The first day in the financial reconstruction of Yubari, Hokkaido, has passed. On April 1, the start of the new fiscal year, the city began its 18-year-long program to repay accumulated debts of 35.3 billion yen. The central government will carefully monitor budgets drawn up by the city, which was once a thriving coal-mining center but is now designated a "municipality under rehabilitation."
Yubari is not an isolated case. Many local governments are suffering from deteriorating financial conditions. To try to prevent more bankruptcies, the government has submitted to the Diet a bill aimed at ensuring financially healthy local governments.
If the bill passes, the government hopes to start implementing it in a phased manner in fiscal 2008, with full implementation from April 2009. It is hoped that the legislation will help re-instill fiscal discipline in prefectural and municipal governments. The central government also needs to work out measures to encourage and help local governments.