A budget compromise between the internal affairs and finance ministries has left tax allocation to local governments intact and set back the so-called trinity reforms of the current administration.

Local governments will receive the same 16.9 trillion yen from the national treasury in fiscal 2005 as they did this fiscal year.

The payout was decided Saturday by Minister of Internal Affairs and Communications Taro Aso and Finance Minister Sadakazu Tanigaki.

Next fiscal year's plan for total revenue and expenditure by local governments has also been determined, with 83.77 trillion yen for both earnings and expenditures.

That amount is a 1.1 percent decrease from fiscal 2004 and represents the fourth successive year-on-year fall.

However, the reduction from the previous year is only 900 billion yen, which is well below the 1.5 trillion yen reductions of the previous three years.

Saturday's agreement sets back the government's trinity reforms which call for cuts in local government expenditures.

The reduction in annual appropriations for public works by local governments will be no more than 1.1 trillion yen in the budget for fiscal 2005. Up until the latest cuts, spending came to 5 trillion yen more than the Finance Ministry thought was appropriate.

In addition to an inadequate reduction in excessive appropriations for public works, an increase of 400 billion yen has been accepted in general administrative expenditures by local governments.

Accordingly, the ministry's emphasis on eliminating excessive appropriations within two years has been substantially set back.

The amount of local tax allocations was a major focus in the formulation of next fiscal year's national budget, with the Finance Ministry calling for sharp cuts but the internal affairs ministry opposing reductions.

Consequently, the national general account's fiscal 2005 expenditures, 82.2 trillion, will be slightly more than this fiscal year's 82.1109 trillion yen.(IHT/Asahi: December 20,2004)