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OSAKA — To forestall intervention by the central government, the cash-strapped Osaka Prefectural Government announced a 10-year restructuring plan Thursday that includes a reduction in prefectural officials and teachers as well as a suspension of regular annual wage increases for two years.

The plan requires the prefectural government, under severe financial restraints, to deal with revenue shortfalls that could reach 625 billion yen in fiscal 2002 alone if no measures are taken.

However, a prefectural official said the solo effort by the prefectural government cannot resolve the continuous revenue shortfalls because the current tax system for local governments must be changed.

According to the plan, starting next fiscal year, the number of prefectural officials and teachers will be cut by 7,000 over the next 10 years. The prefecture already has cut 3,000 staffers over the past two years.

In addition to the two-year halt in pay raises, the age requirement for voluntary retirement will be lowered from 50 to 45 for three years beginning this year, with those who apply eligible for an additional 30 percent of the usual retirement allowance. With these measures, 546 billion yen in personnel expenses is expected to be saved by fiscal 2008.

The 92 corporations financed and supervised by the prefectural government, as well as the number of executives at the firms, will be streamlined by about 20 percent. No retirement allowance from such corporations will be paid to prefectural officials who held executive positions there.

Osaka Gov. “Knock” Yokoyama called on the people of Osaka to share the burden of financial difficulties that will be caused by the review of policies.

More than 25 main policy categories, including subsidies for private schools and medical care, will be reviewed and scaled down. A total 507 billion yen will be cut by fiscal 2008 through these revisions, according to the plan.

Funds for public facilities such as gymnasiums and parking lots will be increased, as well as prefectural high school and university tuitions. Nine construction projects that were to be suspended until September 1999 now will be frozen until fiscal 2001.

Even if everything goes as planned, however, the balance would be achieved through money from a special deficit-covering fund, and by fiscal 2008 roughly 751 billion yen would be taken from the fund.

In effect, this would be the amount of debt the prefecture will have to deal with thereafter, the official said.

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