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Subsidies dry up; local governments feel fiscal pinch

Date Posted: 2004-01-22

The tightening of the money spigots in Tokyo has forced many local governments to slash public works projects and many welfare programs. Local cities, towns and villages are mired in increasingly worsening fiscal morass as the central government slashes subsidies it pays to local governments amid its own fiscal problems.

The fiscal year in Japan begins April 1, and bureaucrats in every public office are trying to figure out how to do more with less. For example, Hirara City on Miyako Island has operated in the red since 1997, and has accumulated a debt totaling Y1.2 billion in the process. It is affecting every social and welfare program in the city. “Our income has decreased every year while our costs are going up. Our biggest cost is the welfare for the aged, and eventually we have somehow to slash those costs also,” a Hirara City spokesman said.

Naha City is not much better. The subsidy from the central government was cut by Y1.7 billion for next fiscal year and that has forced the city to slash or cancel some planned public construction projects. Urasoe City’s budget is Y1.5 billion in the red, and Itoman City’s Y2.3 billion.

“The money this coming fiscal year is the tightest ever. It is going to be a hard year for construction businesses and workers as they depend on public projects for much of their income,” a Naha City official said.

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