Non-Metropolitan Emergency Fiscal Reserves Halved in Three Years
The 'emergency fiscal reserves' that non-metropolitan local governments had stockpiled for crises have shrunk to less than half in just three years. According to an analysis of data from 14 non-metropolitan metropolitan governments by Rep. Lee Jong-wook of the National Assembly's Planning and Finance Committee (People Power Party, Jinhae-gu, Changwon), the balance of fiscal stabilization accounts — funds built up from revenue surpluses and drawn on during economic downturns or to repay debt — fell 54.1%, from 754.6 billion won at the end of 2022 to 346.7 billion won at the end of 2025. This account serves as a kind of buffer that allows local governments to absorb fiscal shocks on their own.
Some regions saw particularly steep declines. South Chungcheong Province's balance plummeted 94.9%, from 30.1 billion won in 2022 to 1.5 billion won in 2025. Over the same period, South Jeolla Province fell 86.3%, from 80.9 billion won to 11.1 billion won; North Jeolla Province dropped 84.4%, from 2.7 billion won to 400 million won; and North Chungcheong Province fell 69.3%, from 9.2 billion won to 2.8 billion won. Ulsan also recorded a decline for three consecutive years, down 45.8 billion won (45.5%), from 100.7 billion won at the end of 2022 to 54.9 billion won at the end of 2025. South Gyeongsang Province edged up slightly, from 118 million won in 2022 to 124 million won in 2025, but excluding Gangwon and North Gyeongsang provinces, which have no balance at all, it holds the smallest reserve among non-metropolitan metropolitan governments.
National local governments' matching funds for state-subsidized projects rose 8.5 trillion won, from 36.4 trillion won in 2022 to 44.9 trillion won in 2026. By sector, social welfare spending increased from 18.2 trillion won to 20.9 trillion won over the period, while education spending rose from 1.4 trillion won to 4.5 trillion won.
Rep. Lee Jong-wook of the People Power Party said the government's proposed Future Response Fund would reduce local shared tax resources in 2027 by roughly 30.5 trillion won compared with maintaining the current formula. The government maintains that the Future Response Fund is a fiscal stabilization mechanism designed to reduce volatility in the local shared tax and provide additional support to local governments when fiscal conditions deteriorate.
"The sharp drop in non-metropolitan local governments' fiscal stabilization account balances signals that their capacity to respond to fiscal shocks on their own is rapidly weakening," Rep. Lee said. "To strengthen local governments' capacity to prepare for the future, they must first be given sufficient general-purpose resources and fiscal buffer capacity to prepare for crises on their own, rather than relying solely on after-the-fact support from the central government," he added.
