Welfare policies deplete finances

Rising welfare costs have forced most district offices in Seoul to halt administrative projects such as parking lot construction, urban development and water-supply and drainage repairs.

Guro District Office has planned to build its public parking lot since 2014, but has not yet started construction. The central government and Seoul Metropolitan Government were to fund 80 percent of the expected budget, or 10.3 billion won ($9.1 million), but a Guro District Office official said, “We couldn’t raise the 2.6 billion won because we had to secure our welfare budget first.”

Government subsidies are only offered when a district office meets its part of the proposed budget, but district offices in Seoul prefer to secure costs for welfare projects first, as these are the most expensive, leaving little for other types of cost-sharing plans.

Insufficient funding, however, is not just an issue for small district offices. Songpa District Office, which because of its size can raise so much in taxes that it does not qualify for a number of government subsidies, nevertheless hasn’t been able to carry out repair and maintenance for its child care centers, health centers and community centers, as of early this year.

“Our total budget per year amounts to 550 billion won, but less than 10 billion won remains after allocating 277.1 billion won for welfare and some expenses for personnel and operations,” said Lee Jong-su, head of finances at Songpa District Office. “Realistically speaking, the money is not enough to carry out a single project.”

A bigger problem is that welfare expenses hamper district offices from planning medium and long-term projects. Eunpyeong District Office has not been able to plan road constructions for the past decade, although its heavy traffic demands new roads.

An official from the office said, “We rely on Seoul city government’s adjustment grants, which barely cover one or two projects a year.”

Seoul Metropolitan Government provides adjustment grants to reduce fiscal inequalities between district offices. A total of 337.3 billion won of adjustment grants from last year helped carry out urgent projects in some district offices.

Gangdong District Office repaired a water-drainage system in Seongnae 1-dong, an area prone to floods, and a crosswalk was constructed near Oksu Elementary School in Seongdong District, reducing traffic hazards.

But the city government’s burden of welfare expenses has significantly increased. Welfare spending constituted 21.8 percent of the city’s total expenditure in 2010, but this year it amounted to 34.2 percent.

Seoul government’s support for district offices has also grown by 669.4 billion won.

“We aim to support district offices so that they can carry out necessary projects,” said Kim Ok-hee, who heads the local autonomy administrative division at Seoul Metropolitan Government, “but our fiscal capacity is also limited.”

BY CHO HAN-DAE, LEE SOO-KI AND SEO JUN-SUK [kim.yuna1@joongang.co.kr]