Legal solutions for fostering sound local finances

The aging of low birth rates, the movement of the population to the metropolitan area and large cities, and the lack of jobs are causing problems along with the reduction of the local population. Local governments' financial independence and social overhead capital are decreasing, while social welfare expenses are continuously increasing. Local governments with guaranteed autonomy under the constitution shall secure independent resources to sustainably carry out the welfare of local residents and respond to the administrative demands of residents, secure the safety and efficiency of local finances, and ensure autonomy and accountability in financial management. If the fiscal soundness of local governments is not secured, various legal problems arise, such as fiscal expansion, debt growth, inflation, and local financial collapse. In particular, due to the structural contradiction of local taxes concentrated on property tax and acquisition tax due to the recent low economic growth of our country, the slump in the real estate market, the deepening of inflation, and the trend of high interest rates, it is urgent to secure the soundness of local finances due to the decrease in local tax revenues, increase in debt due to the issuance of local bonds, decrease in profits from investment projects, and deterioration of financial structure. It is necessary to devise a direction for the operation and development of local finances that enhances the efficiency of local finances. After discussing the operating system for securing fiscal soundness under the Local Autonomy Act and the Local Finance Act, we present a healthy local financial promotion plan by reviewing legal issues such as rationalization of expenditure management for sound local financial promotion, enactment of the Local Financial Integration Act, revitalization of local financial consolidation ordinances, securing sustainability of local finances, and strengthening external audit systems.