HANAM — The city of Hanam in Gyeonggi Province has shifted to an emergency fiscal footing and launched a sweeping spending overhaul after departments submitted budget requests for next year that exceeded projected revenue by more than 120 billion won. With growth in its own tax revenue slowing and provincial subsidies shrinking in the wake of Gyeonggi Province's own fiscal emergency declaration, the city plans to re-examine routine programs from scratch to avert a fiscal breakdown.
Spending estimates submitted by city departments for next year came in 13.1%, or 127.2 billion won, above revenue projections, Hanam said on the 29th. The city attributed the gap to a combination of factors: a sharp slowdown in growth of its own revenue, a heavier municipal burden as the province cut its subsidy rates, rising fixed costs such as operating expenses for large-scale investment projects, and a surge in demand for pledged and welfare programs.
In response, the city has issued strict cost-cutting guidelines to all departments and will review the necessity and feasibility of every program from a zero base. Program priorities will be reset from scratch, with sharp reductions in scale and the consolidation of overlapping or similar programs.
Subsidized programs, where the city's share has grown as provincial funding was cut, are the main focus. Requests for new programs or budget increases for existing ones will in principle be frozen entirely, except for statutory and mandatory expenses. Where a program cannot be avoided, it will be reflected in the budget only if the department presents an alternative, such as scrapping or scaling back an existing program or securing outside funding on its own.
Alongside spending cuts, the city is stepping up "special revenue management" to broaden its revenue base. Hanam plans to overhaul data used for regular local tax assessments to prevent taxable items from being missed, and to maximize collection rates through tailored enforcement against large and habitual delinquents as well as tax audits of corporations.
The city also aims to uncover hidden revenue sources through surveys of idle public property, toughen enforcement against unpaid penalty surcharges and non-compliance fines, and increase interest income by managing its funds more efficiently.
To ease the growing burden of facility operating costs, the city has begun reviewing whether to bring public service charges and various fees closer to actual costs. Hanam said it will closely analyze cases at other local governments before drawing up an appropriate adjustment plan.
At the same time, the city will open channels for advance communication to limit inconvenience to residents from program cuts. If benefit programs tied to livelihoods and welfare are reduced or suspended, the city plans to hold briefings or information sessions beforehand to explain its fiscal condition and seek public understanding. Essential livelihood spending for vulnerable groups will be preserved as far as possible.
"This is a grave crisis in which spending estimates exceed revenue by more than 120 billion won, so every department must approach budget savings with extraordinary resolve," Hanam Mayor Lee Hyun-jae said. "Routine and low-efficiency programs must be boldly operated on, and where program cuts are unavoidable, please minimize public anxiety through active communication with those affected."
