Silviase/jgov_v1.4_full_ann huggingface dataset:
## 1 Expenses by Function

When expenses are classified by function, we see that a lot of revenue is expended for such items as education expenses, public welfare expenses, and civil engineering work expenses. In prefectures it is mainly expended for education expenses, debt servicing, and civil engineering work expenses, in that order. In municipalities it is primarily expended for public welfare expenses, civil engineering work expenses, and debt servicing, in that order.

Education expenses: Expenses for school education, social education, etc.

Civil engineering work expenses: Expenses for the construction and improvement of public facilities, such as roads, housing and parks.

Public welfare expenses: Expenses for the construction and operation of welfare facilities for children, the elderly, the mentally and physically disabled, etc. and for the implementation of livelihood protection, etc.

Public debt payment: Expenses for the payment of principal, interest, etc. on debts.

## Composition of Expenditure by Function (FY 2005)
Breakdown of Educational Expenses by Purpose

Breakdown of Civil Engineering Work Expenses by Purpose

Breakdown of Public Welfare Expenses by Purpose
In recent years, while there has been a decline in such items as agriculture, forestry and fishery expenses and civil engineering work expenses, welfare expenses, public debt payments and so on have been increasing.

Trends in Expenditures by Function (ordinary account net total) Unit: Ratio with FY 1992 as 100.
## 2 Expenses by Character

Classified by character, expenses can be divided into "obligatory expenses" (personnel expenses, social assistance expenses and public debt payments), which are mandatory and difficult to cut down at the discretion of individual local governments; "investment expenses," including ordinary construction expenses, etc.; and "other expenses."

Expenditure by Character (FY 2005 settlement)
In recent years, while there has been a decline in such items as ordinary construction expenses, social assistance expenses, public debt payments and so on have been increasing.

Trends in Breakdown of Expenditures by Character (ordinary account net total) Unit: Ratio with FY 1992 as 100.

Social assistance expenses

Expenses which include child welfare expenses, livelihood protection expenses, etc., aimed at assisting the needy, children, the elderly, mentally and physically disabled, etc., as a part of the social security system.

Ordinary construction expenses

Expenses necessary for the construction of social capital, such as roads, bridges, parks, schools, etc.
# Flexibility of the Financial Structure

How can local finance respond to the demand toward local governments?

In addition to revenue sources allocated to obligatory expenses required every year, it is necessary for local governments to ensure revenue sources for measures to respond properly to social and economic trends and changes in the demand of the residents. The extent to which these revenue resources can be ensured is called the flexibility of the financial structure.

## 1 Ordinary Balance Ratio

The national average of the ordinary balance ratio (the ratio of ordinary revenue allotted to expenses recurring every fiscal year to the total of ordinary revenue recurring every fiscal year, centered on local taxes and the local allocation tax, as well as tax reduction supplementary bonds and extraordinary financial countermeasures bonds [see note]) remained at a high level of 91.4%, almost the same as the previous fiscal year.

Tax-reduction supplementary bonds and extraordinary financial countermeasures bonds have been added since fiscal 2001.
# Real Debt Service Ratio and Debt Service Payment Ratio Used for Permission to Issue Local Bonds

It is necessary to keep a close watch on trends in public debt payments at all times, since public debt payments, payments of principal and interest on the debts of local governments, are expenses especially lacking flexibility.

The real debt service ratio, which is an index indicating the extent of the real debt payment burden, was calculated for the first time on the basis of fiscal 2005 account settlements. Past trends can be seen in the debt service payment ratio used for permission to issue local bonds. The national average is the same ratio for the previous fiscal year and remains at a high level.

State of the Real Debt Service Ratio

## $ ^{*} $ Real debt service ratio

The real debt service ratio indicates the ratio of the principal and interest repayments on local bonds (excluding advanced redemption, etc.) and the real debt service amount, including items corresponding to debt service expenses, such as disbursements to public enterprise bonds, minus that portion of the local allocation tax allotted for this purpose to the total of the standard financial amount and the issuable extraordinary financial countermeasures bond amount. It is used to determine organizations that require consultations or permission to issue bonds. If the ratio is over 18%, the organization needs permission to issue bonds; if it is over 25%, the issue of certain kinds of local bonds is restricted; and if it is over 35%, the restrictions are tightened even more.

Trends in the Debt Service Payment Ratio Used for Permission to Issue Local Bonds

$ ^{*} $ Debt service payment ratio used for permission to issue local bonds

The debt service payment ratio used for permission to issue local bonds indicates the ratio of the total of local debt principal and interest and expenditure relating to debt-burden acts corresponding to debt service expenses, excluding the amount of advanced redemption, and also excluding the amount of general revenue resources calculated for this purpose that includes the local allocation tax, to the total of the standard financial amount and possible issue of extraordinary financial countermeasures bonds (excluding the amount of local allocation tax calculated for service payment).
# Outstanding Local Government Borrowing (Ordinary Account)

What is the state of debts in local public finance?

## 1 Trends in Outstanding Local Government Borrowing

Outstanding local government borrowing, the debts of local governments, amounted to approximately ¥140 trillion at the end of fiscal 2005. This figure has been increasing in recent years because of such factors as the need to supplement tax revenue as a result of tax cuts and the issue of extraordinary financial countermeasures bonds. The figure is 1.5 times larger than total revenue and about 2.5 times larger than the total sum of general revenue resources, such as local taxes and local allocation tax.

## Trends in Outstanding Local Government Borrowing

Notes:

1. Outstanding local government borrowing excludes special fund public investment bonds.

2. Economic-stimulus figures are estimates.
## 2 Outstanding Borrowing of Local Finance

Also, the outstanding borrowing of local public finance, which includes the local burden of borrowing from the special account for local allocation tax and transfer tax grants and those public enterprise bonds borne by the ordinary account, as well as current outstanding local government bonds, remains at a high level, amounting to approximately ¥201 trillion at the end of fiscal 2005.

Trends in Outstanding Borrowing That Should Be Shouldered by the Ordinary Account and Ratio of Outstanding Borrowing to Gross Domestic Product

1. Outstanding local government borrowing excludes special fund public works bonds and special fund public investment bonds.

2. Outstanding public enterprise bonds (borne by the ordinary account) are estimates based on settlement statistics.
## Local Public Enterprises

## What is the state of local public enterprises?

Local public enterprises are managed directly by local governments for the purpose of social and public benefit. They provide social infrastructure and services indispensable for local residents and the development of the community, including water supply, sewerage, transport and hospitals.

## Ratio of Local Public Enterprises

Local public enterprises play a major role in improving the standard of living of residents.

## Notes:

1. The graph shows the ratio of local public enterprises when the total number of business entities nationwide is taken as 100.

2. Figures for the total number of enterprises nationwide are compiled from statistical materials of related organizations; figures for local public enterprises are compiled from figures for the total number of enterprises and settlements for the previous fiscal year.
## 2 Number of Businesses Operated by Local Public Enterprises

The number of businesses is 9,379. By type of business, sewerage accounts for the largest ratio, followed in order by water supply, hospitals, and care services.

## 3 Scale of Financial Settlement

The total financial settlement scale is ¥20.3182 trillion. By type of business, sewerage accounts for the largest ratio, followed in order by hospitals, water supply, and Residential development.
## 4 Management Conditions

Local public enterprises had a surplus of ¥276.7 billion. By type of business, while water supply, industrial water supply, electricity, and sewerage showed a surplus, transport and hospitals are continuing to register a deficit.

Trends in Management Conditions of Local Public Enterprises
# Trends and Issues in Local Public Finance

## 1 Promotion of Decentralization Reform

## (1) Enactment of the Law for the Promotion of Decentralization Reform

The Law for the Promotion of Decentralization Reform, which aimed to clarify the basic philosophy for the promotion of decentralization and the responsibilities of the central and local governments, to stipulate fundamental matters, and to promote decentralization in a comprehensive and planned manner by establishing the necessary system, was enacted on December 8, 2006, and enforced on April 1, 2007. On the basis of this law, efforts are being made to promote new decentralization reforms, thoroughly review the role sharing between the central and local governments, advance the transfer of authority and financial resources to local governments, and establish the independence and responsibility of the regions.

## Basic Policy 2006 (approved by the cabinet on July 7, 2006; extract)

"Through the comprehensive revision of related laws and ordinances and so on toward decentralization, efforts will be made to review the role sharing between the central and local governments, abolish or reduce state involvement and national treasury subsidies, etc."

## Law for the Promotion of Decentralization Reform (enacted on December 8, 2006)

## Outline of Law

☑ Establishment of a setup within the government to promote decentralization reform (Decentralization Reform Promotion Committee)

→ To study the form of role sharing between the central and local governments, etc.

● The government shall compile a Decentralization Reform Promotion Plan.

The law shall be valid for a limited period of three years from its enforcement.

## Compilation of Decentralization Reform Promotion Plan

Comprehensive Law on Decentralization

Reform (tentative name)

## Comprehensive

revision of individual

laws
## State of Progress of Municipal Mergers

## (2) Promotion of Municipal Mergers

As decentralization advances and the role of the municipality becomes increasingly important, in the present situation of severe fiscal conditions both centrally and locally, the promotion of municipal mergers is important in order to strengthen the administrative and financial bases of municipalities and to maintain and improve their administrative services.

## State of Progress of Municipal Mergers by Prefecture

$ ^{*} $ The number of municipalities declined from 3,229 to 1,804 (as of April 1, 2007).
## Community Development Efforts of Merged Municipalities

In many merged municipalities, positive efforts have begun toward building an energetic and individualistic community in response to local issues.

## Examples

## I mprovement in the convenience of residents!

Through mergers, it has become possible to go beyond municipal boundaries and use child day-care centers that have vacancies. (Niigata City, Niigata Prefecture)

In order to facilitate the efficient use of libraries, library systems have been integrated so that it is now possible at any library to search the books stocked at other libraries and to request, borrow, and return them. (Tahara City, Aichi Prefecture)

## Upgrading and diversification of administrative services!

A clinic was opened for the first time in about 30 years in the mountainous district of Besshiyama, which previously did not have a doctor. (Niihama City, Ehime Prefecture; formerly the mountainous area of Besshiyama)

A new fire station has been established in the town, which previously did not have any emergency fire-prevention service or a fire station, and the ambulance and fire-prevention services have been expanded and strengthened. (Kibichuo Town, Okayama Prefecture)

## Wide-area community development!

A Children's Comprehensive Support Office has been established as a key station for assisting and coordinating enhancement of the child-raising, health, and educational environment in a comprehensive manner, and more specialist services are now provided. (Kameyama City, Mie Prefecture)

In addition to the former Takayama City area, which boasts the popular Takayama Festival and a historical townscape, such attractions as the former Kamitakara area of the Northern Alps and the Oku-Hida Hot Springs Village have been added to the municipality, making it possible to aim for the establishment of a new Hida-Takayama brand by, among other things, launching an accommodation- and tour-style tourist strategy linking urban and rural areas. (Takayama City, Gifu Prefecture)

## Greater administrative and financial efficiency!

As a result of a survey of 557 local governments that merged between April 1999 and March 2006, it is estimated that after fiscal 2016 (that is, about 10 years after the mergers) efficiency will amount to about ¥1.8 trillion a year.
## (2) Further Promotion of Administrative Reform

On August 31, 2006, the Ministry of Internal Affairs and Communications formulated "Guidelines for the Further Promotion of Administrative Reform in Local Governments" and requested local governments to make positive efforts toward three reforms: reform of total personnel expenses, reform of public services, and reform of local public accounting.

## Reform of total personnel expenses

● Further net reduction in number of employees bearing in mind the net reduction (down 5.7%) in the number of national public employees

Promotion of salary reform (reflection of regional private-sector salaries, further streamlining of salaries)

Efforts to curb personnel expenses in third-sector enterprises, etc.

## Reform of public services

● Implementation of studies in light of project classification and overall inspection of need for public services and implementing entities

Setting of performance indexes relating to the maintenance and improvement of public services and numerical targets relating to expenditure reduction, etc. in the implementation of marketization tests

## Reform of local public accounting (local asset and debt management reform)

Promotion of the compilation of four documents: balance sheet, administrative cost statement, financial balance statement, and net asset fluctuation statement

Formulation of the direction and specific measures for asset and debt reform including promotion of the sale of unused assets, effective utilization of assets, etc.

## Formulation of Rules for Information Disclosure to Facilitate Comparisons and Appraisal Between Local Governments and Strengthening of Resident Monitoring

● Enhancement of disclosure systems, including salary information

● Further promotion of financial information disclosure to enable comparisons between organizations

Disclosure of implementation process and implementation results of marketization tests

Active appointment of outside personnel as auditors and utilization of external auditing
## Reference

## Number of Public Employees

The number of local public employees has declined for 12 consecutive years since 1995. The number of employees has fallen for 11 consecutive years in the general administrative sector and 5 consecutive years in the public enterprise sector.

The reason for these declines is that, although the number of staff in the police and fire service sectors is increasing due to such factors as the enhancement of public security and disaster-prevention measures, efforts are being made to reduce the number of staff as a whole by, for example, setting numerical targets for personnel management and implementing cuts in other sectors on the basis of scrap-and-build policies

Number of Local Public Employees

Trends in the Number of Staff in Local Governments by Sector

April 1, 1997	General administrative sector
Excluding welfare
welfare
Education sector
Police and fire service sector
Public enterprises, etc.
All local governments
April 1, 2006	General administrative sector
Excluding welfare
welfare
Education sector
Police and fire service sector
Public enterprises, etc.
All local governments

Unit: Ratio against 100 as the number of staff as of April 1, 1997.
## Reference Salary Level

When the salary level of local public employees is shown on the Laspeyres Index, the average for all local governments is 98.0.

In fiscal 2005 a total of 1,015 local governments adopted measures to correct wage levels, such as the revision of salary scales, and a total of 1,573 local governments implemented the revision of various allowances and retirement allowances.

Trends in the Laspeyres Index (Trends in the Average for All Local Governments)
## 3 Promotion of Information Disclosure

Amid the increasing severity of local public finance, various efforts are being made to fulfill accountability. In order for each local government to promote financial soundness while gaining the understanding and cooperation of residents, etc., the Ministry of Internal Affairs and Communications has compiled financial comparative analysis tables and posted them on its homepage with the aim of disclosing information to residents, etc. in an easy-to-understand manner based on indicators that are comparable with those of other local governments.

In the fiscal 2005 settlement, the ministry conducted a comparative analysis of the principal financial indicators, etc. among similar organizations and analyzed the efforts, etc. of each organization toward the improvement of the indicators, etc.

## Example of a Financial Comparative Analysis Table

Fiscal power index
Meanwhile, in recent years an increasing number of local governments have been compiling balance sheets and other financial documents as a means of disclosing and analyzing financial conditions in order to grasp the state of their assets and liabilities in a comprehensive manner.

## Example of Balance Sheet (City A)

Ordinary Account Balance Sheet

(Assets)
1. Financial assets	40,196,119	F=D+E
Funds	18,911,616	E
Financial assets (excluding funds)	21,284,503	D=A+B+C
Credit	6,721,155	A
Tax and other accounts due	4,508,866
Accounts due	1,332,777
Loans	1,302,100
Other credit
(Deduction) Reserve for doubtful accounts	△ 422,588
Securities	72,410	B
Investments, etc.	14,490,938	C
Capital investments	7,868,771
Other investments	6,622,167
2. Nonfinancial assets	717,453,750	M=J+K+L
Assets for business	287,625,664	J=G+H+I
Tangible fixed assets	287,502,677	G
Land	148,337,692
Timber and bamboo	598,187
Buildings	125,602,108
Structures	1,681,927
Machinery and equipment	7,507,524
Goods	2,391,846
Ships
Aircraft
Other tangible fixed assets
Construction suspense account	1,383,393
Intangible fixed assets	122,987	H
Superficies	99,740
Patent rights
Software	23,247
Telephone subscription rights
Other intangible fixed assets
Inventory assets	I
Infrastructure assets	429,828,086	K
Public property land	227,280,153
Public property facilities	196,345,590
Other public property	0
Public property construction suspense account	6,202,343
Deferred assets	0	L
Assets total	757,649,869	N=F+M
(Liabilities)
1. Liquid liabilities	17,209,330	0
Accounts payable and unpaid expenses	6,258
Advance received and income in advance
Reserves	1,276,819
Bonus reserve	1,276,819
Deposits (money in custody, etc.)	2,082,760
Local government bonds (short-term)	13,843,493
Short-term loans
2. Nonliquid liabilities	166,779,157	P
Local government bonds (long-term)	145,034,516
Long-term loans
Reserves	21,744,641
Retirement allowance reserve	21,744,641
Other reserves
Liabilities total	183,988,487	Q=O+P
(Net assets)
Revenue sources	△ 779,807	R
Revenue sources allotted to asset formation	574,441,189	S
Fixed assets	557,182,109
Long-term financial assets	15,865,448
Appraisal and conversion differential, etc.	1,393,632
Other net assets	0	T
Opening unanalyzed balance	573,661,382	U=R+S+T
Net assets total	757,649,869	U=Q+U
Liabilities and net assets total

$ ^{*} $ From the standard model form in Chapter 2 of the report of the Study Group on a New Local Public Accounting System (May 2006).
The administrative cost statement shows the amount of administrative resources spent on administrative services during the year.

## Example of Administrative Cost Statement (City B)

Administrative Cost Total

From April 1, 2005, to March 31, 2006

Administrative costs
Personnel expenses	46,148,516
Payment into retirement allowance reserve	3,839,860
Property expenses	32,437,241
Maintenance and repair expenses	2,991,546
Depreciation expenses	44,091,083
Assistance allowances	28,418,044
Subsidy expenses, etc.	19,823,946
Disbursements	14,942,664
Subsidies, etc. to other organizations, etc. relating to asset formation	11,068,941
Interest payable	6,961,365
Estimated losses due to nonpayment recorded	767,245
Other administrative costs	308,828
Administrative cost total
Administrative service revenue
Usage fees	$ \triangle $ 5,341,014
Handling fees	$ \triangle $ 1,359,098
Other administrative service revenue	$ \triangle $ 2,649,997
Administrative service revenue total
Ordinary national treasury (prefecture) expenditure
(Balance) Net administrative cost

$ ^{*} $ From the Ministry of Internal Affairs and Communications format revised model form in Chapter 3 of the report of the Study Group on a New Local Public Accounting System (May 2006).

### State of Compilation of Balance Sheets (no. of organizations)

$ ^{*} $ Number of municipalities at time of survey: as of March 31, 2007, 1,827.
Partial administrative associations, wide-area local public bodies

Local public corporations, third-sector enterprises, etc.