CHANGWON — South Gyeongsang Province Governor Park Wan-su criticized the central government's creation of a future response fund, calling it a step backward in local fiscal policy.
Marking the 100th day of his second term, Park told a news conference on the 6th that "the government, in setting up the future response fund, is instead placing grants bound for local governments into the central government's reserve budget and deciding their use at its own discretion."
Park said local governments have very limited means to raise their own revenue, and that a weakening property market is further eroding local tax receipts, leaving South Gyeongsang and other provinces and metropolitan cities increasingly strapped. "At meetings of governors and mayors, we ask for corporate tax, value-added tax and consumption tax to be assigned to local governments or for our share to be raised, but the central government does not accept it," he said.
He also pointed to matching programs, in which the central and local governments split the cost. "Of South Gyeongsang's 14 trillion won annual budget, the discretionary portion we can allocate freely is about 500 billion won," Park said. "Take the basic income program for farming and fishing villages, which is matched 50-50 between the central and local governments. If all 10 county areas in South Gyeongsang adopt it following Namhae County, it would cost 400 billion won a year, leaving the province's own budget at close to zero."
Even so, he said he would not increase debt. "When I took over the provincial administration four years ago, I made it a matter of conviction not to add debt beyond what was already there," Park said. "Essential projects require issuing local bonds, but we should do it this once and then hold back." The province's debt stood at 1.27 trillion won when his first term began in 2022. Over those four years, the province repaid 340 billion won, and despite issuing local bonds in two supplementary budgets since his second term began, debt is projected at about 1.1 trillion won at the end of this year, the province said.
He also said welfare spending needs to be reorganized. Welfare accounts for 42% of the provincial budget. "I believe welfare policy has to be pursued with the province's finances in mind," Park said. "I even worry that we may not be able to keep 100% of the welfare pledges from the last election." He said overlapping welfare outlays should be cleaned up and that lower-priority items need restructuring.
Park said the province would bid to bring the combined headquarters of the country's five power generation companies to the Gyeongnam Innovation City in Jinju, as part of the government's consolidation and relocation of public-sector institutions. "The government said it would give priority to institutions linked to public agencies relocated in the first round and to those that can create synergy with local industry," he said. "I think South Gyeongsang is well positioned, with Korea South-East Power headquartered here and a cluster of energy institutions including the Korea Electrotechnology Research Institute and Doosan Enerbility."
On appointments to the heads of provincially funded and invested institutions in his second term, he said: "People may have doubts, but let me make clear that the province is not involved at all." The province has completed the selection of heads at two institutions, while nine are going through board and personnel hearing procedures.
Asked about an administrative merger of Busan and South Gyeongsang, he said: "The province's position that an administrative merger is needed has not changed, but the mayors of Busan and Ulsan do not appear to be considering one for now." He added: "Our views differ, and if I push the idea unilaterally on my own, the only result could be regional conflict."
Park set out three directions for his second term: a major transition to new industries, the build-out of a wide-area transport network, and closing gaps in the welfare safety net. Citing the humanoid robot industry he observed on a recent trip to China, he said: "I believe South Gyeongsang has the potential to emerge as a hub for physical artificial intelligence." In aerospace, he cited the localization of aircraft engine parts, and said the second national industrial complex in Changwon is being pursued again on a 700,000-pyeong site, excluding the former mine grounds.
Ahead of the news conference, the province announced an innovation plan for the second term, covering three areas: administrative operations, organizational culture and public institutions.
