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A Red Flag on Local Governments Due to Universal Relief Funds
Disaster Relief Funds for Citizens (cfsouthernindiana.com)

On September 22nd, the Ministry of the Interior and Safety (MOIS) announced that local governments distributed about 5,449 billion won for the coronavirus disease 2019 (COVID-19) emergency relief funds as of 2020 and the 1st half of 2021. As a result, the average independent rate of finance or municipalities nationwide fell to 48%, which had been maintained at over 50% since 2010. In the case of Pocheon-si, Gyeonggi-do, the local government handed out the largest universal relief funds of 800,000 won per citizen, and the independent rate of finance was only 24% as of September 2021. MOIS insisted that the cause of the decline in the independent rate of finance would be that the denominator in the formula for the rate of calculation is increased by the budget size from government subsidy. However, if the relief funds exceed the subsidy, the local government should fill the lacking amount. Experts believe that the problem exists in providing universal relief funds to all citizens, rather than selective relief funds that help vulnerable social groups or those who have undergone difficult situations due to COVID-19. What is more, to win the local elections in June next year, local governments plan to hand out more universal funds, which can be seen as a populist policy. Professor Park Sang-in from the Department of public administration at Seoul National University pointed out that “With the local governments’ finances deteriorating, their excessive universal relief funds are a kind of deception and moral hazard.”

양희태  yht0648@g.skku.edu

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