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The Osaka Prefectural Government, facing a financial crisis, announced a 3.5 trillion yen budget plan Friday for fiscal 1999 that reduces prefectural personnel costs for the first time since the Local Government Law took effect in 1947.

The planned cut in personnel costs was made possible because 1,300 officials, including 1,000 teachers, are to be let go in fiscal 1999, and regular pay raises of public workers are to be halted for two years starting in April.

It is the first workforce reduction in connection with a 10-year streamlining program announced in September that will eliminate 7,000 workers over the next 10 years. The prefecture currently has 91,000 workers.

Expected tax revenues for fiscal 1999 will be 1.07 trillion yen, down more than 20 percent of the initial forecast for fiscal 1998.

1998 tax revenues have been revised downward several times, and the latest figure is 1.18 trillion yen.

Although the account for fiscal 1998 will be 16.9 billion yen in the red, the debt cannot be resolved in fiscal 1999 due to the ailing economic climate, a prefectural official said. It will be put forward till fiscal 2000 or later.

In addition to subsidies from the central government, the budget plan also relies on 299 billion yen in prefectural bonds, of which 120 billion yen will be used to cover a 565 billion yen revenue shortfall. The local government has already issued prefectural bonds worth 3.5 trillion yen.

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