SUWON — Competition among local governments in Gyeonggi Province to expand rail networks is spreading beyond winning route approvals to securing funding. A growing number of municipalities are setting aside rail funds worth tens of billions to hundreds of billions of won in advance to cover the local share of costs that arise once a line is approved.
Seongnam and Gwangju have created separate funds for rail projects, while Yongin and Hwaseong are moving to set up similar funds, according to local governments in Gyeonggi Province on the 22nd.
The push to secure funding early stems from the nature of rail projects. Even after a line is included in higher-level plans such as the national rail network plan, it takes considerable time to reach groundbreaking through preliminary feasibility studies and design work. Once construction gets underway, however, large sums are needed for the local cost share and compensation payments. If funding is not arranged in time, projects can be delayed.
Seongnam has been the most aggressive. The city stepped up contributions to its rail construction fund after the current local government took office. It set aside 70 billion won annually from 2023 through last year, then added 90 billion won in January this year for a total of 300 billion won. The city plans to add another 100 billion won during the next local government term, expanding the fund to 400 billion won. The money will cover the city's share of major rail projects, including the extension of Seoul Subway Line 8 to Pangyo and the Wirye-Samdong line.
Yongin and Hwaseong stand out for channeling increased tax revenue from the growth of the semiconductor industry into long-term transportation infrastructure investment. Yongin is pursuing a plan to set aside part of the increase in local corporate income tax revenue driven by the semiconductor upturn into a separate fund. The aim is to secure in advance the local funding needed for projects such as the southern Gyeonggi metropolitan railway and the extension of the Gyeonggang line, as the development of a semiconductor cluster and population growth increase the need for expanded metropolitan transit. The city plans to begin contributions by 2028 at the latest after enacting the necessary ordinance, with a target of 1 trillion won.
Hwaseong is considering adding a rail category to its existing infrastructure development fund. The idea is to use tax revenue boosted by the growth of the semiconductor industry to expand metropolitan transportation infrastructure, including rail. "The specific size of the contributions has not yet been determined, but we are reviewing a plan to create funds by sector starting next year," a Hwaseong city official said.
Gwangju, which has a relatively smaller budget, has also joined the effort. The city enacted an ordinance in April this year and plans to set aside 50 billion won by the end of 2030 for projects such as the Wirye-Samdong line and the Pangyo-Opo urban railway, both undergoing preliminary feasibility studies. Another reason for creating the fund is that a local government's level of project preparation is taken into account in the policy assessment portion of the feasibility review. The city plans to make contributions in stages, however, given its fiscal conditions.
Goyang and Dongducheon are also moving toward creating funds for rail projects. Depending on the type of project, metropolitan railways can split costs between the central and local governments at a ratio of 7 to 3, meaning local governments must shoulder substantial funding once construction begins.
"A rail fund is a kind of reserve for future rail projects, set aside in advance to cover the local costs that will be needed so that projects are not delayed over funding," an official at one local government said.
