South Korean governors oppose Future Response Fund over fiscal concerns

The Association of Governors of Korea has issued a joint statement expressing strong opposition to the government's proposed ‘Future Response Fund,’ warning that it could severely destabilize local finances.

During a meeting in Jeju, governors from 16 metropolitan local governments argued that the new fund could lead to a reduction in local shared taxes, as the fund's accumulation would be deducted from the domestic tax base used to calculate these transfers. They emphasized that such a move would diminish local fiscal autonomy and make budget planning unpredictable.

Key demands from the governors include maintaining the current calculation method for local shared taxes under the Local Shared Tax Act and establishing a ‘Pan-Governmental Fiscal Decentralization Task Force.’ Park Wan-soo, Governor of Gyeongsangnam-do, noted that increasing local financial burdens for national projects without consultation forces local governments to selectively accept state programs based on their limited resources.