LOCAL FINANCE ACT

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LOCAL FINANCE ACT — 법갈피

Article 11(Issuance of local government bonds) #

(1) Where necessary to raise funds for the following purposes, the head of a local government may issue local government bonds; provided, subparagraphs 5 and 6 only apply when a superintendent of education issues those bonds: <Amended on May 28, 2014; May 13, 2015>

1. Financial investment projects under his or her jurisdiction, such as the creation of public property and making up for expenses directly incurred therein;

2. Disaster prevention and recovery projects;

3. Making up the unforeseen revenue deficit which has occurred due to a natural disaster;

4. Conversion of local government bonds;

5. Making up the difference of subsidies under Article 9 (3) of the Local Education Subsidy Act;

6. Making up for expenses additionally incurred in relation to voluntary retirement (referring to the voluntary retirement under Article 36 of the Educational Officials Act and Article 60-3 of the Private School Act; hereinafter the same shall apply) where the number of applicants for voluntary retirement exceeds 120/100 of an average number of the voluntary retirees in the immediately preceding three years.

(2) The head of a local government that intends to issue local government bonds pursuant to paragraph (1) shall obtain a resolution from the local council within the limits of local government bonds prescribed by Presidential Decree, considering financial situation, scale of debt obligations, etc.; provided, where he or she issues foreign bonds, although within the limits of local government bonds, he or she shall obtain approval from the Minister of the Interior and Safety before obtaining a resolution from the local council. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017>

(3) Notwithstanding paragraph (2), where the head of a local government has consulted with the Minister of the Interior and Safety as prescribed by Presidential Decree, he or she may issue local government bonds in excess of the limits of the issuance of local government bonds under paragraph (2) within the consulted limit following a resolution passed by the local council; provided, where he or she issues local government bonds exceeding the limits prescribed by Presidential Decree, considering the level of financial risk, financial situation, scale of debt obligation, etc. shall obtain a resolution from the local council after obtaining approval from the Minister of the Interior and Safety, to enhance financial responsibility. <Amended on Mar. 23, 2013; May 28, 2014; Nov. 19, 2014; Jul. 26, 2017; Jan. 29, 2020>

(4) Where it is necessary to raise funds for an investment project of the local government association (hereinafter referred to as the "Association") under Article 176 of the Local Autonomy Act and urgent disaster recovery, or to lend money to a local government to support an investment project or disaster recovery project, the head of the Association may issue local government bonds. In such cases, the association shall obtain a resolution from local councils of member local governments within the limits approved by the Minister of the Interior and Safety. <Amended on Mar. 23, 2013; May 28, 2014; Nov. 19, 2014; Jul. 26, 2017; Jan. 12, 2021>

(5) The association and member local governments shall be jointly liable for the repayment of the principal of, and interest on, local government bonds issued pursuant to paragraph (4).

[This Article Wholly Amended on Aug. 4, 2011]

[The amended provisions of Article 11 (1) of the Act (No. 13283, May 13, 2015) shall remain effective until December 31, 2017 in accordance with Article 2 of the Addenda of that Act]

Article 27-2(Local government finance management committee) #

(1) A Local Government Finance Management Committee (hereinafter referred to as the "Committee") shall be established under the jurisdiction of the Minister of the Interior and Safety to deliberate on the following matters concerning financial burdens on local governments and financial crisis management: <Amended on Aug. 16, 2023>

1. The following matters concerning financial burdens on local governments:

(a) Matters concerning major expenses accompanied by financial burdens on local governments under Article 26;

(b) Important matters that become a burden on local finance among the adjustment of items of taxation between the State and a local government;

(c) Matters concerning adjustments to the apportionment rate of financial burdens of a project subsidized by the National Treasury among the State and local governments, or among Cities/Dos and Sis/Gun/Gus;

(d) Matters deemed necessary and submitted by the Minister of the Interior and Safety among draft statutes or regulations, or policies concerning the apportionment of financial burdens on local governments;

(e) Matters deemed necessary and submitted by the Minister of the Interior and Safety among matters concerning the enactment, amendment, repeal of statutes or regulations relating to local tax having significant influences on local tax incomes, such as exceptions to local taxation and adjustment of tax rates;

(h) Other matters concerning financial burdens on local governments, which are deemed necessary and submitted by the Minister of the Interior and Safety;

2. The following matters concerning the financial crisis management of local governments:

(a) Matters concerning financial diagnosis under Article 55 (3);

(b) Matters concerning the designation of a local government in financial crisis or under financial caution and revocation thereof under Article 55-2 (1) and (2);

(c) Matters concerning the recommendation of the formulation and implementation of plans for financial soundness under Article 55-3 (8);

(d) Matters concerning the designation and the removal of the designation of an organization subject to emergency financial management under Article 60-3;

(e) Matters concerning the appointment of an emergency financial manager under Article 60-4;

(f) Matters concerning the approval of an emergency financial management plan and the approval of the change thereof under Article 60-5;

(g) Matters concerning an evaluation of the implementation of an emergency financial management plan and recommendations under Article 60-6 (4);

(h) Other matters concerning the management of financial crisis of local governments, which are deemed necessary and submitted by the Minister of the Interior and Safety.

(2) The Committee shall be comprised of not more than 15 members, including the chairperson and the vice chairperson, in consideration of gender balance. <Amended on Mar. 27, 2018; Aug. 16, 2023>

(3) The Minister of the Interior and Safety shall be the chairperson of the Committee, the Vice Minister of the Interior and Safety and a non-governmental member shall be the vice chairpersons, and the vice chairperson who is a non-governmental member shall be elected by the Committee from among its members. <Added on Jul. 16, 2013; Nov. 19, 2014; Jul. 26, 2017; Aug. 16, 2023>

(4) The following persons shall be members of the Committee: <Added on Jul. 16, 2013; May 28, 2014; Nov. 19, 2014; Mar. 21, 2017; Jul. 26, 2017; Aug. 16, 2023>

1. Public Officials who hold office as Vice Ministers or Vice Administrators of the relevant central government agencies prescribed by Presidential Decree, such as the Ministry of Economy and Finance and the Office for Government Policy Coordination, or positions equivalent thereto;

2. One person recommended respectively by the National Conference of the Mayors and Do Governors, the National Conference of the Heads of Sis/Guns or Gus, the National Conference of the Chairpersons of City/Do Councils, and the National Conference of the Chairpersons of Si/Gun/Gu Councils. In such cases, the National Conference of the Mayors and Do Governors, and the National Conference of the Heads of Sis/Guns or Gus shall recommend one person out of the heads of local governments which belong to the relevant National Conference;

3. Other persons appointed by the Minister of the Interior and Safety with extensive knowledge about, and experience in, local public finance.

(5) Meetings of the Committee shall be held at least once a year and convened by the Chairperson; provided, meetings may be held additionally in the following cases: <Added on Jul. 16, 2013>

1. Where the Chairperson deems it necessary to hold a meeting;

2. Where the Conference of Local Governments requests the Chairperson to convene a meeting.

(6) The Minister of the Interior and Safety shall immediately notify the head of each central government agency and the head of each local government, of matters resolved by the Committee; and the head of each central government agency and the head of each local government shall reflect such matters when he or she conducts his or her business; provided, where the head of a central government agency or the head of a local government fails to reflect the resolved matters for unavoidable reasons, he or she shall notify the Minister of the Interior and Safety of the details of such reasons, and the Minister of the Interior and Safety shall report the details thereof to the Committee. <Added on Dec. 29, 2015; Jul. 26, 2017>

(7) A subcommittee shall be established in the Committee to efficiently operate the Committee and professionally examine matters to be discussed by the Committee. <Added on Jul. 16, 2013; Nov. 19, 2014; Dec. 29, 2015; Jul. 26, 2017; Aug. 16, 2023>

(8) Other matters necessary for the composition and operation of the Committee and subcommittees shall be prescribed by Presidential Decree. <Amended on Jul. 16, 2013; Dec. 29, 2015; Aug. 16, 2023>

[This Article Added on Aug. 4, 2011]

[Title Amended on Aug. 16, 2023]

Article 27-6(Assessment of impacts on local government finance) #

(1) Where the head of a local government intends to make a bid or file an application for a domestic or international sports competition, festival, event, public contest, etc., he or she shall assess the impact on finance of the relevant local government beforehand, and undergo screening by a local government finance investment appraisal committee under Article 37-3 based on the result of such assessment. In such cases, matters subject to assessment shall be prescribed by Presidential Decree, giving due consideration to the kind of the local government provided for in Article 2 of the Local Autonomy Act, a type and nature of a project, the size of financial burden, etc. <Amended on Apr. 11, 2023>

(2) Where the head of a central government agency hears opinions pursuant to Article 25 or holds consultations pursuant to Article 26, he or she shall submit the result of the assessment of the impact on local government finance (hereafter in paragraph (3) referred to as "written assessment of the impact on local government finance") on matters accompanied by large-scale burden on local government finance to the Minister of the Interior and Safety, as prescribed by Presidential Decree. In such cases, matters subject to assessment shall be prescribed by Presidential Decree, giving due consideration to the required period of burden on local government finance, the required amount, etc. <Amended on Nov. 19, 2014; Jul. 26, 2017>

(3) The head of a central government agency shall submit a written assessment of the impact on local government finance under paragraph (2) to the Minister of Economy and Finance at the following timing: <Amended on Nov. 19, 2014; Jul. 26, 2017>

1. Where he or she hears the opinion of the Minister of the Interior and Safety pursuant to Article 25, at the time he or she submits a written assessment of the impact on local government finance to the Minister of the Interior and Safety;

2. Where he or she holds consultations with the Minister of the Interior and Safety pursuant to Article 26, at the time he or she submits documents or detailed statements under the aforesaid Article to the Minister of Economy and Finance.

[This Article Added on May 28, 2014]

Article 29(Grants-in-aid for adjustment among Sis/Guns) #

(1) The Mayor/Do Governor (excluding the Special Metropolitan City Mayor; hereafter in this Article the same shall apply) shall secure an amount equivalent to 27 percent (47 percent in cases of a Si with a population of at least 500,000 and a Si in which a Gun, other than an autonomous Gu, is established) of the following amounts as funds for grants-in-aid for adjustment of the disparities in fiscal capacity among Sis/Guns under his or her jurisdiction: <Amended on May 28, 2014; Dec 31, 2019; Dec. 7, 2021>

1. The total amount of the Metropolitan City tax and the Do tax (excluding local resource and facility tax on thermal power generation and nuclear power generation, local resource and facility tax on firefighting, and local education tax), which are collected by a Si/Gun;

2. The amount calculated by dividing the amount of local consumption tax (excluding the amount allocated to Si/Do under Article 71 (3) 3 (a) of the Local Tax Act and subparagraph 4 (a) of that paragraph from the relevant local consumption tax) of a relevant Si/Do (excluding a Metropolitan City; hereafter in this Article the same shall apply) by the population of a relevant Si/Do at the end of the preceding year, and then multiplying by the population of a Si/Gun at the end of the preceding year.

(2) The Mayor/Do Governor shall allocate funds for grants-in-aid for adjustment under paragraph (1) to Sis/Guns located in the jurisdiction of the relevant Si/Do according to population, the collection record (excluding local consumption tax), the financial situation of the relevant Si/Gun, and other standards prescribed by Presidential Decree. <Amended on May 28, 2014>

(3) The Mayor/Do Governor shall distribute each local resource and facility tax on thermal power generation and nuclear power generation, respectively, to the competent Sis/Guns according to the following classifications. In such cases, the amount under subparagraph 2 shall be equally distributed to Sis/Guns under that subparagraph and to autonomous Gus under Article 29-2 (2) 2: <Amended on Feb. 20, 2024>

1. An amount equivalent to 65/100 of the local resource and facility tax on thermal power generation and nuclear power generation (if the collection subsidies under Article 17 (2) of the Local Tax Collection Act are granted, referring to an amount obtained by subtracting such subsidies): A Si/Gun where a thermal power plant or nuclear power plant is located;

2. An amount equivalent to the ratio prescribed by municipal ordinance within 20/100 of the local resource and facility tax on nuclear power generation: A Si/Gun having jurisdiction over all or part of a radiological emergency planning zone defined in Article 2 (1) 9 of the Act on Physical Protection and Radiological Emergency (excluding a Si/Gun where the relevant nuclear power plant is located).

(4) The Mayor/Do Governor shall allocate an amount equivalent to 20/100 of the leisure tax collected at a Si/Gun for betting tickets, horse racing tickets, etc. under Article 42 of the Local Tax Act (hereinafter referred to as "betting tickets, etc."), sold at an off-track betting facility under subparagraph 2 of Article 43 of that Act (excluding an off-track betting facility co-located with a place of business for horse racing, etc. under subparagraph 1 of that Article of that Act) to each Si/Gun in which such off-track betting facility is located. <Added on Dec. 28, 2021>

[This Article Wholly Amended on Aug. 4, 2011]

[Title Amended on May 28, 2014]

[The amended provisions of Article 29 (1) 2 of the Act (No. 18546, Dec. 7, 2021) shall remain effective until December 31, 2026 in accordance with Article 2 of the Addenda of that Act]

Article 29-2(Grants-in aid for adjustment among autonomous Gus) #

(1) The Special Metropolitan City Mayor and a Metropolitan City Mayor shall secure a certain amount of normal tax revenue prescribed by Presidential Decree as grants-in-aid for adjustment and shall adjust the disparities in fiscal capacity among autonomous Gus within the jurisdiction of the relevant local government, as prescribed by municipal ordinance. <Amended on Dec. 28, 2021>

(2) The Special Metropolitan City Mayor and a Metropolitan City Mayor shall distribute each local resource and facility tax on thermal power generation and nuclear power generation, respectively, to the competent autonomous Gus, according to the following classifications. In such cases, the amount under subparagraph 2 shall be equally distributed to autonomous Gus under that subparagraph and to Sis/Guns under Article 29 (3) 2: <Amended on Feb. 20, 2024>

1. An amount equivalent to 65/100 of the local resource and facility tax on thermal power generation and nuclear power generation (if the collection subsidies under Article 17 (2) of the Local Tax Collection Act are granted, referring to an amount obtained by subtracting such subsidies): An autonomous Gu where a thermal power plant or nuclear power plant is located;

2. An amount equivalent to the ratio prescribed by municipal ordinance within 20/100 of the local resource and facility tax on nuclear power generation: An autonomous Gu having jurisdiction over all or part of a radiological emergency planning zone defined in Article 2 (1) 9 of the Act on Physical Protection and Radiological Emergency (excluding an autonomous Gu where the relevant nuclear power plant is located).

(3) The Special Metropolitan City Mayor and a Metropolitan City Mayor shall allocate an amount equivalent to 20/100 of the leisure tax collected at an autonomous Gu for betting tickets, etc. sold at an off-track betting facility under subparagraph 2 of Article 43 of the Local Tax Act (excluding an off-track betting facility co-located with a place of business for horse racing, etc. under subparagraph 1 of that Article of that Act) to each autonomous Gu in which such off-track betting facility is located. <Added on Dec. 28, 2021; Feb. 20, 2024>

[This Article Added on May 28, 2014]

Article 33(Formulation of medium-term local government finance plans) #

(1) In order to manage local government finance in a planned manner, the head of a local government shall formulate a medium-term local government finance plan each year for a period of at least five fiscal years from the next fiscal year and submit such plan to the local council along with a budget bill, and submit the plan to the Minister of the Interior and Safety 30 days prior to the beginning of the relevant fiscal year. <Amended on May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

(2) The head of a local government that formulates a medium-term local government finance plan (hereinafter referred to as "medium-term local government finance plan") under paragraph (1), shall ensure that such medium-term local government finance plan is correlated with State plans and regional plans under related statutes or regulations according to procedures for formulation of plans prescribed by the Minister of the Interior and Safety. <Amended on Mar. 23, 2013; May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

(3) Medium-term local government finance plans shall include the following matters: <Added on May 28, 2014>

1. Basic direction setting for, and objectives of, financial management;

2. Medium-term financial conditions and financial scale outlook;

3. Relevant matters of related state plans and regional plans;

4. Plans for allocation of funds for each field;

5. Management directions of the budget and each fund;

6. Rate of increase of mandatory spending (referring to expenditure which and the size of which are determined pursuant to statutes or regulations and interest expenditure, the specific scope thereof shall be prescribed by Presidential Decree; hereinafter the same shall apply) and details of calculation, and outlook on the rate of increase of discretionary spending (referring to spending other than mandatory spending; hereinafter the same shall apply) for each field and grounds therefor and a management plan;

7. Outlook on, and grounds for, consolidated regional finance statistics under Article 59;

8. Outlook on, and a plan for, the management of consolidated financial earnings and expenses (referring to consolidated finance statistics of general accounts, special accounts and funds, which is the amount calculated by subtracting net expenses from net earnings);

9. Projects subject to investment appraisals and the issuance of municipal bonds;

10. Other matters prescribed by Presidential Decree.

(4) The Minister of the Interior and Safety may notify local governments of guidelines, including the following matters necessary to formulate a mid-term local government finance plan each year: <Added on May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

1. Finance management directions of the State;

2. Related State plans and regional plans;

3. Other information necessary to formulate the medium-term local government finance plan;

4. Criteria for the formulation of the medium-term local government finance plan.

(5) The Minister of the Interior and Safety may request the head of a related central government agency to provide information necessary to prepare guidelines under paragraph (4). In such cases, the head of a related central government agency, in receipt of a request, shall provide cooperation to him or her. <Added on May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

(6) The Minister of the Interior and Safety shall formulate a comprehensive medium-term local government finance plan each year based on each local government's medium-term local government finance plan formulated under paragraph (1) and report the comprehensive medium-term local finance plan to the Cabinet meeting. In such cases, the Minister of the Interior and Safety shall endeavor to fully reflect the opinions of local governments. <Amended on Mar. 23, 2013; Jul. 16, 2013; May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

(7) Where the Minister of the Interior and Safety formulates a comprehensive medium-term local government finance plan pursuant to paragraph (6), he or she shall consult with the heads of related central government agencies so that he or she may enhance the connection with a national finance management plan under the National Finance Act. <Added on May 28, 2014; Nov. 19, 2014; Jul. 26, 2017>

(8) Paragraphs (1), (2), (6) and (7) shall apply mutatis mutandis to revisions of a medium-term local government finance plan. <Amended on May 28, 2014>

(9) A local government finance plan deliberative committee shall be established in each local government to advise the head of each local government on the formulation of the medium-term local government finance plan. <Amended on May 28, 2014>

(10) Matters necessary for the organization and operation of local government finance plan deliberative committees under (9) and other matters shall be prescribed by ordinance of the relevant local government. <Amended on May 28, 2014>

(11) The head of a local government shall not make a project not reflected in a medium-term local government finance plan eligible for investment appraisal or the issuance of municipal bonds under Article 37; provided, the foregoing shall not apply where the project cannot be reflected due to extenuating circumstances when a medium-term local government finance plan is formulated. <Added on May 28, 2014>

[This Article Wholly Amended on Aug. 4, 2011]

Article 37(Investment appraisal) #

(1) The head of a local government shall conduct appraisal on the necessity and feasibility of the following matters (hereinafter referred to as "investment appraisal") in advance or request a Mayor/Do Governor to conduct investment appraisal: <Amended on Jan. 12, 2021; Apr. 11, 2023>

1. Compilation of a budget bill on finance investment projects;

2. Requesting the local council to pass resolutions on the following matters:

(a) Assuming debt obligations;

(b) Assuming guaranteed obligations;

(2) The scope of projects subject to investment appraiser by each investment appraiser entity under paragraph (1) shall be prescribed by Presidential Decree, in consideration of the type of a local government, the total project cost, and the type, nature, etc. of the project. <Amended on April 11, 2023>

(3) Notwithstanding paragraph (1), the following projects shall be exempt from projects subject to investment appraisals: <Amended on Apr. 11, 2023; Aug. 8, 2023>

1. A project aimed at restoration to original state, such as disaster recovery;

2. A project to repair national heritage under subparagraph 1 of Article 2 of the Act on Repair of National Heritage;

3. A project to establish a local government-invested public corporation under Article 49 of the Local Public Enterprises Act and a local public agency under Article 76 of that Act;

4. A project to construct public health centers under Article 10 of the Regional Public Health Act and firefighting agencies under Article 3 (1) of the Framework Act on Firefighting Services;

5. Other projects prescribed by Presidential Decree, such as disaster prevention and safety projects and projects that have undergone appraisals similar to investment appraisals under other statutes.

(4) The results of investment appraisals under paragraph (1) shall be classified into appropriate, conditionally approved, reexamination required, and inappropriate. <Amended on Apr. 11, 2023>

(5) The head of a local government shall not compile a budget, where the results of such investment appraisal are reexamination required or inappropriate. <Added on Apr. 11, 2023>

(6) Other matters necessary for investment appraisals, such as standards and procedures for investment appraisals, ex post facto evaluation of investment appraisals, etc. shall be prescribed by Decree of the Ministry of the Interior and Safety. <Added on Apr. 11, 2023>

[This Article Wholly Amended on May 28, 2014]

Article 37-2(Feasibility study) #

(1) The head of a local government shall receive an investment appraisal for a new project, the total project cost of which is at least 50 billion won among projects subject to investment appraisals under Article 37 (1) (including a project subject to obligations under the items of paragraph (1) 2; hereinafter the same shall apply) or shall request a specialized institution determined and publicly notified by the Minister of the Interior and Safety to conduct a study to verify the feasibility of the new project in an objective manner (hereinafter referred to as "feasibility survey"); provided, the feasibility study shall be deemed to have been conducted in any of the following cases:

1. Where a preliminary feasibility study under Article 38 (1) of the National Finance Act has been conducted;

2. Where the adequacy of a project plan has been reviewed under Article 38 (5) of the National Finance Act;

3. Where a preliminary feasibility survey has been conducted under the main clause, with the exception of the subparagraphs, of Article 40 (3) of the Act on the Management of Public Institutions;

4. Where a project proposed pursuant to Article 9 (1) of the Act on Public-Private Partnerships in Infrastructure whose details have been reviewed and whose eligibility has been tested by any of the following institutions prescribed by Presidential Decree as prescribed by Presidential Decree:

(a) A public and private investment management center has been established under Article 23 (1) of the Act on Public-Private Partnerships in Infrastructure;

(b) A specialized institution designated under Article 8-2 (1) of the National Finance Act to conduct a preliminary feasibility study under Article 38 (1) of that Act;

5. Other cases prescribed by Presidential Decree where procedures similar to studies or reviews under subparagraphs 1 through 4 have already been completed, as prescribed by Presidential Decree.

(2) The head of a local government may conclude a contract for a feasibility study by entrusting it to the Minister of the Interior and Safety.

(3) Matters necessary for procedures and methods for conducting a feasibility study, procedures, etc. for paying expenses shall be prescribed by Decree of the Ministry of the Interior and Safety.

[This Article Added on Apr. 11, 2023]

[Previous Article 37-2 moved to Article 37-3 <Apr. 11, 2023>]

Article 37-3(Local government finance investment appraisal committee) #

(1) A local government finance investment appraisal committee shall be established under the control of the head of a local government in order to provide any advice and suggestions on investment appraisal as requested by him or her; provided, where there is another committee that is suitable for serving functions of the local government finance investment appraisal committee and members of that committee have knowledge of and expertise in local government finance or investment appraisal, such committee may serve functions of the local government finance investment appraisal committee instead of it, as prescribed by local finance.

(2) A local government finance investment appraisal committee under paragraph (1) shall be composed of not more than 15 members, including one chairperson, with due consideration of gender equality. <Amended on Jan. 12, 2021>

(3) Members under paragraph (2) shall be appointed or commissioned from among non-governmental members (including teachers of national and public schools under Higher Education Act) and public officials (referring to public officials in general service under Article 2 (2) 1 of the Local Public Officials Act), and the number of members who are public officials shall not exceed 1/4 of the total number of members. <Added on Jan. 12, 2021>

(4) The chairperson shall be elected from among and by non-governmental members. <Added on Jan. 12, 2021>

(5) The terms of office of non-governmental members shall be prescribed by local ordinance within three years, and they may be reappointed only once. <Added on Jan. 12, 2021>

(6) A member shall be disqualified from deliberating on an agenda item subject to deliberation in any of the following cases: <Added on Jan. 12, 2021>

1. Where a member or a person who is his or her relative has an interest in the relevant agenda item subject to deliberation;

2. Where an institution to which a member belongs has an interest, such as providing service or advice, in relation to the relevant agenda item subject to deliberation.

(7) Where it is impracticable for a person directly involved in an agenda item subject to deliberation by a local government finance investment appraisal committee to expect a fair deliberation by a member, he or she may file an application for the use of a challenge against such member with the committee, which shall decide the matter by voting. In such cases, the member against whom an application for the use of the challenge is filed shall not participate in voting. <Added on Jan. 12, 2021>

(8) Where a member is subject to disqualification for grounds specified in the subparagraphs of paragraph (6), he or she shall voluntarily refrain from participating in deliberation on the relevant agenda item subject to deliberation. <Added on Jan. 12, 2021>

[This Article Added on May 28, 2014]

[Moving from Article 37-2; previous Article 37-3 to Article 37-4 <Apr. 11, 2023>]

Article 39(Residents’ participation in budget process, such as formulation of local budget) #

(1) The head of a local government shall prepare and implement a system through which residents may participate in the budget process (hereafter in this Article, referred to as "participatory budgeting system"), such as the formulation of the local budget (excluding resolutions adopted by the local council under Article 47 of the Local Autonomy Act; hereafter in this Article, the same shall apply), as prescribed by Presidential Decree. <Amended on May 13, 2015; Mar. 27, 2018; Jan. 12, 2021>

(2) The head of a local government may establish a participatory budgeting organization (hereinafter referred to as "participatory budgeting organization"), such as the participatory budgeting committee, under his or her jurisdiction in order to deliberate on the following related to the participation of residents in the budget process, such as the formulation of the local budget: <Added on Mar. 27, 2018>

1. Matters regarding the administration of the participatory budgeting system;

2. Matters regarding the details of a written opinion to be attached to a budget proposal submitted to the local council pursuant to paragraph (3);

3. Other matters the head of the local government deems necessary for the administration of the participatory budgeting system.

(3) The head of a local government shall attach a written opinion of residents, collected through the participatory budgeting system, to a budget proposal to be submitted to the local council. <Amended on May 28, 2014; Mar. 27, 2018>

(4) The Minister of the Interior and Safety may evaluate the administration of the participatory budgeting system of each local government in consideration of financial and local conditions, etc. of each local government, as prescribed by Presidential Decree. <Added on May 13, 2015; Jul. 26, 2017; Mar. 27, 2018>

(5) The formation and operation of the participatory budgeting organization and other necessary matters shall be prescribed by ordinance of the local government concerned. <Added on Mar. 27, 2018>

[This Article Wholly Amended on Aug. 4, 2011]

[Title Amended on Mar. 27, 2018]

Article 44(Assumption of debt obligations) #

(1) Except in any of the following cases, if the head of a local government enters into a contract or does an act causing the local government to assume debt obligations, he or she shall, beforehand, include them in the budget and obtain a resolution thereon from the local council. In such cases, debt obligations incurred by the assumption of debt obligations shall be included in the calculation of the maximum amount of local government bonds to be issued pursuant to Article 11 (2):

1. One that complies with statutes, regulations or municipal ordinances;

2. One that is within the limit of expenditure budget, specified carry-over expenses or continuing expenses.

(2) Notwithstanding the provisions of paragraph (1), if the head of a local government has no time to convene a local council, he or she may enter into a contract for a project without obtaining a resolution thereon from the local council, which requires urgent promotion for recovery from a disaster and the total amount of which is below the amount prescribed by municipal ordinance within one billion won among contracts causing the local government to assume debt obligations.

(3) If the head of a local government enters into a contract without obtaining a resolution thereon from the local council pursuant to paragraph (2), he or she shall immediately file a report to the local council.

(4) Where the head of a local government has performed an act assuming debt obligations pursuant to paragraphs (1) through (3), he or she shall appropriate such debt obligations in the expenditure budget for the fiscal year after next at the latest without fail, but shall not appropriate them in the expenditure budget for the other fiscal year. <Amended on May 28, 2014>

(5) In the case of acts causing a local government to assume debt obligations pursuant to paragraphs (1) through (3), an act causative of disbursement spanning a relevant fiscal year and the following fiscal year may be done.

[This Article Wholly Amended on Aug. 4, 2011]

Article 44-2(Documents to accompany budget bills) #

(1) Each budget bill shall be accompanied by the following documents; provided, all or some of the following documents may be omitted for a revised budget bill or revised supplementary budget bill:

1. Outline of the conditions of financial management;

2. Descriptions of revenue and expenditure budget for each project;

3. Descriptions on projects requiring continuing expenses, the conditions of spending and an investment plan;

4. Descriptions on assuming debt obligations, the conditions of spending and the expected amount;

5. A report on local tax expenditure (based on an estimate) under Article 5 of the Restriction of Special Local Taxation Act;

6. A report on consolidated regional finance statistics (based on a budget) under Article 59;

7. Gender-sensitive budgetary documents;

8. A performance plan;

9. A table of organization of public officials whose personnel expenses are appropriated in the budget and unit prices which are the basis for the organization thereof;

10. Detailed statements of specified carry over expenses;

11. Medium-term local government finance plans;

12. Documents related to public property;

13. Documents related to the transfer between accounting and funds;

14. Other documents prescribed by Presidential Decree.

(2) An outline of the conditions of financial management under paragraph (1) 1 shall include the following: <Amended on Nov. 19, 2014; Jul. 26, 2017>

1. Financial indicators prescribed by Decree of the Ministry of the Interior and Safety;

2. Consolidated debts (referring to debts including debts of local public enterprises (hereinafter referred to as "local public enterprises") under the Local Public Enterprises Act and invested institutions or funded institutions (hereinafter referred to as "local government-invested or funded institutions") under Act on the Operation of Institutions Provided with Investments or Funds by Local Governments; hereinafter the same shall apply);

3. Contingent liabilities (referring to those that may be changed to liabilities of a local government according to a guarantee or agreement; hereinafter the same shall apply);

4. Ratio of mandatory spending to discretionary spending;

5. Results of audits conducted by the Board of Audit and Inspection of Korea, etc. related to financial management;

6. Matters regarding reductions in local allocation tax;

7. Details of financial analysis and financial diagnosis;

8. Current status of local tax expenditures;

9. Other matters prescribed by Presidential Decree.

(3) A local government may submit a report of consolidated regional finance statistics under paragraph (1) 6 within 10 days after it submits a budget bill to the local council.

[This Article Added on May 28, 2014]

Article 55(Financial analysis and financial examination) #

(1) The Minister of the Interior and Safety shall analyze the details of financial reports under Article 54, as prescribed by Presidential Decree. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017>

(2) The Minister of the Interior and Safety shall examine the level of financial risk on matters prescribed by Presidential Decree, such as liabilities of the financial position of local governments, as prescribed by Presidential Decree. <Amended on Mar. 27, 2018>

(3) The Minister of the Interior and Safety may conduct a financial examination of local governments falling under any of the following after deliberation by the Committee, as prescribed by Presidential Decree: <Amended on Mar. 27, 2018; Aug. 16, 2023>

1. Local governments of which financial soundness and efficiency are noticeably low as a result of financial analysis under paragraph (1);

2. Local governments of which level of financial risk is higher than the level designated by Presidential Decree as a result of the examination under paragraph (2).

(4) The Minister of the Interior and Safety may publish the results of financial analysis and financial examination under paragraphs (1) and (3). <Amended on Mar. 27, 2018>

(5) The Minister of the Interior and Safety shall report important matters in the results of financial analysis and financial examination under paragraphs (1) and (3) to the competent Standing Committee of the National Assembly and the State Council within three months after he or she conducts financial analysis and financial examination every year. <Added on Mar. 27, 2018>

(6) In order to ensure the objectivity and expertise of financial analysis and financial examination under paragraphs (1) and (3), the Minister of the Interior and Safety may entrust such analysis and examination to a specialized institution prescribed by Presidential Decree. <Added on May 28, 2014; Nov. 19, 2014; Jul. 26, 2017; Mar. 27, 2018>

[This Article Wholly Amended on Aug. 4, 2011]

Article 55-3(Obligations of local governments in financial crisis) #

(1) The head of a local government designated as a local government in financial crisis (hereinafter referred to as "head of a local government in financial crisis") under Article 55-2 (1) 1 shall formulate a plan for financial soundness and obtain approval from the Minister of the Interior and Safety, as prescribed by Presidential Decree. In such cases, the head of a Si/Gun/autonomous Gu shall submit a plan via the competent Mayor/Do Governor. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017; Mar. 27, 2018>

(2) The head of a local government in financial crisis shall submit a plan for financial soundness formulated under paragraph (1) to the local council for resolution.

(3) Where the head of a local government in financial crisis compiles a budget, it shall be based on a plan for financial soundness under paragraph (2).

(4) The head of a local government in financial crisis shall report the status of implementation of a plan for financial soundness to the local council and the Minister of the Interior and Safety. In such cases, the head of a Si/Gun/autonomous Gu shall submit a report via the competent Mayor/Do Governor. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017>

(5) The Minister of the Interior and Safety may recommend or guide matters necessary for the formulation of a plan for financial soundness and the status of implementation of such plan to a local government in financial crisis. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017>

(6) The head of a local government in financial crisis shall comply with the recommendation and guidance under paragraph (5) except in extenuating circumstances.

(7) The head of a local government in financial crisis shall disclose a plan for financial soundness and the status of implementation thereof to the residents at least twice a year.

(8) The Minister of the Interior and Safety may recommend a local government designated as a local government under financial caution under Article 55-2 (1) 2 to formulate and implement a plan for financial soundness under paragraph (1) or guide matters necessary for financial soundness following deliberation by the Committee. <Added on Mar. 27, 2018; Aug. 16, 2023>

[This Article Added on Mar. 8, 2011]

[Title Amended on Mar. 27, 2018]

Article 60(Publication of management conditions of local government finance) #

(1) The head of a local government shall publish the following matters to residents based on the budget statement and statement of accounts within two months after the determination on or approval for the budget or settlement of accounts is made or granted: <Amended on May 29, 2016; Mar. 27, 2018; Jan. 29, 2020>

1. Management conditions of revenue and expenditure budget (including a performance plan and performance report);

2. Financial statements;

3. Current status of debt management;

4. Current status of the application of funds;

5. Increase and decrease and the current value of public property;

6. Consolidated regional finance statistics;

7. Information on the business management of local public enterprises and local government-invested or -funded institutions;

8. Medium-term local government finance plans;

9. Gender sensitive budget statement and gender sensitive statement of accounts under Article 36-2, and Article 18 of the Local Accounting Act;

10. Management conditions for each criterion for compilation of budget under Article 38;

10-2. Operational status of participatory budgeting system under Article 39 and written opinions of residents;

11. Outlines of the conditions of financial management under Article 44-2 (1) 1;

12. Plans for financial soundness formulated pursuant to Article 55-3 (1) and the current status of the implementation thereof;

13. Plans for management of financial soundness under Article 87-3 and the current status of the implementation thereof;

14. Current status of activities to appraise investment, activities to issue municipal bonds, activities to attract private capital, and activities to guarantee obligations;

15. Current status of the following matters related to local subsidies:

(a) Current status of the provision of local subsidies;

(b) Results of performance evaluation;

(d) Details of important dispositions, such as the revocation of the determination on providing local subsidies;

16. Other important matters regarding financial management prescribed by Presidential Decree.

(2) The head of a local government shall prepare matters referred to in the subparagraphs of paragraph (1) so that residents may understand such matters easily, as prescribed by the Minister of the Interior and Safety, and shall publish the matters on its website, etc. so that residents may read them or download data at any time in the absence of inevitable circumstances. <Amended on Nov. 19, 2014; Jul. 26, 2017>

(3) A local government finance publication deliberative committee shall be established under the jurisdiction of the head of a local government in order to deliberate on the appropriateness, etc. of the details of publication under paragraph (1); provided, if there exists another committee appropriate for performing the functions of a local government finance publication deliberative committee, such committee may act on behalf of the local government finance publication deliberative committee, as prescribed by municipal ordinance. <Amended on Nov. 15, 2022>

(4) Article 37-3 (2) through (8) shall apply mutatis mutandis to the organization of a local government finance publication deliberative committee, the term of office of its members, the exclusion of, challenge to, recusal, etc. of, its members. In such cases, "local government finance investment appraisal committee" shall be construed as "local government finance publication deliberative committee". <Added on Nov. 15, 2022; Apr. 11, 2023>

(5) Except as provided in paragraphs (3) and (4), matters necessary for the organization and operation of a local government finance publication deliberative committee shall be prescribed by ordinance of the relevant local government. <Added on Nov. 15, 2022>

(6) The head of a local government shall report the details of publication made pursuant to paragraph (1) to the local council and the Mayor/Do Governor in cases of a Si/Gun/autonomous Gu, or the Minister of the Interior and Safety in cases of a City/Do within five days from the date of publication. In such cases, the Mayor/Do Governor shall report the details thereof, including the details thereof of a Si/Gun/Gu under his or her jurisdiction. <Amended on Nov. 19, 2014; Jul. 26, 2017; Nov. 15, 2022>

(7) The head of a local government shall disclose the management conditions of the revenue and expenditure budget thereof to residents every day without special reason not to do so, as well as publication under paragraph (1). In such cases, he or she shall allow residents to access the management conditions of the revenue and expenditure budget by detailed project through the website. <Added on May 13, 2015; Nov. 15, 2022>

(8) Except as provided in paragraphs (1), (2), (6), and (7), matters necessary for publication and disclosure shall be prescribed by Presidential Decree. <Amended on May 13, 2015; Nov. 15, 2022>

[This Article Wholly Amended on May 28, 2014]

[Title Amended on May 13, 2015]

Article 60-3(Designation, and removal of designation of, organizations subject to emergency financial management) #

(1) Where the Minister of the Interior and Safety deems that it is impracticable for a local government to overcome its financial crisis situation by its own efforts because it falls under any of the following, he or she may designate the relevant local government as an organization subject to emergency financial management. In such cases, he or she shall hear the opinion of the head of the local government which he or she intends to designate as an organization subject to emergency financial management and the local council in advance: <Amended on Jul. 26, 2017>

1. Where the level of financial crisis of the local government after three years have passed from the time it was designated as an organization under a financial crisis or thereafter worsens below the level prescribed by Presidential Decree compared to the time it was designated as an organization under a financial crisis though the local government designated as an organization under a financial crisis pursuant to Article 55-2 has implemented a financial soundness plan under Article 55-3 for three years;

2. Where the local government has failed to pay salaries to public officials under its jurisdiction for at least 30 days;

3. Where the local government has failed to pay the principal or interest of the debt whose repayment is due, for at least 60 days.

(2) Where the head of a local government deems that the relevant local government falls under any subparagraph of paragraph (1) or requires emergency financial management because it faces an equivalent financial crisis, he or she may file an application for designation of an organization subject to emergency financial management under paragraph (1) with the Minister of the Interior and Safety after he or she hears the opinion of the local council. <Amended on Jul. 26, 2017>

(3) Where the Minister of the Interior and Safety intends to designate an organization subject to emergency financial management pursuant to paragraph (1) or to designate an organization subject to emergency financial management based on an application filed by the head of a local government pursuant to paragraph (2), he or she shall designate an organization subject to emergency financial management following deliberation by the Committee. <Amended on Jul. 26 2017; Aug. 16, 2023>

(4) Where grounds for designation of an organization subject to emergency financial management have ceased, the head of a local government designated as an organization subject to emergency financial management (hereinafter referred to as "organization subject to emergency financial management") pursuant to paragraph (1) or (2) may file an application for removal of the designation thereof with the Minister of the Interior and Safety after hearing the opinion of the local council. <Amended on Jul. 26, 2017>

(5) Where grounds for designation of an organization subject to emergency financial management have ceased or an application for removal of the designation thereof under paragraph (4) has been filed, the Minister of the Interior and Safety may remove the designation thereof following deliberation by the Committee. <Amended on Jul. 26, 2017; Aug. 16, 2023>

(6) Where the Minister of the Interior and Safety designates a City/Do as an organization subject to emergency financial management pursuant to paragraph (1) or (2), he or she shall report the designation thereof to the State Council within 60 days from the date he or she designates the City/Do as the organization subject to emergency financial management. <Amended on Jul. 26, 2017>

(7) Except as provided in paragraphs (1) through (6), the designation and the removal of the designation of an organization subject to emergency financial management and other necessary matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 29, 2015]

Article 60-6(Implementation of emergency financial management plan) #

(1) The head of an organization subject to emergency financial management shall conscientiously implement an emergency financial management plan.

(2) The Minister of the Interior and Safety or an emergency financial manager may inspect the conditions of the implementation of an emergency financial management plan of an organization subject to emergency financial management or request the organization subject to emergency financial management to make a report or submit data. In such cases, the head of the organization subject to emergency financial management shall conscientiously comply with such request. <Amended on Jul. 26, 2017>

(3) The head of an organization subject to emergency financial management shall provide support in matters necessary for an emergency financial manager to perform his or her duties.

(4) The Minister of the Interior and Safety may conduct an evaluation of the implementation, etc. under paragraphs (1) through (3), and recommend necessary matters as a result of the evaluation thereof. <Amended on Jul. 26, 2017>

(5) The head of an organization subject to emergency financial management in receipt of recommendations under paragraph (4), shall take prompt measures and notify the Minister of the Interior and Safety of the results thereof. <Amended on Jul. 26, 2017>

(6) The head of an organization subject to emergency financial management shall disclose an emergency financial management plan, the conditions of the implementation thereof, and the results of the evaluation of the implementation thereof conducted by the Minister of the Interior and Safety to residents at least twice a year. <Amended on Jul. 26, 2017>

(7) Article 55-5 shall apply mutatis mutandis to the imposition of disadvantage on an organization subject to emergency financial management that poorly implements an emergency financial management plan. In such cases, "organization under a financial crisis" shall be construed as "organization subject to emergency financial management," and "financial soundness plan" as "emergency financial management plan."

[This Article Added on Dec. 29, 2015]

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Basic principles for operating local government finance) #

Article 4(Research and development of local government finance systems) #

Article 5(Performance-oriented operation of local government finance) #

Article 6(Fiscal year) #

Article 7(Principle of one-year budget) #

Article 8 #

Article 9(Classification of accounts) #

Article 9-2(Deposit of surplus financial resources between accounts and funds) #

Article 10(Application of matters concerning education, science, and physical education) #

Article 11(Issuance of local government bonds) #

Article 11-2(Restrictions on issuance of municipal bonds) #

Article 12(Procedures for issuing local government bonds) #

Article 13(Assuming guaranteed obligations) #

Article 14 #

Article 15 #

Article 16 #

Article 17(Restrictions on donations or subsidies) #

Article 17-2 #

Article 18(Restrictions on investment or funding) #

Article 19(Advice on operation of local government finance) #

Article 20(Expenses concerning autonomous clerical affairs) #

Article 21(Liability amount and grant) #

Article 22(Apportionment rates of expenses) #

Article 23(Provision of subsidies) #

Article 24(Filing applications for government subsidies) #

Article 25(Bills accompanied by burdens on local governments) #

Article 26(Expenses accompanied by burdens on local governments) #

Article 27(National subsidies accompanied by burden on local governments) #

Article 27-2(Local government finance management committee) #

Article 27-3(Budget compilation for projects subsidized by national treasury) #

Article 27-4(Administration of government subsidies) #

Article 27-5(History management of government-subsidized projects) #

Article 27-6(Assessment of impacts on local government finance) #

Article 27-7(Conducting affairs following transfer of government-subsidizing affairs to local governments) #

Article 27-8(Management of execution of government-subsidized projects) #

Article 28(Assuming expenses accompanying clerical affairs entrusted by Cities/Dos) #

Article 28-2(Restrictions on local tax reductions and exemptions) #

Article 29(Grants-in-aid for adjustment among Sis/Guns) #

Article 29-2(Grants-in aid for adjustment among autonomous Gus) #

Article 29-3(Kinds and purposes of grants-in-aid for adjustment) #

Article 29-4(Disclosure of particular details of grants-in-aid for adjustment) #

Article 30 #

Article 31(Service charges for state-owned public facilities) #

Article 32(Devolvement of incomes, such as administrative fines following delegation of clerical affairs) #

Article 32-2 #

Article 32-3 #

Article 32-4 #

Article 32-5 #

Article 32-6 #

Article 32-7 #

Article 32-8 #

Article 32-9 #

Article 32-10 #

Article 32-11 #

Article 33(Formulation of medium-term local government finance plans) #

Article 34(Total budget principle) #

Article 35(Financial resources of annual expenditures) #

Article 36(Compilation of budgets) #

Article 36-2(Preparation and submission of gender-sensitive budgets) #

Article 37(Investment appraisal) #

Article 37-2(Feasibility study) #

Article 37-3(Local government finance investment appraisal committee) #

Article 37-4(Disclosure of major projects) #

Article 38(Manuals for operating local government finance) #

Article 39(Residents’ participation in budget process, such as formulation of local budget) #

Article 40(Details of budgets) #

Article 41(Classification of budget items) #

Article 42(Continuing expenses) #

Article 43(Reserve funds) #

Article 44(Assumption of debt obligations) #

Article 44-2(Documents to accompany budget bills) #

Article 45(Compilation of revised supplementary budgets) #

Article 46(Execution of budgets when budgets are not approved) #

Article 47(Prohibition of disbursing budget for other purposes) #

Article 47-2(Budget spending and transfer of budget) #

Article 48(Payment of performance bonuses for saved budgets) #

Article 48-2(Residents’ surveillance of illegal disbursement and dissipation of budgets and funds) #