In a move toward greater local autonomy, a government panel has submitted a report to Prime Minister Junichiro Koizumi calling for large cuts in state subsidies to local governments, including a reduction in government payments for public education. Currently the central government pays half of the salaries for public-school teachers, provided that the standard size of a class -- 40 students -- is maintained.
The report from the Commission for Local Decentralization and Reform says the central government should allow local governments to use state subsidies as they like. Specifically, education subsidies (2.657 trillion yen) and day-care center operating expenses (42.3 billion yen) would be reclassified as "general revenues" with no strings attached. Additionally, subsidies for municipal public-works projects (5.125 trillion yen) would be either scrapped or slashed.
State subsidies have been used as means of extending central-government authority to local governments not only in public education and investment but also in other vital areas of administration. Revamping the complex system of subsidies is, therefore, essential to decentralization, which is an important item on the Koizumi administration's structural reform agenda.