Silviase/jgov_v1.4_full_ann huggingface dataset:
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 Breakdown of Expenditures by Function (ordinary account net total)

FY 1992	General administration expenses	(Unit:¥1 billion)
Welfare expenses	10,108.7
Of which, social welfare expenses	9,935.3
Of which, elderly welfare expenses	2,792.2
Of which, child welfare expenses	2,672.8
Sanitation expenses	2,956.1
Of which, cleaning expenses	5,614.3
Agriculture, forestry and fishery expenses	2,339.8
Commerce and industry expenses	5,676.2
Civil engineering work expenses	4,445.4
Education expenses	21,633.2
Public debt payments	18,406.0
Total expenditure	7,115.0
89,559.7
FY 1997	General administration expenses	86
Welfare expenses	128
Of which, social welfare expenses	125
Of which, elderly welfare expenses	145
Of which, child welfare expenses	119
Sanitation expenses	120
Of which, cleaning expenses	120
Agriculture, forestry and fishery expenses	114
Commerce and industry expenses	121
Civil engineering work expenses	99
Education expenses	102
Public debt payments	145
Total expenditure	109
FY 2002	General administration expenses	85
Welfare expenses	144
Of which, social welfare expenses	134
Of which, elderly welfare expenses	142
Of which, child welfare expenses	147
Sanitation expenses	115
Of which, cleaning expenses	121
Agriculture, forestry and fishery expenses	91
Commerce and industry expenses	112
Civil engineering work expenses	82
Education expenses	96
Public debt payments	184
Total expenditure	106
FY 2006	General administration expenses	85
Welfare expenses	8,617.7
Of which, social welfare expenses	164
Of which, elderly welfare expenses	159
Of which, child welfare expenses	4,426.0
Sanitation expenses	165
Of which, cleaning expenses	5,510.2
Agriculture, forestry and fishery expenses	94
Commerce and industry expenses	3,753.1
Civil engineering work expenses	107
Education expenses	13,853.4
Public debt payments	89
Total expenditure	100
## [What are expenses for?]

## 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."

Composition of Expenditure by Character (FY 2006 settlement)
Trends in Personnel Expenses

Breakdown of Personnel Expenses by Item

Prefectures
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)

Social assistance expenses :

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%, the same as the previous fiscal year.

Tax-reduction supplementary bonds and extraordinary financial countermeasures bonds have been added since fiscal 2001.
## 2 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 11.6%, which is approximately the same ratio as 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 ¥139 trillion at the end of fiscal 2006. 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 2.4 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 ¥200 trillion at the end of fiscal 2006.

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

Ratio of outstanding borrowing that should be shouldered by the ordinary account to GDP

Notes:

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.

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 9,317. By type of business, sewerage accounts for the largest ratio, followed in order by water supply, care services, and hospitals.

## 3 Scale of Financial Settlement

The total financial settlement scale is ¥19.3012 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 ¥193.3 billion. By type of business, while water supply, electricity, and sewerage showed a surplus, hospitals are continuing to register a deficit.
# Trends and Issues in Local Public Finance

## 1 Promotion of Decentralization Reform

## 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
## Decentralization Reform Promotion Committee "Interim Report" (Outline) November 11, 2007

## “Compass” showing the direction of study toward recommendation

Interim report

Decentralization conference (7 times)

Committee (29 times)

Recommendation,

Opinion, etc.: Sequential

“recommendation” from

spring 2008 onward

Report from respective government ministries

Cabinet decision on decentralization reform promotion plan

Submission of new comprehensive law on decentralization reform to Diet

## Efforts so that “Local Governments Play Leading Part in Nation Building”

Transfer of power for establishing local governments

Realization of completely autonomous entities

Revitalization of local communities

☑ Ensurement of comprehensiveness of governments

☑ Improvement of capabilities for assuming autonomous control

## Review of Legal Schemes, etc

① Thorough abolishment or curtailment of obligations, framing (method of enforcement, etc.) and involvement (consultation, consent, etc.) by the central government

② Expansion of ordinance making power

③ Check system regarding new obligation, framing and involvement

④ Legislation of transfer of power from prefectures to municipalities

## Drastic Review and Examination of Individual Administrative Areas and Administrative Works

## Priority Issues

① Medical care ② Public assistance

④ Compulsory education ⑤ Roads

③ Unification of kindergartens and nursery schools

## Other Key Issues

① Welfare and health ② Labor

⑥ Transportation

⑦ Environment

⑥ Rivers

⑦ Agriculture

③ Children

⑧ Agriculture

⑨ Education

⑨ Commerce and industry

⑤ Housing and cities

⑩ Disaster prevention

## Decentralization Reform and Revitalization of Local Communities

Path to revitalization of depopulated central cities and local villages

## Public Finance and Taxation

① Financial relation of central and local governments

② Rectification of interregional disparities in financial strength

④ Central government subsidy reform

③ Financial burden on social capital improvement

⑤ Financial discipline

## Administrative System Toward Conversion to Decentralized Society

① Enhancement of wide-range cooperation

② Concept of large city system

③ Review of local branch offices, etc.
## 2 Promotion of Administrative Reform

## (1) Intensive Reform Plans

In order to solidly promote local administrative reform, the Ministry of Internal Affairs and Communications compiled the New Guidelines for the Promotion of Administrative Reform in Local Governments (the New Local Administrative Reform Guidelines) and notified local governments of them on March 29, 2005.

As a result, local governments have compiled and disclosed intensive reform plans indicating specific efforts, such as the reorganization and arrangement of administrative work and projects and the promotion of private-sector consignment, to be undertaken in general until fiscal 2009.

## (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 13 consecutive years since 1995. The number of employees has fallen for 12 consecutive years in the general administrative sector and 6 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, 1998	General administrative sectorExcluding welfarewelfareEducation sectorPolice and fire service sectorPublic enterprises, etc.All local governments

April 1, 2007	General administrative sector	86
Excluding welfare	87
welfare	85
Education sector	89
Police and fire service sector	106
Public enterprises, etc.	93
All local governments	91

Unit: Ratio against 100 as the number of staff as of April 1, 1998.
When the salary level of local public employees is shown on the Laspeyres Index, the average for all local governments is 98.5.

In fiscal 2006 a total of 577 local governments adopted measures to correct wage levels, such as the revision of salary scales, and a total of 781 local governments implemented the revision of various allowances and retirement allowances. In addition, 1,636 organizations (approximately 87%) among 1,874 organizations had a Laspeyres Index of less than 100.

Trends in the Laspeyres Index (Trends in the Average for All Local Governments)
## Subject of Ratio for Determining Soundness

Local public corporations, third-sector enterprises, etc.
## I mage of Early Financial Soundness, Financial Rebuilding and Soundness of Public Enterprise Management

• ② to ④ must be less than

$ ^{*} $ Under the existing reconstruction system, an organization under reconstruction is required to ensure equilibrium of the real balance.

## Soundness of public enterprise management
## Early Financial Soundness Criterion, Financial Rebuilding Criterion, Management Soundness Criterion, etc

“Law Relating to the Financial Soundness of Local Governments” was enacted in June 2007.

Regulations concerning the disclosure of financial indexes has been enforced since April 1, 2008, and will be applied from the settlement of FY 2007.

Regulations concerning the obligation to formulate plans, etc. will be enforced from April 1, 2009, and applied from the settlement of FY 2008.

## Early financial soundness

Formulation of financial soundness plan, request for external auditing, etc.

## Financial rebuilding

Formulation of financial rebuilding plan, procedure for seeking agreement of central government on plan, restriction on the issue of local bonds, rebuilding transfer special bonds, etc.

Early financial soundness criterion	Financial rebuilding criterion
Real deficit ratio• Real deficit ratio of general account, etc.	Prefectures: 3.75%Municipalities: 11.25 to 15%according to financial size	Prefectures: 5%Municipalities: 20%
Consolidated real deficit ratio• Real deficit ratio of all accounts	Prefectures: 8.75%Municipalities: 16.25 to 20%according to financial size	Prefectures: 15% (*)Municipalities: 30% (*)
Real debt service ratio• Ratio of debt service expenses and expenditures similar to debt service expenses	Prefectures and municipalities: 25%	Prefectures and municipalities: 35%
Future burden ratio• Ratio of substantial debts to be borne by the general account, etc. in the future in addition to outstanding local government bonds	Prefectures and cities designated by government ordinance: 400%Municipalities: 350%	—
Financial shortfall ratio of public enterprises• Financial shortfall ratio of each public enterprise	20%	—

$ ^{*} $ With respect to the financial rebuilding criterion of the consolidated real deficit ratio, a 3-year temporary criterion (in the case of municipalities, $ 40\%\rightarrow40\%\rightarrow35\% $ ) is provided.
(2) Promotion of Local Public Accounting Reform and Information Disclosure

### A. Promotion of reform of local public accounting

With respect to the establishment of local public accounting, the Ministry of Internal Affairs and Communications requested local governments to make efforts toward disclosing information that is required for the compilation and formulation of financial documents based on “Guidelines for the Further Promotion of Administrative Reform in Local Governments.” In consideration of the fact of the formulation of the direction and specific measures for asset and debt reform by fiscal 2009 and the enforcement of “Law Relating to the Financial Soundness of Local Governments,” it is important for every local government to conduct certain asset valuation and compile financial documents by fiscal 2009. Further enhancement of transparency in the financial conditions of local governments through the establishment of local public accounting is expected, and it is, therefore, important to disclose information to residents, etc. in an easy-to-understand manner, and the Ministry of Internal Affairs and Communication gave the model of financial documents showing concisely the overall financial conditions.

## Balance Sheet

● A balance sheet shows the state of assets/properties and the revenue resources for procurement as of the end of the fiscal year.

Assets	Amount	Liabilities	Amount
1. Public assets	***	1. Fixed liabilities	***
(1) Assets for business	***	(1) Local government bonds	***
(2) Infrastructure assets	***	(2) Retirement allowance reserve	***
(3) Disposable assets	***	(3) Other	***
2. Investments, etc.	***	2. Current liabilities	***
(1) Investments and capital investments	***	(1) Local government bonds redeemable in following year	***
(2) Loans	***	(2) Other	***
(3) Reserve funds, etc.	***
3. Current assets	***	Liabilities total	***
(1) Funds	***	Net assets	Amount
(2) Accounts due	***	Net assets total	***
Assets total	***	Liabilities and net assets total	***