial budget by fiscal 200935% reduction of unsubsidized public works (construction) compared with the fiscal 2006 initial budget by fiscal 200917.5% reduction of unsubsidized public works (maintenance) compared with the fiscal 2006 initial budget by fiscal 200917.5% reduction of direct obligations compared with the fiscal 2006 initial budget by fiscal 2009

Reduction of investment expenses other than public works in a planned manner by 35% compared with the initial budget forFY 2006 by FY 2009

Revision of administrative workReduction based on the results of the comprehensive inspection of administrative work, which was implemented in fiscal 2006

and individually inspected all administrative work of prefecturesThorough revision of work from the perspectives of necessity, effectiveness, and efficiency, optimization of informationsystems, review of contracts, etc.Revision of subsidies, etc. corresponding to obligatory subsidies

In order to solidly promote local administrative reform, the Ministry of Internal Affairs andCommunications compiled the New Guidelines for the Promotion of Administrative Reform in LocalGovernments (the New Local Administrative Reform Guidelines) and notified local governments of themon March 29, 2005. As a result, local governments have compiled and disclosed intensive reform plans indicating specificefforts, such as the reorganization and arrangement of administrative work and projects and the promotionof private-sector consignment, to be undertaken in general until fiscal 2009.

Specific Examples of Intensive Reform Plans

Promotion of Administrative Reform2

State of Efforts Through Intensive Reform Plans

Prefecture

A

City

B


30

On August 31, 2006, the Ministry of Internal Affairs and Communications formulated"Guidelines for the Further Promotion of Administrative Reform in Local Governments" andrequested local governments to make positive efforts toward three reforms: reform of totalpersonnel expenses, reform of public services, and reform of local public accounting.

Further Promotion of Administrative Reform

Reform of total personnel expenses

Further net reduction in number of employees bearing in mindthe net reduction (down 5.7%) in the number of national publicemployees

Promotion of salary reform (reflection of regional private-sectorsalaries, further streamlining of salaries)

Efforts to curb personnel expenses in third-sector enterprises,etc.

Reform of public services

Implementation of studies in light of project classification andoverall inspection of need for public services and implementingentities

Setting of performance indexes relating to the maintenanceand improvement of public services and numerical targetsrelating to expenditure reduction, etc. in the implementation ofmarketization tests

Reform of local public accounting(local asset and debt management reform)

Promotion of the compilation of four documents: balancesheet, administrative cost statement, financial balancestatement, and net asset fluctuation statement

Formulation of the direction and specific measures for assetand debt reform including promotion of the sale of unusedassets, effective utilization of assets, etc.

Enhancement of disclosure systems, including salaryinformationFurther promotion of financial information disclosure toenable comparisons between organizationsDisclosure of implementation process and implementationresults of marketization testsActive appointment of outside personnel as auditors andutilization of external auditing

Formulation of Rules for Information Disclosure toFacilitate Comparisons and Appraisal Between Local

Governments and Strengthening of Resident Monitoring

Trendsand

Issuesin

LocalPublic

Finance


31

The number of local public employees has declined for 12 consecutive years since 1995. Thenumber of employees has fallen for 11 consecutive years in the general administrative sector and5 consecutive years in the public enterprise sector.The reason for these declines is that, although the number of staff in the police and fire servicesectors is increasing due to such factors as the enhancement of public security and disaster-prevention measures, efforts are being made to reduce the number of staff as a whole by, forexample, setting numerical targets for personnel management and implementing cuts in othersectors on the basis of scrap-and-build policies

Number of Public Employees

3,267

3,2493,232

3,204

3,172

3,144

3,117

3,084

1,069

1,172 1,166 1,1611,152

1,1141,100

1,086

3,042

1,049

2,998

1,027

3,200

3,220

3,240

3,160

3,180

3,140

3,120

3,100

3,080

3,260

3,2801,000 persons

1,100

1,120

1,080

1,060

1,140

1,160

1,180

Total number of localpublic employees

General administrativesector

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

3,040

3,060

3,020

3,000

2,980

1,040

1,020

April 1,

1997

April 1,

2006

General administrative sector

Excluding welfare

welfare

Education sector

Police and fire service sector

Public enterprises, etc.

All local governments

General administrative sector

Excluding welfare

welfare

Education sector

Police and fire service sector

Public enterprises, etc.

All local governments

Number of Local Public Employees

Trends in the Number of Staff in LocalGovernments by Sector

Unit: Ratio against 100 as the number of staff as of April 1, 1997.

R eference


32

19981974 1988 2005 2006

110.6

103.4

101.3

98.098.0

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

Trends in the Laspeyres Index(Trends in the Average for All Local Governments)

Laspeyres IndexThe Laspeyres Index is used to compare pricelevels, wage levels and so on. Here it is used toshow the salary level of local public employeeswhen the salary level of national public employees istaken as 100.

Trendsand

Issuesin

LocalPublic

Finance

When the salary level of local public employees is shown on the Laspeyres Index, the averagefor all local governments is 98.0. In fiscal 2005 a total of 1,015 local governments adopted measures to correct wage levels, suchas the revision of salary scales, and a total of 1,573 local governments implemented the revisionof various allowances and retirement allowances.

Salary LevelR eference


200,

000

150,

000

100,

000

50,0

000

108,343

65,489

170,490

112,503

S

ettle

men

t am

ount

of p

erso

nnel

exp

ense

s, p

rope

rty

expe

nses

, etc

. pe

r ca

pita

pop

ulat

ion ［¥108,343］

Cur

rent

bal

ance

rat

io:

This

rat

io is

low

er t

han

the

aver

age

for

sim

ilar

orga

niza

tions

and

is d

eter

iora

ting

year

by

year

as

a re

sult

of a

n in

crea

se in

wel

fare

-rel

ated

exp

ense

s. T

he ra

tio w

ill m

aint

ain

the

pres

ent l

evel

due

to e

ffort

s to

red

uce

oblig

ator

y ex

pens

es t

hrou

gh e

ffort

s to

war

d ad

min

istr

ativ

e an

d fin

anci

al r

efor

m,

such

as

cuts

in p

erso

nnel

exp

ense

s.D

ebt

serv

ice

pay

men

t ra

tio:

This

rat

io i

s in

crea

sing

due

to

debt

rep

aym

ents

rel

atin

g to

was

te p

roce

ssin

g fa

cilit

y an

d re

cycl

ing

cent

er c

onst

ruct

ion

expe

nses

, et

c. a

nd is

slig

htly

abo

ve t

he a

vera

ge f

or s

imila

r or

gani

zatio

ns.

Ove

r th

e ne

xt f

ive

year

s th

e ra

tio w

ill dr

op b

elow

the

ave

rage

for

sim

ilar

orga

niza

tions

as

a re

sult

of

rest

rain

ts o

n la

rge-

scal

e pr

ojec

ts a

nd p

rope

r deb

t ser

vice

man

agem

ent.

Lasp

eyre

s In

dex

:Th

is in

dex

is a

t th

e lo

wes

t le

vel a

mon

g si

mila

r or

gani

zatio

ns d

ue t

o th

e im

plem

enta

tion

of e

mpl

oyee

sa

lary

cut

s (5

% f

or m

anag

ers,

3%

for

gen

eral

sta

ff).

From

now

on

effo

rts

will

be m

ade

tow

ard

the

furt

her r

atio

naliz

atio

n of

sal

arie

s th

roug

h an

ove

rall

insp

ectio

n of

allo

wan

ces,

etc

. N

o. o

f em

plo

yees

per

1,0

00 p

op

ulat

ion:

This

num

ber

exce

eds

the

aver

age

for

sim

ilar

orga

niza

tions

due

to

larg

e-sc

ale

recr

uitm

ent

in t

he

perio

d of

rap

id g

row

th o

f the

pop

ulat

ion.

On

the

basi

s of

an

empl

oyee

rat

iona

lizat

ion

plan

, ov

er t

he

next

fiv

e ye

ars

the

num

ber

of

em

plo

yees

w

ill

be

cut

by

5%

(50

per

sons

) th

roug

h th

e no

nrep

lace

men

t of m

anda

tory

retir

ees

and

the

prom

otio

n of

priv

ate-

sect

or c

onsi

gnm

ent.

Mu

nic

ipal Fin

an

cia

l C

om

para

tive

An

aly

sis

Tab

le (FY

20

05

Sett

lem

en

t)

xx C

ity,

xx

x P

refe

cture

Po

pul

atio

n: 1

29,2

36 (a

s o

f M

arch

31,

200

6)A

rea:

63.

19 s

q. k

mTo

tal r

even

ue: ¥

31,2

23.8

67 m

illio

nTo

tal e

xpen

ditu

re: ¥

31,2

17.9

96 m

illio

nR

eal b

alan

ce: ¥

5.03

6 m

illio

n

unde

r 4080 60100

120

over

140

Fis

cal p

ower

Sou

ndne

ss o

f fu

ture

bur

den

Sou

ndne

ss o

f de

bt s

ervi

ce b

urde

n

App

ropr

iate

ness

of

no.

of e

mpl

oyee

s

App

ropr

iate

ness

of

sal

ary

leve

ls

(com

paris

on w

ith c

entra

l gov

ernm

ent)

Fle

xibi

lity

of

fisca

l str

uctu

re

App

ropr

iate

ness

of

pers

onne

l exp

ense

s,pr

oper

ty e

xpen

ses,

etc

.xx

City

Com

paris

on w

hen

aver

age

of s

imila

r or

gani

zatio

ns is

take

n as

100

Ave

rage

of s

imila

r or

gani

zatio

ns

*Sim

ilar

orga

niza

tions

ref

er t

o th

ose

loca

l go

vern

men

ts i

n th

e sa

me

grou

p as

the

org

aniz

atio

n co

ncer

ned

as a

res

ult

of t

he c

lass

ifica

tion

of m

unic

ipal

ities

nat

ionw

ide

into

88

grou

ps a

ccor

ding

to

pop

ulat

ion,

indu

stria

l str

uctu

re, e

tc.

Fis

cal p

ow

erFi

scal

pow

er in

dex ［0.73］

Max

imum

figur

e in

si

mila

r or

gani

zatio

nsAv

erag

e fig

ure

in

sim

ilar

orga

niza

tions

Min

imum

fig

ure

in

sim

ilar

orga

niza

tions

Natio

nal m

unic

ipal

ave

rage…… 0

.43

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re…………… 0

.63

Rat

io o

f x

x C

ity

Ran

king

in s

imila

r or

gani

zatio

ns［14/28］

0.20

0.40

0.60

0.80

1.00

1.20

0.73

0.97

0.48

0.72

Cur

rent

bal

ance ［84.8％］

Natio

nal m

unic

ipal

ave

rage…… 8

7.4

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re…………… 8

8.4

Natio

nal m

unic

ipal

ave

rage…

121,4

78

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re………… 1

15,2

10

Ran

king

in s

imila

r or

gani

zatio

ns［10/28］

Ran

king

in s

imila

r or

gani

zatio

ns［17/28］

110

10090807060

84.8

（％）

102.2

76.9

88.4

Fle

xib

ility

of

fisca

l str

uctu

re

Appr

opria

tenes

s of p

erson

nel e

xpen

ses,

prop

erty e

xpen

ses,

etc.

（¥）

*The

tota

l of p

erso

nnel

ex

pens

es, p

rope

rty

expe

nses

, and

m

aint

enan

ce a

nd

repa

ir ex

pens

es.

How

ever

, per

sonn

el

expe

nses

incl

ude

proj

ect-

base

d pe

rson

nel e

xpen

ses

paid

but

do

not

incl

ude

retir

emen

t al

low

ance

s.

Ap

pro

pri

aten

ess

of

sala

ry le

vels

(co

mp

aris

on

with

cen

tral

go

vern

men

t)

Lasp

eyre

s In

dex ［92.8］

Ran

king

in s

imila

r or

gani

zatio

ns［1/28］

105.

0

100.

0

95.0

90.0

85.0

92.8

92.8

102.0

98.5

Natio

nal c

ityave

rage…… 9

7.6

National t

ow

n a

nd

vi

llage a

vera

ge

…………… 9

3.7

No.

of e

mpl

oyee

s pe

r 1,

000

popu

latio

n ［7.86 persons］

App

ropr

iate

ness

of n

o. o

f em

ploy

ees

Ran

king

in s

imila

r or

gani

zatio

ns［22/28］

151050

7.86

(pers

ons)

3.84

9.30

6.93

Natio

nal m

unic

ipal

ave

rage…… 8

.25

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re…………… 7

.82

Deb

t ser

vice

pay

men

t rat

io ［10.5％］

Ran

king

in s

imila

r or

gani

zatio

ns［20/28］

20151055 0

10.5

（％）

2.1

13.2

9.4

So

und

ness

of

deb

t se

rvic

e b

urd

en

Natio

nal m

unic

ipal

ave

rage…… 1

1.0

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re…………… 1

0.4

Out

stan

ding

loca

l deb

t pe

r ca

pita

pop

ulat

ion

So

und

ness

of

futu

re b

urd

en

Ran

king

in s

imila

r or

gani

zatio

ns［5/28］

500,

000

600,

000

700,

000

400,

000

300,

000

200,

000

100,

0000

262,133

（¥）

181,422

511,304

316,284

Natio

nal m

unic

ipal

ave

rage

………… 4

63

,35

3

Munic

ipal a

vera

ge

in x

xx P

refe

ctu

re………… 3

25

,60

9

［¥262,133］

Ana

lysi

s C

olu

mn

33

Amid the increasing severity of local public finance, various efforts are being made to fulfillaccountability. In order for each local government to promote financial soundness while gainingthe understanding and cooperation of residents, etc., the Ministry of Internal Affairs andCommunications has compiled financial comparative analysis tables and posted them on itshomepage with the aim of disclosing information to residents, etc. in an easy-to-understandmanner based on indicators that are comparable with those of other local governments. In the fiscal 2005 settlement, the ministry conducted a comparative analysis of the principalfinancial indicators, etc. among similar organizations and analyzed the efforts, etc. of eachorganization toward the improvement of the indicators, etc.

Promotion of Information Disclosure3

Example of a Financial Comparative Analysis Table


Mayo

rD

eputy

mayo

rT

reasu

rer

Chairpers

on o

f board

of educa

tion

Speake

r of ass

em

bly

Deputy

speake

r of

ass

em

bly

M

embe

rs o

f ass

embl

y

131,205

127,733

2.7％

1,135 1.8

14,000

22.2

46,400

73.7

1,349 2.2

15,628

25.0

45,025

72.0

43.19

3,038

Na

me

of

pre

fect

ure

○○ P

refe

ctu

re △△ C

ity

Nam

e of

loca

l gov

ernm

ent

Sett

lem

en

t fo

r FY

20

05

×

×

○ × × × ×

× × × × × × ○

1 1 1 1 1 1 28

18.04.01

18.04.01

18.04.01

18.04.01

12.04.01

12.04.01

12.04.01

8,630

7,370

6,730

6,730

5,400

4,800

4,500

3,815

3,530

4,175

3,513 －

3,768

746 87 6

145 －

897

32,168,871

30,215,506

1,953,365

830,659

1,122,706

－147,821

241,000 －

30,000

63,179

32,671,555

30,939,738

1,731,817

461,290

1,270,527

496,323

1,000 －

1,218,000

－720,677

2,845,860

307,090

25,050

509,340 －

3,380,250

3,262,774

873,800

112,478 －－

804,751

1,471,745

116,247

43,057

24,240

45,882 88 51

142

131,838

131,592

0.2％

16,819,763

818,154

97,356

60,055

99,970

959,696

39,901

－

258,472 －

764,357

1,267,276

1,117,237

150,039

21,185,000

21,033

273,757

552,589

220,687

2,490,341 －

1,083,349

46,148

256,468

548,554

1,731,817

321,328

3,437,800

277,800

1,329,800

32,168,871

52.3

2.5 0.3 0.2 0.3 3.0 0.1 －

0.8 －

2.4 3.9 3.5 0.5

65.9

0.1 0.9 1.7 0.7 7.7 －

3.4 0.1 0.8 1.7 5.4 1.0

10.7

0.9 4.1

100.0

15,292,253

818,154

97,356

60,055

99,970

959,696

39,901

－

258,472 －

764,357

1,117,237

1,117,237 －

19,507,451

21,033

－

57,084

－－－－

1,356 －－－

5,101 －－－

19,592,025

15,356,319

15,356,319

8,427,818

170,364

7,640,860

193,819

422,775

6,330,559

6,315,545

71,704

526,238 －－－

1,463,444

1,463,444 －－

1,463,444 －－－

16,819,763

9,219,587

6,669,434

3,554,976

2,608,146

2,608,146 －

15,382,709

5,494,208

265,890

1,486,990

238,108

3,150,296

272,175

198,278 －

3,964,960

93,929

3,964,960

808,037

2,691,141 －－

30,215,506

352,657

5,286,947

8,850,768

2,851,893

20,812

291,832

267,581

4,150,571

1,427,305

4,106,992 －

2,608,148 －－

30,215,506

－

641,439

256,071

212,248 12

46,150 －

1,956,000

61,300

791,740 －－－－

3,964,960

352,477

4,415,498

5,619,549

2,354,315

20,792

277,849

155,912

2,945,295

1,378,481

3,616,652 －

2,542,608 －－

23,679,428

1.2

17.5

29.3

9.4 0.1 1.0 0.9

13.7

4.7

13.6 －

8.6 －－

100.0

30.5

22.1

11.8

8.6 8.6 －

50.9

18.2

0.9 4.9 0.8

10.4

0.9 0.7 －

13.1

0.3

13.1

2.7 8.9 －－

100.0

40.2 －

5.8

12.0

12.0 －

58.0

21.5

1.2 5.7 1.1 9.3 －

0.0

8,571,339

6,084,052

1,219,422

2,542,606

2,542,606 －

12,333,367

4,704,713

246,855

1,290,035

238,108

2,989,966

256,791

77,078 －

1,780,623

78,372

1,780,623

91,156

1,464,535 －－

23,679,428

8,528,465 －

1,219,042

2,542,606

2,542,606 －

12,290,113

4,566,619

244,829

1,206,335

238,108

1,979,216 －

297

91.3

91.3

50.1

1.0

45.4

1.2 2.5

37.6

37.5

0.4 3.1 －－－

8.7 8.7 －－

8.7 －－－

100.0

64,066

64,066

64,066

－

－

－

64,066

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

64,066

78.1

4.2 0.5 0.3 0.5 4.9 0.2 －

1.3 －

3.9 5.7 5.7 －

99.6

0.1 －

0.3 －－－－

0.0 －－－

0.0 －－－

100.0

14,170,686

15,224,453

18,614,282

19,731,519

0.92

5.7

99.3

10.2

9.0

10.2

8.4

1,534,000

541,000

1,288,000

27,026,165

19,060,040

1,884,989 －

173,660 －－－

97.9　93.1

98.4　94.5

97.3　91.3

×

× × × × × × × ○ × × × ×

×

○

×

Ⅲ-3

2-8

Population

20

05

na

tion

al c

en

sus

20

00

na

tion

al c

en

sus

105,975

102,815

2000 n

atio

nal c

ensu

s (p

ers

ons)

1995 n

atio

nal c

ensu

s (p

ers

ons)

Ra

te o

f ch

an

ge

Basic residents' register population

Ma

rch

31

, 2

00

6M

arc

h 3

1,

20

05

Ra

te o

f ch

an

ge

State of revenues

(units

: ¥

thousa

nd; %

)

Cate

gory

Settle

ment

figure

Share

Cur

rent

gen

eral

reve

nue

reso

urce

s, e

tc.

Share

Loca

l taxe

sLoca

l tra

nsf

er

tax

Inte

rest

app

ortio

nmen

t gra

ntD

ivid

end

appo

rtion

men

t gra

ntCa

pital ga

ins fro

m sha

res, e

tc. ap

portio

nmen

t gran

tLo

cal c

onsu

mpt

ion

tax

gran

tG

olf c

ours

e ut

iliza

tion

tax

gran

tSp

ecia

l loca

l con

sum

ptio

n ta

x gr

ant

Auto

mob

ile a

cqui

sitio

n ta

x gr

ant

Lig

ht oil

deliv

ery

tax

gra

nt

Loca

l speci

al g

rant

Loca

l allo

catio

n tax

　　　　　　　

Ord

inary

　　　　　　　

Speci

al

(Gen

eral

reve

nue

reso

urce

s to

tal)

Spec

ial gr

ant fo

r tra

ffic sa

fety m

easu

res

Charg

es,

burd

ens

Usa

ge fees

Handlin

g c

harg

es

Nat

iona

l tre

asur

y di

sbur

sem

ents

Natio

nal p

rovi

sion g

rant

(spe

cial w

ard

fisca

l adju

stmen

t gra

nt)

Pre

fect

ura

l dis

burs

em

ents

Pro

pert

y re

venue

Donatio

ns

Money

transf

err

ed

Money

carr

ied o

ver

Various

reve

nues

Loca

l bonds

Of w

hich,

tax-re

ducti

on su

pplem

entar

y bon

ds O

f whic

h, ext

raordi

nary

financi

al cou

nterm

easur

es bo

nds

Tota

l reve

nues

Typ

e o

f m

unic

ipalit

y

Loca

l allo

catio

nta

x are

aA

rea（

km2）

Popula

tion d

ensi

ty(p

ers

ons)

Industrial structure

Cate

gory

2000

nat

iona

lce

nsus

1995

nat

iona

lce

nsus

Prim

ary

Seco

ndar

y

Tert

iary

State of municipal taxes

(unit:

¥ thousa

nd; %

)

Cate

gory

Rev

enue

set

tled

Share

Excess tax

port

ion

Ord

inary

taxe

s S

tatu

tory

ord

inary

tax

M

unic

ipal r

esi

dent's

tax

Indi

vidu

al e

qual

app

ortio

nmen

t

In

com

e a

pport

ionm

ent

Cor

pora

te e

qual

app

ortio

nmen

t

C

orpo

rate

tax

appo

rtion

men

t

Fix

ed a

sset ta

x

O

f whi

ch, n

et fi

xed

asse

t tax

Lig

ht m

oto

r ve

hic

le tax

Munic

ipal t

obacc

o tax

Min

ing tax

Speci

al l

and-h

old

ing tax

Non

stat

utor

y or

dina

ry ta

xes

Earm

ark

ed taxe

s S

tatu

tory

earm

ark

ed taxe

s S

pa tax

B

usi

ness

offic

e tax

C

ity p

lannin

g tax

W

ater

util

ity a

nd la

nd p

rofit

tax

Non

stat

utor

y ea

rmar

ked

taxe

sT

axe

s fr

om

defu

nct

law

sT

ota

l

State of

designated

organizations,

etc.

Form

er n

ew in

dust

rial c

ityFo

rmer

indu

stria

l de

velo

pmen

t spe

cial

are

aU

nder

deve

lope

d ar

eaFo

rmer

min

ing

area

Rur

al d

evel

opm

ent a

rea

Rem

ote

isla

ndU

nder

popu

late

d ar

eaPe

nins

ula

Met

ropo

litan

Tok

yo a

rea

Kink

i are

aC

hubu

are

aW

ide-

area

mun

icip

ality

Spec

ial r

ural

villa

geFi

scal

reco

nstru

ctio

n or

gani

zatio

nFi

scal

inde

x re

fere

nce

orga

niza

tion

Rev

enue

-sur

plus

or

gani

zatio

n

State of membership of

partial administrative associations

Special staff, etc.

No. o

fse

ats

Appli

cable

begin

ning

date

Per c

apita

ave

rage

mon

thly

salar

y (c

ompe

nsat

ion ¥

hun

dred

)

Cate

gory

No. of

em

plo

yees

(pers

ons)

mo

nth

ly s

ala

ry

(¥ h

undre

d)

Per

capita a

vera

ge

month

ly s

ala

ry

(¥ h

undre

d)

Cate

gory

FY

2004

(¥

thousa

nd)

FY

2005

(¥

thousa

nd)

Tota

l reve

nues

Tota

l exp

enditu

reR

eve

nues

min

us

exp

enditu

res

Rev

enue

reso

urce

s th

at s

houl

d be

ca

rrie

d ov

er to

the

next

fisc

al y

ear

Real b

ala

nce

Sin

gle

FY

bala

nce

Rese

rve

Adv

ance

d re

dem

ptio

n of

loca

l loa

nsR

ese

rve b

reaku

p a

mount

Real s

ingle

FY

bala

nceState of income-expenditure balance

Genera

l sta

ff O

f w

hic

h, sk

illed w

ork

ers

Educ

atio

n-re

late

d go

vern

men

t em

ploy

ees

Fire-f

ightin

g s

taff

Tem

pora

ry s

taff

Tota

l

General staff,etc.

Raw

sew

age d

isposa

lG

arb

age d

isposa

lC

rem

ato

ries

Rese

rve fire s

erv

ice

Ele

menta

ry s

chools

Junio

r hig

h s

chools

Oth

er

Acc

iden

ts to

ass

embl

y m

embe

rs in

cou

rse

of d

uty

Acc

iden

ts to

par

t-tim

e st

aff

in

cour

se o

f dut

yR

etir

em

ent allo

wance

Join

t offic

e e

quip

ment

Tax

adm

inis

tratio

nE

lderly

welfa

reIn

fect

ious

dis

ease

s

State of expenditures by character

(unit:

¥ thousa

nd; %

)

Cate

gory

Settl

emen

t am

ount

Share

Appr

opria

ted

gene

ral

reve

nue

reso

urce

s, e

tc.

Curre

nt e

xpen

ses

appr

opria

ted

gene

ral r

even

ue re

sour

ces,

etc

. O

rdin

ary

bala

nce

ratio

Pers

onnel e

xpense

s O

f w

hic

h, em

plo

yee s

ala

ries

Soci

al a

ssis

tance

exp

ense

sP

ublic

debt paym

ents

　　　　

Prin

cipal

and

inte

rest

repa

ymen

ts　　　　

Tem

pora

ry lo

an in

tere

st(T

ota

l of oblig

ato

ry e

xpense

s)N

onpers

onnel e

xpense

sM

ain

tenance

and r

epair e

xpense

sS

upple

menta

ry e

xpense

s, e

tc.

O

f whic

h, b

urde

n of

par

tial a

dmini

strat

ive a

ssoc

iation

sT

ransf

ers

Rese

rve

Inve

stm

ent, c

apita

l, lo

ans

Appr

opria

tions

car

ried

over

from

pre

viou

s FY

Inve

stm

ent exp

ense

s O

f w

hic

h, pers

onnel e

xpense

s 　　　　

Ord

inar

y co

nstru

ctio

n ex

pens

es

　　　　

Of w

hich

, sub

sidi

zed

expe

nses

　　　　

Of w

hich

, uns

ubsi

dize

d ex

pens

es

　　　　

Disa

ster

reco

nstru

ctio

n ex

pens

es

　　　　

Unem

ploym

ent c

ounte

rmea

sures

expe

nses

Tota

l exp

enditu

re

Brea

kdow

n

Brea

kdow

n

Tota

l of c

urre

nt e

xpen

ses

appr

opria

ted

gene

ral r

even

ue re

sour

ces,

etc

. ¥ 20,287,409,000

Ord

inary

bala

nce

ratio

95.7% 103.5% (

Exclu

ding

tax-

redu

ctio

n su

pple

men

tary

bon

ds a

nd e

mer

genc

y fin

ancia

l co

unte

rmea

sure

s bo

nds )

Inco

me g

enera

l reve

nue

reso

urc

es,

etc

. ¥ 25,014,468,000

State of expenditures by purpose

(unit:

¥ thousa

nd; %

)

Cate

gory

Settle

ment

am

ount (A

)S

hare

Of A

, ord

inar

yco

nstr

uctio

npr

ojec

t ex

pens

es

Of A

, app

ropr

iate

dge

nera

l rev

enue

re

sour

ces,

etc

.

Cate

gory

Ass

em

bly

exp

ense

sG

enera

l adm

inis

tratio

n e

xpense

sP

ublic

welfa

re e

xpense

sS

anita

tion e

xpense

sLabor

exp

ense

sA

gricu

lture

, fo

rest

ry a

nd fis

hery

exp

ense

sC

om

merc

e a

nd in

dust

ry e

xpense

sC

ivil

engin

eering w

ork

exp

ense

sF

ire-s

erv

ice e

xpense

sE

duca

tion e

xpense

sD

isast

er

reco

nst

ruct

ion e

xpense

sP

ublic

debt paym

ents

Various

exp

ense

sA

ppro

priatio

ns

carr

ied o

ver

from

the p

revi

ous

FY

T

ota

l exp

enditu

re

Tota

lS

ew

era

ge b

usi

ness

Wate

r su

pply

Indust

rial w

ate

r su

pply

Tra

nsp

ort

Natio

nal h

ealth

insu

rance

Oth

er

Tra

nsf

ers

to p

ublic

busi

ness

, etc

. S

tate

of t

he n

atio

nal h

ealth

insu

ranc

e pr

ogra

m a

ccou

ntR

eal b

ala

nce

Resu

btr

act

ed b

ala

nce

No. of su

bsc

riber

house

hold

s (h

ouse

hold

s)N

o. of in

sure

d p

ers

ons

(pers

ons)

　　　　

Am

ount

ed o

f col

lect

ed in

sura

nce

fees

　　　　 N

atio

nal t

reasu

ry e

xpenditu

re　　　　 I

nsu

rance

benefit

exp

ense

s

Per

cap

itain

sure

dpe

rson

s

(¥ th

ousa

nd)

Sta

ndard

fin

anci

al r

eve

nue

Sta

ndar

d fin

anci

al re

quire

men

tS

tandard

tax

reve

nue a

mount, e

tc.

Sta

ndard

fis

cal s

cale

Fis

cal p

ow

er

index

Real r

eve

nue-e

xpenditu

re r

atio

(%)

Curre

nt g

ener

al re

venu

e re

sour

ces,

etc

. rat

io(%

)D

ebt s

ervi

ce e

xpen

ses

burd

en r

atio

(%)

Debt se

rvic

e e

xpense

s ra

tio(%

)R

eal d

ebt se

rvic

e r

atio

(%)

Debt

servic

e paym

ent ra

tio use

d for

perm

ission

to iss

ue loc

al bon

ds(%)

Curr

ent re

serv

e o

uts

tandin

g　　　　

Fis

cal a

dju

stm

ent

　　　　

Debt paym

ents

　　　　

Speci

al p

urp

ose

sO

utst

andi

ng lo

cal g

over

nmen

t bon

ds O

f w

hic

h, gove

rnm

ent fu

nds

Cont

ract

auth

oriza

tion

amou

nt (s

ched

uled

expe

nditu

re)

Purc

hase

of su

pplie

s, e

tc.

Guara

nte

e, co

mpensa

tion

Oth

er

Oth

er it

ems

accr

uing

from

real

deb

t bur

den

acts

Pro

fit-g

enera

tion b

usi

ness

inco

me

Cur

rent

land

dev

elop

men

t fun

d ou

tsta

ndin

gC

olle

ctio

n r

ate

(%)［

Cur

rent

yea

r, to

tal］

　　　　

Tota

l　　　　

Munic

ipal r

esi

dent's

tax

　　　　

Net fix

ed a

sset ta

x

No

te 1

: S

upple

menta

ry b

usi

ness

exp

ense

s of ord

inary

const

ruct

ion p

roje

ct e

xpense

s in

clude the s

upple

menta

ry b

usi

ness

exp

ense

s of co

mm

issi

oned p

roje

ct e

xpense

s; s

ingle

pro

ject

exp

ense

s in

clude s

am

e-leve

l gro

up tra

vel p

roje

ct e

xpense

s and the s

ingle

p

roje

ct e

xpense

s of co

mm

issi

oned p

roje

ct e

xpense

s.

2

: T

he s

tandard

fin

anci

al r

eve

nue fig

ure

and the s

tandard

fin

anci

al r

equirem

ent fig

ure

for

the s

peci

al w

ard

s of T

oky

o a

re n

ece

ssary

for

the c

alc

ula

tion o

f th

e s

peci

al w

ard

fin

anci

al a

dju

stm

ent gra

nt, a

nd the fis

cal p

ow

er

index

is c

alc

ula

ted fro

m the a

bove

s

tandard

fin

anci

al r

equirem

ent fig

ure

and s

tandard

fin

anci

al r

eve

nue fig

ure

.

Concentrated population zone

No. of house

hold

s in

2005 n

atio

nal c

ensu

s49,598

No. of house

hold

s in

2000 n

atio

nal c

ensu

s46,631

34

In addition, the settlement data of all prefectures and municipalities (since fiscal 2001) areshown in balance sheets for each individual organization posted on the homepage.

Example of Settlement Card

Trendsand

Issuesin

LocalPublic

Finance


35

In response to the growing demand for comprehensive transparency in local public financeinformation, as a means of disclosing the overall financial condition of each local government,including the condition of special accounts, such as enterprise accounts, as well as the ordinaryaccount, the management condition of third-sector enterprises and so on, and the state offinancial assistance to them, the Ministry of Internal Affairs and Communications compilesfinancial condition tables and so on and posts them on its homepage.

Example of Table of Financial Condition, Etc.

1. Financial condition of general account and special accounts (mainly items relating to ordinary account)

General account

Prefectural debt management special account

Disaster relief project special account

Mother-child widow welfare financial loan project special account

Small and medium-sized enterprise support financial loan project special account

Agricultural improvement financial loan project special account

Forestry promotion financial loan project special account

Offshore fishing improvement financial loan project special account

Prefectural forest project special account

Urban development finance project special account

Ordinary account

Borrowingfrom

other accounts

Current outstandinglocal government

bonds

Realbalance

FormalbalanceExpenditureRevenue Remarks

( million)

2. Financial condition of other special accounts (items relating to public enterprise accounts)

Electricity business special account

Industrial water supply business special account

Industrial land development business special account

Toukou coastal land development business special account

Hospital business special account

Borrowingfrom otheraccounts


bonds

Bad debts(real balance)

Net profit/loss(formal balance)

Total expenses(expenditure)

Total earnings(revenue) Remarks

( million)

3. Financial condition of related partial administrative associations, etc.

Regional Federation of Water Supply Enterprises

Federation of Coastal Water Supply Enterprises

Burden share oforganizationconcerned


bonds

Real balance(bad debts)

Formal balance(net profit/loss)

Expenditure(total expenses)

Revenue(total earnings) Remarks

( million, %)

4. Management condition of third-sector enterprises, etc. and state of local government financial assistance

Cultural Promotion Foundation

Industrial Creation Organization

Construction Technology Center

Cultural Deposits Research Corporation

Forest Development Human Resources Foundation

Marine Products Promotion Foundation

Agriculture and Forestry Public Corporation

Women's Foundation

Sports Association

Outstanding debtinvolving debt guaranteefrom the organization

concerned

Loans fromorganizationconcerned

( thousand)

Subsidies fromorganizationconcerned

( thousand)

Investment fromorganizationconcerned

( thousand)

Capital ornet assets

( thousand)

Ordinaryprofit/loss

( thousand)Remarks

( thousand)

Notes:1. "Enterprises governed by law" means public enterprises to which the Local Public Enterprise Law applies.2. When bad debts amount to so many million yen, they are shown with a mark.

Outstanding debtinvolving loss

compensation from theorganization concerned

Note: Enterprises that do not compile profit/loss statements enter their increase or decrease of net assets in the current term in the "Ordinaryprofit/loss" column.

Note: The real debt service ratio is the three-year average from FY 2003 to FY 2005 used in such procedures as consultations on the issue ofbonds in FY 2006.

5. Financial indexes

Financial strength index Real balance ratio Real debt service ratio Ordinary balance ratio

Name of organization

Prefecture

Enterprisesgoverned

by law


Example of Balance Sheet (City A)

36

Ordinary Account Balance Sheet(As of March 31, 2006; unit: thousand)

Meanwhile, in recent years an increasing number of local governments have been compilingbalance sheets and other financial documents as a means of disclosing and analyzing financialconditions in order to grasp the state of their assets and liabilities in a comprehensive manner.

*From the standard model form in Chapter 2 of the report of the Study Group on a New Local Public Accounting System (May 2006).

(Assets)1. Financial assets

FundsFinancial assets (excluding funds)

CreditTax and other accounts dueAccounts dueLoansOther credit(Deduction) Reserve for doubtful accounts

SecuritiesInvestments, etc.

Capital investmentsOther investments

2. Nonfinancial assetsAssets for business

Tangible fixed assetsLandTimber and bambooBuildingsStructuresMachinery and equipmentGoodsShipsAircraftOther tangible fixed assetsConstruction suspense account

Intangible fixed assetsSuperficiesPatent rightsSoftwareTelephone subscription rightsOther intangible fixed assets

Inventory assetsInfrastructure assets

Public property landPublic property facilitiesOther public propertyPublic property construction suspense account

Deferred assetsAssets total

(Liabilities)1. Liquid liabilities

Accounts payable and unpaid expensesAdvance received and income in advanceReserves

Bonus reserveDeposits (money in custody, etc.) Local government bonds (short-term)Short-term loans

2. Nonliquid liabilitiesLocal government bonds (long-term)Long-term loansReserves

Retirement allowance reserveOther reserves

Liabilities total

(Net assets)Revenue sourcesRevenue sources allotted to asset formation

Fixed assets Long-term financial assetsAppraisal and conversion differential, etc.

Other net assetsOpening unanalyzed balance

Net assets total

Liabilities and net assets total

Trendsand

Issuesin

LocalPublic

Finance


Compiled（including being compiled and scheduled to be compiled)Prefectures

Municipalities

0 20 40 60 80 100（％）

0 20 40 60 80 100（％）

47

47

44 3

47

1,113 714

1,102

1,636

1,710

725

191

117

Compiled（including being compiled and scheduled to be compiled)

Not compiled

Not compiled

No. of organizations compilingordinary account balance sheet

No. of organizations compiling administrative cost account statementNo. of local public organizations compiling ordinary account and publicbusiness accounts balance sheet

No. of organizations compiling balance sheet including public enterprises, third-sector enterprises, etc.

No. of organizations compiling ordinary account balance sheet

No. of organizations compiling balance sheet including public enterprises, third-sector enterprises, etc.

No. of local public organizations compiling ordinary account and publicbusiness accounts balance sheet

No. of organizations compiling administrative cost account statement

37

Example of Administrative Cost Statement (City B)

Administrative Cost Total

State of Compilation of Balance Sheets (no. of organizations)

*Number of municipalities at time of survey: as of March 31,2007, 1,827.

From April 1, 2005,to March 31, 2006

(unit: thousand)

*From the Ministry of Internal Affairs and Communications format revised model form in Chapter 3 of the report of the Study Group on a NewLocal Public Accounting System (May 2006).

Administrative costs

Personnel expenses

Payment into retirement allowance reserve

Property expenses

Maintenance and repair expenses

Depreciation expenses

Assistance allowances

Subsidy expenses, etc.

Disbursements

Subsidies, etc. to other organizations, etc. relating to asset formation

Interest payable

Estimated losses due to nonpayment recorded

Other administrative costs

Administrative cost total

Administrative service revenue

Usage fees

Handling fees

Other administrative service revenue

Administrative service revenue total

Ordinary national treasury (prefecture) expenditure

(Balance) Net administrative cost

The administrative cost statement shows the amount of administrative resources spent onadministrative services during the year.


38

Amid severe financial conditions caused by such factors as the redemption of local bonds andthe advance of aging, local governments are required to conduct autonomous financialmanagement that takes into account the needs of local residents. Furthermore, it is extremelyimportant to establish the financial discipline of local governments in order to promotedecentralization from now on. In response to this situation, the present system of local government financial reconstructiononly uses flow indexes for the real deficit, such as the general account, and various problemshave been pointed out, such as the fact that it is a mechanism for reconstruction throughapplication. Therefore, the present system of local government financial reconstruction was drasticallyrevised for the first time in about 50 years, and the Law Relating to the Financial Soundness ofLocal Governments (2007, Law No. 94) has been enacted as a new system to thoroughlyestablish and disclose financial indexes and to strive for the early soundness and rebuilding offinancial affairs. Financial indexes will be enforced from a date stipulated by governmentordinance within one year after the promulgation of the law, and other obligatory regulationswill be enforced from April 2009.

Revision of Reconstruction Legislation 4Background of Revision

Comparison of New Law and Present System

Sound stage Early financialsoundness Financial rebuilding

Establishment of indexesand thorough information

disclosure

Financial soundnessthrough independentimprovement efforts

Definite rebuilding throughinvolvement of the

central government, etc.

Flow indexes: Real deficit ratio, consolidated real deficit ratio, real debt service ratio

Stock indexes: Future burden ratio = indexes by real liabilities, including public enterprises, third-sector enterprises, etc.

→Reported to assembly and publicly announced with auditor inspection attached

Formulation of financial soundness plan (approval by assembly), obligatory request for external auditing

Report of progress of implementation to assembly and public announcement every fiscal year

If the early achievement of financial soundness is deemed to be strikingly difficult, the minister of internal affairs and communications or the prefectural governor makes necessary recommendations.

Formulation of financial rebuilding plan (approval by assembly), obligatory request for external auditing

The financial rebuilding plan can seek consultations and agreement from the minister of internal affairs and communications.

(No agreement) Restrictions on the issue of local bonds, excluding disaster rehabilitation projects, etc.

(Agreement) Possible to issue local bonds (rebuilding transfer special bonds) whose redemption deadline comes within the plan period in order to transfer the balance shortfall.

If financial management is deemed not to conform with the plan, etc., budget changes, etc. are recommended. Soundness of public enterprise management

New law

Present system

Sound finance Financial deterioration

Problems of present systemDisclosure of easy-to-understand financial

information, etc. is inadequate. There are only standards for reconstruction

organizations and no early corrective functions. There are only balance indexes centered on the

ordinary account, and even if problems relating to the financial condition of stock (liabilities, etc.) are cited, they are not taken up.

There are no early corrective functions for public enterprises. Etc.

Law on Special Measures for the Promotion of Local Financial Reconstruction

Formulation of financial reconstruction plan throughapplication by the deficit organization (Agreement of theminister of internal affairs and communications is necessary.)

Corresponding reconstruction system for publicenterprises as well (Local Public Enterprise Law)

*Prefectures with a deficit ratio of 5% or more and municipalities with a deficit ratio of 20% or more cannot issue local construction bonds unless they undertake financial reconstruction in accordance with the law.

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Scope of Financial Indexes in the New Law

*Calculated for each public enterprise account.

Generalaccount

Specialaccounts

Of which,public

enterpriseaccounts

Local government

Ordinaryaccount

Publicenterpriseaccounts

Real deficitratio

Consolidatedreal deficit

ratio

Real debtservice ratio

Futureburden

ratio

*Financialshortfall

ratio

Partial administrativeassociations,wide-area localpublic bodies

Local publiccorporations,third-sectorenterprises, etc.


40

From the perspective of drastically simplifying the method of calculation of the local allocationtax and enabling forecasting of the local allocation tax, a new type of local allocation taxinvolving a simplified calculation based on population and area will be introduced from fiscal2007. The system has been designed to minimize the amount of fluctuation so that no difficulties arisein the financial management of local governments.

Reform of Local Allocation Tax Computation 5

Introduction of New Type of Local Allocation Tax

1 Introduction of a new type of local allocation tax for computation ofadministrative fields for which there are no national standards or which areweak (about 10% of the standard financial demand amount)

2 Reflection of administrative cost differences by population scale and formof land use, such as residential land and fields or paddies

3 30% reduction of number of items in "individual estimated expenses"(previous type) through integration of expense items

4 Ensuring of mechanism to respond to local governments that really dorequire consideration, such as remote islands and depopulated areas(establishment of local promotion expenses)

Method of calculation

Cost difference by scale of population

ax + bya: ￥12,390 (prefecture), ￥23,220 (municipality)

b: ￥1,114,000 (prefecture), ￥2,357,000 (municipality)

x: Population reflecting cost difference by scale of population

y: Area reflecting cost difference by form of land use

(Prefecture) Z = 1.7 million persons(Municipality) Z = 100,000 persons

Cost difference by form of land use

Prefecture

Residential land: 1.00 (summary protocol of fixed asset price, etc.) Agricultural land: 2.87 (agriculture and forestry industry census) Forest: 0.60 (agriculture and forestry industry census)Other: 0.59 (other area announced by the Geographical Survey Institute)

Coefficient

1.000

Z Population

Residential land: 1.00 (summary protocol of fixed asset price, etc.) Fields and paddies: 0.90 (summary protocol of fixed asset price, etc.) Woodland: 0.25 (agriculture and forestry industry census)Other: 0.18 (other area announced by the Geographical Survey Institute)

Municipality

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2006 200795 (42 for prefectures,

53 for municipalities)68 (32 for prefectures,

36 for municipalities)


Integration and Revision of Estimated Expense Items

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FY 2006

Expense item Unit of measurement

Police expenses

Road and bridge expenses

River expenses

Harbor expenses

Other civil engineering expenses

Elementary school expenses

Junior high school expenses

Senior high school expenses

Special education school expenses

Other educational expenses

Livelihood protection expenses

Social welfare expenses

Hygiene expenses

Elderly health and welfare expenses

Labor expenses

Agriculture administration expenses

Forestry administration expenses

Fisheries administration expenses

Commerce and industry administration expenses

Tax collection expenses

Pension expenses

Planning promotion expenses

Other expenses


Harbor expenses

River expenses


Special education school expenses





Other expenses

No. of police officers

Road area

River length

Length of mooring facilities (harbor)

Length of mooring facilities (fishing port)

Population

No. of teachers

No. of teachers

No. of teachers

No. of students

No. of teachers

No. of classes

Population

No. of students in local public universities, etc.

No. of students in private schools, etc.

Town and village area population

Population

Population

Population aged 65 and over


Population

No. of farming households

Nonpublic forest area

Public forest area

No. of fisheries businesses

Population

No. of households

No. of people eligible to receive pensions

Population

Population

Road length

Length of auxiliary facilities (harbor)

Length of auxiliary facilities (fishing port)

River length

No. of students

No. of classes

Population


Agricultural land area

Forest area

Population

Area


Police expenses


River expenses

Harbor expenses





Special support school expenses




Hygiene expenses


Labor expenses



Fisheries administration expenses



Pension expenses

Community promotion expenses

No. of police officers

Road area

Road length

River length





Population

No. of teachers

No. of teachers

No. of teachers

No. of students

No. of teachers

No. of classes

Population

No. of students in local public universities, etc.

No. of students in private schools, etc.

Town and village area population

Population

Population



Population


Nonpublic forest area

Public forest area

No. of fisheries businesses

Population

No. of households

No. of people eligible to receive pensions

Population

FY 20071. Individual estimated expenses

(conventional type)

Population

Area

(1) Prefecture

2. Comprehensive estimated expenses(new type)

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yex

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s


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FY 2006


Fire-fighting expenses


Harbor expenses

Urban planning expenses

Park expenses

Sewer expenses








Public health and hygiene expenses


Waste disposal expenses



Other industrial and economic expenses


Family register and basic residents' register expenses


Other expenses


Harbor expenses


Park expenses

Sewer expenses








Waste-disposal expenses


Other industrial and economic expenses


Other expenses

Population

Road area



Population in urban planning zone

Population

Urban park area

Population

Population

No. of pupils

No. of classes

No. of schools

No. of students

No. of classes

No. of schools

No. of teachers

No. of students

Population

No. of children in kindergartens

City area population

Population

Population



Population


Population

No. of workers in forestry, fisheries, and mining

No. of households

No. of family registers

No. of households

Population

Population

Area

Road length




Population

Population

Population

No. of classes

No. of classes

No. of students

Population

Population


Population


No. of workers in forestry, fisheries, and mining

Population

Population

Area


Fire-fighting expenses


Harbor expenses


Park expenses

Sewer expenses








Public health and hygiene expenses


Waste-disposal expenses


Forestry and fisheries administration expenses



Family register and basic residents' register expenses

Community promotion expenses

Population

Road area

Road length






Population

Urban park area

Population

Population

No. of pupils

No. of classes

No. of schools

No. of students

No. of classes

No. of schools

No. of teachers

No. of students

Population

No. of children in kindergartens

City area population

Population

Population



Population


No. of workers in forestry and fisheries

Population

No. of households

No. of family registers

No. of households

Population

Area

FY 20071. Individual estimated expenses

(conventional type)

Population

Area

2. Comprehensive estimated expenses(new type)

(2) Municipality

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Local governments will formulate their own original projects(setting specific performance targets) and announce them toresidents.

The Ministry of Internal Affairs and Communications willannounce the projects of local governments on its website.

Project applications will be accepted for three years from FY 2007to FY 2009.

Special allocation tax measures will be adopted to helpmunicipalities cover the expenses incurred in tackling the project.

The results of the efforts (the performances indexes cited below)will be reflected in the calculation of the regular local allocationtax.

Local allocation tax measures for the promotion of companylocation

Through cooperation with the Ministry of Agriculture, Forestry andFisheries, the Ministry of Economy, Trade and Industry, and theMinistry of Land, Infrastructure and Transport, consideration willbe given to the priority selection of subsidy schemes, etc. relatingto information and communications, symbiosis and circulationbetween urban and rural areas, export promotion of agricultural,forestry, and marine products and production-area brandformation, programs for the utilization of local resources by smalland medium-sized companies, the promotion of companylocation, the promotion of tourism and exchange, the rejuvenationof local bus services and so on, etc.

43

Support measures, such as the local allocation tax, will be adopted for local governments thatthink up original projects by themselves and tackle them in a forward-looking manner so thatenthusiastic local governments can freely develop their own policies and thereby transform theirdistricts into attractive regions.

Support Program for Local Governments Making Efforts

Administrative reform index

Agricultural production value

Manufactured goods shipmentvalue

No. of businesses

Birthrate

In-coming population

Annual merchandise salesvalue of the retail industry

Employment rate for youngpeople

Waste-disposal volume

Formulation and announcement of projects by local governments

Support measures through the local allocation tax(about 300 billion)

Support measures through cooperation with related ministries


44

Support is given to local governmentsthat strive to realize simple and efficientadministration through administrativeand financial reforms, such asadministrative organization andmanagement reform, and create newvitality in the community.

1 Local ManagementReform Project

Support is given to local governmentsthat tackle local vitalization andexchange by, for example, promotingsymbiosis and circulation betweenurban areas and rural and fishingvillages, local consumption of localproducts, and dietary education andattracting foreign tourists.

6 Tourism Promotion andExchange Project

Support is given to local governmentsthat endeavor to strengthen the base oflocal industries through the discovery,utilization, branding, and so on ofindigenous local resources, such aslocal products, nature, history, culture,and scenery, and build local attractions.

2

Support is given to local governmentsthat tackle the revitalization of centralurban areas as a part of communitydevelopment and the realization of livelycommunities that are pleasant to live infor all people, including the elderly andchildren.

7 CommunityRegeneration Project

Support is given to local governmentsthat tackle low birthrate countermeasuresin a comprehensive and multilateralmanner, such as the expansion of localchild-raising support, the establishmentof an environment in which women cangive birth without anxiety, and the reformof ways of working to enable people tobalance work and child raising.

3 Low BirthrateCountermeasures Project

Support is given to local governmentsthat promote the occupationalindependence of young people, includingNEETs (not in employment, education, ortraining) and freeters (job-hopping part-timers), and offer, for example, assistancefor employment in the agriculture,forestry, and fisheries industries.

8Young People'sIndependence SupportProject

Support is given to local governmentsthat endeavor to attract domesticcompanies, foreign companies, andcompanies making a U-turn fromoverseas to locate in the locality andthereby to strengthen local vitality andcompetitiveness.

4 Company LocationPromotion Project

Support is given to local governmentsthat, among other things, promotemeasures to protect children fromcrime, crime-prevention activities by thelocal community, the healthy upbringingof young children, and local disaster-prevention measures, such as large-scale earthquake countermeasures.

9

Support is given to local governmentsthat strive to promote settlement byproviding people who wish to make a U-or I-turn, such as members of the baby-boom generation and young people,with places where they can enjoy ahealthy life in the countryside, achieveself-realization, or make a returncontribution to society.

5 Settlement PromotionProject

Support is given to local governmentsthat make efforts toward energy saving,the development of new energy sources,the adoption of global-warmingcountermeasures, and the building of arecycle society, such as by promotingthe 3Rs (reduce waste, recycle, reuse),as well as toward symbiosis with nature.

10 EnvironmentalPreservation Project

Local Product Discovery andBrand Formation Project

Safe and SecureCommunity DevelopmentProject

Examples of Support for Projects Formulated by Local Governments

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White Paperon

Local PublicFinance

2007Illustrated

FY 2005 Settlement

Financial Management Division, Local Public FinanceBureau, Ministry of Internal Affairs and

CommunicationsAddress: 2-1-2 Kasumigaseki, Chiyoda-ku, Tokyo 100-8926,

JapanTel.: +81-(0)3-5253-5111(ext. 5649)

http://www.soumu.go.jp

All Rights Reserved


Documents

White Paper on Local Public Finance, 2007 FY 2005 …...4 Outline of FY 2005 Account Settlement 1. Decline in expenditure due to decreases in personnel expenses, ordinary construction