Gyeongsangnam-do Draws Up KRW 14.7368 Trillion Budget Proposal for Next Year Amid "Triple Fiscal Pressure"

Gyeongsangnam-do has drawn up a budget proposal of KRW 14.7368 trillion for next year.

This is KRW 451.7 billion, or 3.2%, more than the initial budget of KRW 14.2851 trillion for this year. The proposal includes KRW 13.0472 trillion for the general account and KRW 1.6896 trillion for special accounts.

Revenue includes KRW 8.6173 trillion in national subsidies, accounting for 58.5% of the total, KRW 3.9002 trillion in local tax revenue, and KRW 1.2077 trillion in local allocation taxes.

Gyeongsangnam-do described its fiscal outlook for next year as being under "triple fiscal pressure": incoming revenue is stagnant, while spending is rising.

According to the province, local tax revenue is expected to increase by just KRW 95.2 billion, or 2.5%, from this year. In addition, KRW 30.5 trillion of the funding for local allocation taxes will be redirected to a new government Future Response Fund, reducing by KRW 532.8 billion the increase in allocation taxes that Gyeongsangnam-do would receive.

The provincial contribution to six national-subsidy welfare programs, including the basic pension, livelihood benefits and medical benefits, will also rise by KRW 51.3 billion as the median household income threshold increases by 6.7%, the largest increase on record.

The province's matching contributions to 14 major national-subsidy programs for which national funding has increased will rise by KRW 75 billion. These programs include flood and storm damage mitigation in residential areas, child allowances, and a pilot basic income program for rural and fishing communities. The provincial budget burden for national-subsidy programs is estimated to exceed KRW 120 billion.

Park Ilung, Vice Governor for Administrative Affairs of South Gyeongsang Province, explains the 2027 budget proposal. [Photo by Lee Seryeong]

Gyeongsangnam-do expects local allocation taxes to recover starting in 2028, but said prudent fiscal management will be unavoidable next year amid significant fiscal uncertainty.

To secure funding, the province is undertaking a major restructuring of its spending.

Underperforming programs that have continued for at least five years will be subject to sunset clauses or temporary suspensions. Subsidy programs involving overseas training or workshops will operate every other year.

For subsidy programs involving cities and counties, the province has adjusted the funding shares between the provincial and local governments, or transferred responsibility to the cities and counties, taking into account the nature of the administrative work, the policy's importance and who is responsible for implementing the program.

Programs that overlap with national-subsidy projects, projects funded through the Special Account for Balanced National Development, transfer projects or other provincial initiatives have been abolished or consolidated. The province has also streamlined programs with low performance relative to their scale or excessive budget carryovers. It plans to issue as little local government debt as possible.

The province will prioritize investment of the funds secured through these measures in four areas, in line with the vision for its ninth popularly elected administration: "A Great Leap Forward for Gyeongsangnam-do with Its Residents."

The four areas are: "Strong Industries, Vibrant Livelihoods"; "Comprehensive Welfare, Healthy Everyday Lives"; "Culture to Enjoy, Cities to Call Home"; and "Balanced Growth Through Mutual Prosperity, Thriving Rural and Fishing Communities."

The province allocated KRW 507.1 billion to "Strong Industries, Vibrant Livelihoods," covering industry and the local economy, an increase of KRW 76.9 billion from this year.

The allocation includes KRW 19.4 billion to foster leading regional innovation companies, KRW 12.6 billion for employment support in key industries, KRW 3.1 billion to establish a global small modular reactor (SMR) manufacturing and inspection hub, KRW 3 billion to develop a space industry cluster, KRW 1.8 billion to develop a maintenance, repair and overhaul (MRO) cluster for naval vessels, KRW 25 billion in interest subsidies for small and medium-sized enterprises' development funds, KRW 5.9 billion to support business improvements for small business owners, and KRW 2 billion for Gyeongnam Donghaeng Loan, a Gyeongsangnam-do-style emergency livelihood loan.

The province allocated KRW 8.4432 trillion to "Comprehensive Welfare, Healthy Everyday Lives," covering welfare, health and safety, an increase of KRW 185.2 billion.

The allocation includes KRW 273.6 billion for improvements in disaster-risk areas, KRW 28.8 billion to expand meals for children during school vacations, KRW 9.8 billion to improve medical services in rural and fishing communities, KRW 5.7 billion to expand the Gyeongsangnam-do Residents' Pension, KRW 4 billion to operate 365安心 Hospital Wards, KRW 3 billion to build a regional and essential medical care cooperation system centered on responsible medical institutions, and KRW 1.1 billion to strengthen safety services for residents.

2027 Gyeongsangnam-do budget proposal. [Courtesy of Gyeongsangnam-do]

The province will spend KRW 710.6 billion on "Culture to Enjoy, Cities to Call Home," covering culture, tourism, sports, and regional and urban development, an increase of KRW 57.3 billion from the previous year.

The allocation includes KRW 49.1 billion for the development of tourism across the southern region, KRW 25.4 billion to expand nearby public sports facilities, KRW 15.3 billion in rent support for young people, KRW 14 billion to develop a pilgrimage trail linking sites of Admiral Yi Sun-sin's victories, KRW 8.5 billion for marine leisure tourism hubs, KRW 4.3 billion to support local culture, arts and festivals, and KRW 4.2 billion to advance the Culture-Leading Industrial Complex initiative.

The province allocated KRW 1.9855 trillion to "Balanced Growth Through Mutual Prosperity, Thriving Rural and Fishing Communities," covering agriculture, forestry, maritime affairs and fisheries, transportation and logistics, and water resources.

The allocation includes KRW 255.4 billion in basic direct payments for public-interest farming, KRW 113.5 billion to expand and pave nationally funded provincial roads, KRW 44 billion in allowances for farmers and fishers, KRW 24 billion for general port construction, KRW 10.4 billion to develop smart agriculture districts, KRW 1.4 billion to establish an oyster-focused seafood cluster, KRW 3.2 billion to build the foundations for smart livestock farming, and KRW 1.7 billion to establish a full-cycle standardization hub for natural product materials.

Administrative Vice Governor Park Ilung said, "The more difficult the fiscal circumstances, the more carefully we have considered how to direct every possible won to areas essential to residents' lives. We will maintain fiscal soundness while steadily pursuing livelihood stabilization and investment in the future, and continue urging the government to improve the fiscal structure, including by restoring local allocation taxes and expanding fire service funding."

He added, "This budget is a stepping stone toward achieving a great leap forward for Gyeongsangnam-do with its residents. We will communicate fully with the provincial council to ensure the budget delivers changes that residents can feel."

Gyeongsangnam-do's budget proposal is expected to be finalized on December 15, after deliberation at the provincial council's 438th regular session.

This content was produced with the assistance of AI translation services.