Local Finance Council Meeting Summary, September 25, 2026
Overview
On September 25, 2026, the Local Finance Council received briefings on fiscal 2025 settlements for prefectural and municipal general accounts, local public enterprises and related entities, and summaries of soundness indicators and fund shortage ratios. General account revenue and expenditure continued to rise amid higher prices and other factors. The main drivers were property-related expenses and costs related to child and childcare policies on the expenditure side, and local taxes on the revenue side. The council also discussed tariff revisions by public enterprises and the outlook for hospital businesses.
Key points
- The agenda covered summaries of fiscal 2025 settlements for prefectural and municipal general accounts, local public enterprises and related entities, soundness indicators, and fund shortage ratios.
- General account revenue and expenditure rose in fiscal 2025 for a second consecutive year, amid higher prices and other factors.
- For fiscal 2025 revenue, prefectural resident tax remained elevated and municipal taxes also grew; local taxes were identified as the largest driver of increases for both prefectures and municipalities.
- For public enterprises, it was considered important to pass through higher costs caused by rising prices and to implement appropriate tariff increases, while fully explaining their necessity to residents.
Overview
On September 25, 2026, the Local Finance Council received briefings on fiscal 2025 settlements and held a question-and-answer session and an exchange of views. The agenda covered summaries for prefectural and municipal general accounts, local public enterprises and related entities, soundness indicators, and fund shortage ratios.
The briefing described how revenue and expenditure, which had risen during the COVID-19 pandemic, declined through around fiscal 2023, rose again in fiscal 2024 amid higher prices and other factors, and continued to rise in fiscal 2025.
Details
In fiscal 2025, expenditure on property-related items rose due to higher prices and other factors, as did costs related to child and childcare policies. The main reason for the increase in property-related education costs for municipalities was the cost of replacing the one-device-per-student terminals installed under the GIGA School Initiative. The Ministry of Education, Culture, Sports, Science and Technology provides prefectures with funds for establishing reserves, and prefectures then distribute the funds to municipalities through those reserves. In settlement statistics, prefectural spending is classified as subsidies and other expenses, while municipal spending is classified as commissioned services and other property-related expenses.
It was explained that the medical fee revision for hospital businesses takes effect in June 2026. It is unclear whether all future increases in prices and labor costs can be reflected in medical fees, but some improvement is expected.
Public enterprises are generally expected to operate on a self-supporting basis. It was considered important to pass higher costs caused by rising prices through to expenses and cover them through appropriate tariff increases on the revenue side. More entities have revised tariffs, particularly for water supply and sewerage, but further increases are needed. When revising tariffs, it is important to explain fully to residents not only price increases and personnel costs but also the need for disaster preparedness and measures to address aging infrastructure, and to obtain residents' understanding.