Reining in wasteful spendingThe city of Yubari - located on the island of Hokkaido in Japan - went bankrupt in 2007.
It became saddled with huge debts after sponsoring an international film festival and investing heavily in projects to build museums and a massive amusement park. The moves were part of a larger plan to turn the ailing coal mining town into a tourist destination.
As part of its cost-cutting efforts, half of the city’s public workers were sacked and the rest were forced to take wage cuts. An elementary school student wrote a message that said he wished a rich person who would come in and save the town.
Unfortunately, many cities across Korea could share the same fate as Yubari.
Take Taebaek in Gangwon Province, for example. The city spent 200 billion won ($180 million) to build a theme park, but it’s now questionable whether it will even open at all due to doubts about its ability to generate profits. There are four other amusement parks and museums in this mountainous city with grim prospects as well, which could put Taebaek in a precarious position. Sancheong in South Gyeongsang Province also is home to several struggling museums that attract just a dozen or so visitors a day.
The list goes on and on. Numerous tourism centers and related structures that city and provincial governments spent millions of won building are in similar situations, adding to their debt burdens.
They were hastily built just before election season and are now largely vacant.
Some cities keep the lights off in these centers to save electricity, while others have opted to simply close the facilities. The money, of course, came largely from taxpayers, and some of it was used to send city officials on overseas trips.
In order to prevent a serious debt crisis, local governments must incorporate a strong sense of responsibility when it comes to budget spending. They should conduct stringent feasibility studies before approving budgets and projects. Many local governments are already suffering under a crushing debt load and are borrowing even more money to pay their employees. The tax system should be revised to let these poorly managed governments go bankrupt to send a clear message that there will be no more bailouts for incompetency.
The initial responsibility for these projects lies with local government heads. We should pay close attention to this situation and exercise our rights as taxpayers when our money is misspent.