The general purposes governing this Law are to assure sound finance of local public bodies and thus to contribute to development of local autonomy by establishing fundamental principles which shall govern operation of 'local finance' (which shall mean finance of local public bodies hereinafter) and relationship between national and local finance.
(Principles of Local Finance)
Article 2.
Each local public body shall endeavor to administer sound finance, and refrain from any action contrary to the national policies or prejudicial to the finance of the State or other local public bodies.
2.
The State shall endeavor to promote self-dependence and soundness of local finance, and refrain from any action prejudicial to local autonomy or from shifting expenses to local public bodies.
(Budget)
Article 3.
Each local public body shall estimate its annual expenses in the budget in accordance with laws and ordinances, and in conformity with generally accepted standards.
2.
Each local public body shall estimate its annual revenues in the budget by grasping its sources of revenue by means of all available data and by calculating its revenue based on the situation of economy.
(Execution of Budget)
Article 4.
Expense of each local public body shall be kept to the minimum necessity for achievement of its goal.
2.
Revenue of each local public body shall be collected with certainty and fairness.
(Long-term View of Financial Operation)
Article 4-2.
Sound operation of finance in each local public body should not be jeopardized. Therefore, each local public body shall always be in clear prospect of its financial situation considering not only next fiscal year but also following fiscal years when it prepares and executes its budget or takes any action which is to result in increase of its expenditure or decrease of its revenue.
(Adjustment of Revenue)
Article 4-3.
In case the sum of local allocation tax which a local public body receives in a fiscal year and the sum of its basic financial revenues for the same fiscal year, added together, shall considerably exceed the sum of its basic financial needs for the same fiscal year, or in case the sum of its general revenues (which shall hereinafter mean the total sum of ordinary tax, special grant tonnage, grant-in-aid to a city, town or village comprising the State estate, grant-in-aid to To, Do, Fu, or Ken comprising the state estate, grant-in-aid to a city, town or village comprising military bases, etc., and local allocation tax, or local allocation tax for special districts) in a fiscal year shall exceed the sum of general revenues in the previous year and the amount of such excess shall considerably exceed the sum of its newly increased obligations, such excess shall be reserved, with a view to the sound operation of finance in the following fiscal years, for procurement of such property as may in the long run constitute revenue sources, etc. or for advanced retirement of local debts, provided that such surplus may be appropriated to cover the increase of expenses or the decrease of revenues caused by disasters, the deficits brought forward from the previous fiscal year, or the expenses for large-scale civil engineering or other construction works requiring urgency or other unavoidable expenses.
2.
All proceeds accrued from the fund reserved in accordance with preceding section (hereinafter, referred to as 'reserve fund') shall be carried over to the same reserve fund.
3.
The reserve fund shall be deposited in banks or other banking institutions, invested in national government bonds, local bonds, government-guaranteed bonds (which shall mean such bonds as the government guarantees the repayment of principals and payment of interests) or other securities or otherwise invested in a most secure way.
(Appropriation from the Reserve Fund)
Article 4-4.
No appropriation shall be made from the reserve fund but to:
1.
Cover deficits in revenue on account or an extreme change in economy, etc.;
2.
Cover increase of expenses or the decrease of revenues caused by disasters;
3.
Cover expenses for large-scale civil engineering or other construction works that require urgency or other unavoidable expenses;
4.
Cover expenses for procurement of such property as may in the long run constitute revenue sources, etc.;
5.
Retire local debts in advance of the prescribed terms
(Prohibition of Assessments)
Article 4-5.
The State (including inferior courts defined under Article 2 of National Government Organization and Judicature Law (Law No. 59 of 1947) shall not, whether directly or indirectly, collect any extra-legal assessments in money or in kind from local public bodies or inhabitants thereof, with any sort of compulsion.
(Limitations on Local Debts)
Article 5.
All expenses of a local public body shall be financed with its revenue other than local debts. However, local debt may be resorted to finance:
1.
The expense for transportation, gas, water supply and other enterprises undertaken by the local public (hereinafter referred to as "public enterprise".);
2.
Investments and loans (including such expenses for procurement of land or other property to be invested or rented);
3.
Expense for renewal of local debts;
4.
Expenses for temporary measures, recovery works and relief measures in time of disaster;
5.
Expense for construction works of such public or governmental facilities, as schools and other educational facilities, nurseries and other welfare facilities, fire facilities, road, rivers, harbors and other constructions (including share or subsidy for construction works of public facilities carried out by a public body or an organization that is invested by the State or a local public body and that is provided by cabinet order) and expense for procurement of land (including other rights related to land than property) used for public or governmental facilities or substitute for them.
(Term of Redemption)
Article 5-2.
The term of redemption of local debts raised in accordance with item 5 of the preceding article shall be so prescribed as not to exceed the life span of the public or governmental facilities constructed with such money. This rule shall also apply to renewal of such local debts.
(Consultation about Raising Local Debts)
Article 5-3.
A local public body that intends to raise local debts or change the method of raising, interest or the method of redemption shall consult with the Minister for public management, home affairs, posts and telecommunications or the governor of To, Do, Fu or Ken in accordance with cabinet order, except when trivial ones or the cases provided in the order of the Ministry for public management, home affairs, posts and telecommunications.
2.
The consultation shall be hold revealing local debt's purpose, limitation, method, fund, interest and other issues provided by cabinet order.
3.
A local public body may borrow related public funds in accordance with cabinet order only for local debts that the Minister for public management, home affairs, posts and telecommunications or the governor of To, Do, Fu or Ken gives approval to after the consultation provided in paragraph 1.
4.
Expense for redemption of local debts that the Minister for public management, home affairs, posts and telecommunications or the governor of To, Do, Fu or Ken gives approval to after the consultation provided in paragraph 1 shall be included in the estimate of the total disbursement of local public bodies provided in paragraph 2 of Article 7 of local allocation tax law (Law No. 211 of 1950) in accordance with the Article 7 of local allocation tax law.
5.
A mayor of a local government body that intends to raise local debts or change the method of raising, interest or the method of redemption without approval of the Minister for public management, home affairs, posts and telecommunications or the governor of To, Do, Fu or Ken shall report the intend to its assembly in advance. In the case the mayor thinks there is no time to hold an assembly meeting or provided in cabinet order, the mayor shall report it in the next assembly meeting after raising local debts or changing the method of raising, interest or the method of redemption
6.
The Minister for public management, home affairs, posts and telecommunications shall, in accordance with cabinet order, publicize the standard of approval provided by paragraph 1 and permission provided by paragraph 1, 3, 4 and 5 of the next Article, the total planed amount of approval provided by paragraph 1(including permission provided by paragraph 1, 3, 4 and 5 of the next Article) and documents describing other issues required by cabinet order.
7.
The Minister for public management, home affairs, posts and telecommunications shall hear the opinion of local finance council upon the standard of approval provided by paragraph 1 and the preceding paragraph and documents provided the preceding paragraph in advance of publicizing them.
(Permission of Raising Local Debts)
Article 5-4.
A local public body that intends to raise local debts or change the method of raising, interest or the method of redemption and that meets one of the following conditions shall get permission of the Minister for public management, home affairs, posts and telecommunications shall or the governor of To, Do, Fu or Ken in accordance with cabinet order. In this case, such local public bodies do not have to consult provided by paragraph 1 of the preceding Article:
1.
A local public body whose sum of the amount of this fiscal year's revenue (counted in accordance with cabinet order. This applies to all the term "revenue" in this item) appropriated to last fiscal year's expenditure (counted in accordance with cabinet order. This applies to all the term "expenditure" in this item) to deal with the shortage of last fiscal year's revenue, the amount of obligation postponed to this fiscal year's expenditure that should have been appropriated by last fiscal year's revenue primarily but is paid by this fiscal year's revenue instead to deal with the shortage of last fiscal year's revenue, and the amount of the last fiscal year's budget that should have been used to projects last fiscal year but is postponed to this fiscal year exceeds the amount counted in accordance with cabinet order;
2.
A local public body whose one third of the sum of each last three fiscal year's amount figured by deducting the amount of expenses for local debts charges that shall be taken into the standard financial need by the way provided by order of the Ministry for public management, home affairs, posts and telecommunications in accordance with local allocation tax law (the Minister for public management, home affairs, posts and telecommunications determines the equivalent amount used for special districts to this calculation. This amount is hereinafter referred to as "the amount of debt charges taken into calculation" in this item) from the amount calculated as the standard financial revenue in accordance with cabinet order by deducting the sum of the amount of debt charges taken into calculation and the amount of the specific revenue that may be appropriated to funds for local debt charges provided by cabinet order (excluding the amount provided by cabinet order and hereinafter referred to as "the amount of redemption of local debts") and the amount that can be treated as equivalent of the amount of redemption of local debts in accordance with cabinet order (hereinafter referred to as "the quasi amount of redemption of local debts"). from the sum of the amount of redemption of local debts and the quasi amount of local debts exceeds the amount counted in accordance with cabinet order;
3.
A local public body that has local debts that have not been paid on schedule;
4.
A local public body that has an experience of delaying redemption of local debts in the past and that is specified by the Minister for public management, home affairs, posts and telecommunications in accordance with cabinet order as the one that has the possibility of delaying redemption of local debts in the near future;
5.
A local public body that has an experience of raising local debts or changing the method of raising, interest or the method of redemption without consulting in accordance with paragraphl of the preceding Article or getting permission in accordance with this paragraph and paragraph 3, 4 and 5 of the preceding Article and that is specified by the Minister for public management, home affairs, posts and telecommunications;
6.
A local public body (that has an experience of submitting false documents or doing other fraudulent actions at consulting in accordance with paragraph 1 of the preceding Article or getting permission in accordance with this paragraph and paragraph 3, 4 and 5 of the preceding Article and that is specified by the Minister for public management, home affairs, posts and telecommunications.
2.
The Minister for public management, home affairs, posts and telecommunications shall withdraw, in accordance with cabinet order, the specification provided by item 4 to 6 in the preceding paragraph when the Minister admit that the necessity of the specification has disappeared.
3.
A local public body (except such local public bodies that meet one of the items of paragraph 1) that has a public enterprise whose is in a bad operating condition that meets one of the following conditions and that intends to raise local debts or change the method of raising, interest or the method of redemption for the local enterprise shall get permission of the Minister for public management, home affairs, posts and telecommunications shall or the governor of To, Do, Fu or Ken in accordance with cabinet order. In this case, such local public bodies do not have to consult provided by paragraph 1 of the preceding Article :
1.
A public enterprise that has carried-over deficit provided by paragraph 1 of Article 2 of the public enterprise law (Law No. 292 of 1957), a enterprise other than public enterprise that all or part of the public enterprise law is applied to based on paragraph 2 or 3 of Article 2 of the law and that has carried-over deficit and a enterprise other than public enterprise that all or part of the public enterprise law has been applied to since this fiscal year and whose deficit in the preceding fiscal year calculated on cabinet order was larger than the amount calculated on cabinet order;
2.
A public enterprise provided by Article 6 in accordance with cabinet order other than those that meet the preceding item whose deficit in the preceding fiscal year calculated on cabinet order was larger than the amount calculated on cabinet order.
4.
A local public body that intends to raise local debts for financing the expense provided be item 5 of Article 5 or change the method of raising, interest or the method of redemption and one or more of whose tax rate of normal tax (except for local consumption tax, prefectural tobacco tax, municipal tobacco tax, mining area tax and registration of hunter tax, special land property tax and normal tax not provided by law) is below the standard rate shall get permission of the Minister for public management, home affairs, posts and telecommunications shall or the governor of To, Do, Fu or Ken in accordance with cabinet order. In this case, such local public bodies do not have to consult provided by paragraph 1 of the preceding Article.
5.
In cases where one or more of the rates of taxes (except for special land property tax) that are provided by paragraph 2 of Article 5 of the local tax law (Law No. 226 of 1950) and that are imposed by To in accordance with paragraph 1 and item 3 of paragraph 2 of Article 734 of the law is below the standard rate, a special district (except for those that meet one of the items of paragraph 1 and those that shall get permission in accordance with the preceding paragraph) that intends to raise local debts for financing the expense provided be item 5 of Article 5 or change the method of raising, interest or the method of redemption shall get permission of the governor of To in accordance with cabinet order. In this case, such special district does not have to consult provided by paragraph 1 of the preceding Article.
6.
The exception in paragraph 1 of the preceding article shall be applied to the cased where permission is necessary in accordance with paragraph 1, 2, 3 and 5 in the same article. Paragraph 3 in the preceding article shall be applied to local debts that have permission in accordance with paragraph 1, 2, 3 and 5 in the same article. Paragraph 4 in the preceding article shall be applied to expenses for redemption of local debts that have permission in accordance with paragraph 1, 2, 3 and 5 in the same article.
7.
The Minister for public management, home affairs, posts and telecommunications shall hear the opinion of local finance council upon permission provided by paragraph 1, 3 and 4, specification provided by item 4, 5 and 6 in paragraph 1 and withdrawal of specification provided by paragraph2.
(Issuance of Bonds)
Article 5-5.
A local public body that intends to raise local debts by means of bonds may publicize, accept subscriptions and deliver in accordance with cabinet order.
