(Aim of the Law)
Article 1. This law establishes the fundamental principles concerning the financial administration of Iocal public bodies, (to be called local finance here in after) and the relations between national finance and local finance, and so doing aims to secure the stability of local finance and contributes to the promotion and advancement of local autonomy.
(Basic Principles of Operation of Local Finance)
Article 2. Local public bodies shall endeavor to maintain a healthy financial administration but shall by no means administrate in such a manner as would run counter to national policy or carry out policy which would be detrimental to national finance or the finance of other local public bodies.
The national government shall endeavor to foster the independent and health operation of local finance but by no means impair its independency or carry out policy which would throw the burden on local bodies.
(Formation of the Budget)
Article 3. A local public bodies shall, in accordance with the provisions of laws and cabinet orders and on the basic of rational standards dompute its expenditure and appropriate it in the budget.
A local public body shall, on the basis of all available date accuretely appraise its financial resources and compute its revenue in conformity with actual economic conditions and frame it in the budget.
(Execution of the Budget)
Article 4. The expenditure of a local public body shall not be disbursed in excess of the minimum limit required for the attainment of its objective.
The revenue of a local public body shall be secured properly and strenly.
(Limitation on Local Bonds)
Article 5. The expenditures of local public bodies must make revenues other than local bonds their financial resources. However, in the following cases they may make local bonds their financial resources:
1. In a case where they are made the financial resources of expenditures required for communication enterprises, gas enterprises, waterworks enterprises and enterprises performed by other local public bodies.(hereinafter referred to as public enterprise)
2. In a case where they are made the financial resources of investments and loans (including any case where they are made the financial resources for expenditure required in the purchase of land or property for the purpose of investment or loan).
3. In a case where they are made the financial resources for expenditure required in the refinancing of local bonds.
4. In a case where they are made the financial resources for expenditure for emergency measures to be taken against disasters, rehabilitation enterprises for disasters thereof and disasters relief enterprises.
5. In a case where they are made the financial resources for expenditure on war-damages rehabilitation enterprises, construction enterprises for public facilities such as schools, rivers, roads, harbors, etc. in local public bodies where either the assessment rate or the total amount of assessment of the land tax, the house tax, the enterprise tax and the prefectural inhabitant tax, (In Tokyo Metropolis, in accordance with the provisions of Local Tax Law (Law No.110, 1948) Article 130, with respect to the land tax, house tax, enterprise tax, and special ward inhabitant tax imposed by special ward office ore involved) or the surtax of the land tax, the house tax, and the enterprise tax and the city, town or village inhabitant tax is respectively more than 1.2 times the standard assesment rate or the total amount of standard assessment.
In a case where Tokyo Metropolis obtained the financial resources for expenditure with the local bonds, the special ward office in Tokyo Metropolis are made the financial resources for expenditure for enterprise with local bonds provided in Item 5 of the preceding paragraph.
(Management of Public Enterprise)
Article 6. The accounting concerning public enterprises which are prescribed in Cabinet Order shall be handled by the creation of a special account and defrayed by the revenues (including revenues obtained from local bonds provided for in the preceding Article) consequent on the operation of the said enterprises, provided that in case of natural disaster and other special cause and where the resolution of the assembly has been obtained, the revenue which is transferred from the general account or other special account shall be appropriated thereto.
With respect to the enterprise provided for in the preceding paragraph, inventories, balance sheets, profit and loss accounts shall be made regularly.
When an assembly of local public body has designated the enterprise in accordance with the provisions of Article 244, paragraph 2 of the Local Autonomy Law (Law No 67, 1947), the inventories, balance sheets and profit and loss account to be made in accordance with the provisions of the same paragraph shall be deemed to have been made in accordance with the provisions of the preceding paragraph.
(Surplus)
Article 7. In case a surplus is yielded on settlement of revenue and expenditure for each fiscal year, local public bodies must appropriate an amount of not less than one half of the said surplus for financial resource to refund local bonds until the year subsequent to the year following the fiscal year on which snch surplus has been yielded.
With respect to the public enterprise contemplated in the preceding paragraph, in case a surplus is yield on settlement of revenue and expenditure, notwithstanding the provisions of preceding paragraph through resolution of the assembly the whole or part of it may be transferred to the general account or other special account.
With respect to the calculation of the surplus provided for in the preceding two paragraph, provisions shall be made in cabinet order.
(Management and Disposal of Property)
Article 8. Properties of local public bodies, except in a case prescribed in regulation or resolution of this assembly, must not be exchanged, appropriated for means of payment, or transferred or rented without proper equivalent costs.
Properties of leal public bodies shall always be preserved in good condition, and shall be operated most effectively in conformity with the purpose for which they are owned.
(Expenditure for which Local Public Bodies bear the whole amount)
Article 9. The expenses necessary for the execution of affairs which are mainly relevant to the interest of local public bodies shall be borne by the said local public bodies in full.
The expenses of the preceding paragraph shall be as follows:
1. Expenses for assemblies of local public bodies and the election of the member thereof.
2. Expenses required for personal of local public bodies.
3. Expenses for building and management of official buildings of local public bodies.
4. Expenses for coordination and adjustment of public bodies within the area of local public bodies.
5. Expenses for the autonomous police.
6. Expenses for fire defense.
7 Expenses for education, arts and sciences.
8. Expenses for public works.
9. Expenses for city planning and enterprise thereof.
10. Expenses for health and sanitation and social welfare of inhabitants.
11 Expenses for promotion of agriculture, commerce and industry and other production.
12. Expenses for transportation, gas, water works and drinages facilities and other public enterprises.
The expenses for those prescribed in Articles 10 and 11 shall not be included in the expenses included in paragraph 1.
(Expenditure to be borne by the National Government and local Public Bodies)
Article 10. The national government and local public bodies shall mutually bear the expenses necessary for the execution of matters for which they have a mutual interest.
The expenses of the preceding paragraph shall be as follows:
1. Expenses for personnel engaged in compulsory education.
2. Expenses for local planning.
3. Important city planning enterprises designated by laws or cabinet orders and city planning eterprises.
4. Expenses for important public works such as rivers, roads, dykes and harbors desingnated by laws or cabinet orders.
5. Expenses for enterprise such as schools, roads, harbors, hospitals, clinics, waterworks, drainages and other public facilities and housing and land readjustment, carried out for the purpose of war disaster rehabilitation.
6. Expenses for disaster emergency rehabilitation and recovery enterprises and relief enterprises.
7. Expenses required for facilities to prevent disasters.
8. Expenses required for examination station of silkworms.
9. Expenses required for the prevention of tuberculosis, general diseases, epidemics, etc.
10. Expenses required for the rationing of food, fuel and other daily necessities.
11. Expenses for fostering of Labor union and adjustment of labor relation.
12. Expenses for welfare of juveniles and health preservations facilities.
13. Expenses for establishment, maintenance and management of employment exchange facilities.
14. Expenses for livelihood relief.
With respect to the expenses provided for in paragraph 1, the categories, accounting basis and proportion which will be mutually borne by the national government and local public bodies shall be provided for in laws or cabinet orders.
(Expenses which are borne wholly by the National Government)
Article 11. With respect to expenses required for the execution of affairs which are mainly related to the interest of the national government, the local public bodies shall not be bound to bear the expenses thereof.
The expenses of the preceding paragraph may be enumerated as follows:
1. Expenses for the election of members of the National Diet and for referendums.
2. Expenses for statistics and investigation which are carried out mainly with a view to their use by the national government.
3. Expenses for national land planning.
4. Expenses for the control of commodities and prices.
5. Expenses for delivery of staple food, fuel and other daily necessity commodities.
6. Expenses for adjustment of matters pertaining to agricultural land.
7. Expenses for land development carried out in accordance with national government programs.
8. Expenses for inspection deliberation committee.
(Expenses for Affairs with respect to which local Public Bodies have on jurisdiction to dispose)
Article 12. With respect to expenses required for the execution of such affairs which local public body have no jurisdiction to dispose, except for those provided for in laws or cabinet order, the national government shall not take measures which will throw the burden of expense on local public bodies.
The expenses of the preceding paragraph may be enumerated as follows:
1. Expenses for the establishment, maintenance and operation of agencies of the national government.
2. Expenses for the national rural police.
3. Expenses for administration of justice and prisons.
4. Expenses for educational equipment and research establishments of the national government.
(Measures to secure Financial Resources consequent on New Affairs)
Article 13. The national government shall take necessary action with respect to the financial resource required, in case a local public body, an agency of a local public body or national government agency, of which expenses shall be borne by local public bodies comes to bear resposibility for the execution of a new function in accordance with laws and cabinet orders.
Any local public body which is dissatisfied with the actions concerning the financial resources mentioned in the preceding paragraph may submit their opinions to the National Diet through the Cabinet.
Upon receipt of the opinions mentioned in the preceding paragraph, the Cabinet shall submit it to the National Diet without delay with its opinion attached thereto.
(National Government allotment for local employees'expenses)
Article 14. With respect to expenses required for the employees who are engaged in such affairs as prescribed in Article 10 paragraph 1, and Article 11 paragraph 1, notwithstanding the provisions of Article 9 paragraph 2 item 2, the national government shall bear the whole or part of the expenses only for these employees provided for in cabinet order.
The fixed number of employees for whose expenses the national government shall bear the whole or part thereof in accordance with the provisions of the preceding paragraph, the categories of the expenses and the proportion which the national government shall bear with respect to such expenses shall be provided in Cabinet Order in accordance will the categories of affairs in which such employees are engaged.
(The Allocation of the Fixed Number of local Employees by local Public Body, whose Expenses are borne by the National Government)
Article 15. The fixed number by each local public body of the employees whose expenses are borne in whole or in part by the national government in accordance with the provisions of paragraph 1 of the preceding Article, shall be determined by the Prime Minister on the basis of requests by the Prime Minister Attorney-General and respective Ministers (hereinafter to be called respective Ministers).
In the expenses required for the personnel mentioned in the preceding paragraph, that portion to be borne by the national government shall be appropriated in the estimate of expenditure which falls under the jurisdiction of the Prime Minister and shall be granted it to the local public body concerned.
(Grant of Subsidy)
Article 16. Only when the national government deems it especially necessary for the execution of its policies or when it is deemed especially necessary from the financial point of view of local public bodies, it may grant subsides to the local public bodies concerned.
(Disbursement of Allotments)
Article 17. The national government shall, with respect to such affairs as are provided for in Article 10, Paragraph 1, or Article 11, Paragragh 1 which local public bodies, Organ of local public bodies, or national government agencies whose expenses are borne by the local public bodies, execute disbursing to the said local public body concerned the amount which the national government shall bear in accordance with the provisions of Article 10, Paragraph 3, or Article 11, Paragraph 1 and the amount which the national government shall bear in accordance with the provisions of Article 14, Paragraph 1 (hereafer referred to as national government allotment).
Local public bodies shall, with respect to such affairs as are provided for in Article 10, Paragraph 1 which the national government (excluding national government agencies whose expenses are borne by the local public bodies), execute disburing to the national government the amount which local public bodies shall bear (hereinafter to be referred to as local public body allotment) in accordance with the provisions of Paragraph 3 of the same Article.
(Basis of Calculation of National Allotment)
Article 18. The amount to be disbursed as national government allotments, subsidies, etc. to local public bodies (hereinfter referred to as national disbursement) shall be calculated, in accordance with the amount which shall be necessary and sufficient for local public bodies to perform their proper functions relating to the said disbursements.
(The time of the Disbursement of Disbursements of the National Government)
Article 19. Disbursement of the national government must be paid so as to be on time for the period of the disbursement of the expenses whose financial resources shall consist of the abovementioned disbursement.
The provisions of the preceding paragraph shall apply mutatis mutandis to the disbursement to the national government such as allotment of local public bodies, and others.
(Application Mutatis Mutandis of Relevant Provisions in the Case of Delegated Enterprise)
Article 20. The provisions of the preceding two Articles shall apply mutatis mutandis to disbursements which come under the burden of the national government or the local public bodies in a case respectively where the local public bodies carry out enterprise of the national government by delegation thereof and in a case where the national government carries out enterprise of the local public bodies by delegation thereof.
(Laws Cabinet Orders and Ordinance which accompany Burden on Part of Local Public Bodies)
Article 21. The respective Ministers shall, with respeet to drafts of laws, cabinet orders and ordinance relevant to those affairs which fall under their jurisdiction and which are accompanied by burden on the part of local Finance Committee through the Prime Minister prior to requesting cabinet deliberation in the case of bills or drafts of cabinet orders and prior to promulgation in the case of drafts of ordinances.
(Estimate of Expenditure Accompanied by Burden on the Part of Local Public Bodies)
Article 22. The respective Ministers shall, with respect to that part of the affairs which are accompanied by burden on the part of local public bodies among the estimates of revenue and expenditure and the out bearing notional treasury liabilities, which fall under their jurisdiction, obtain the opinion of the Local Finance Committee through the Prime Minister on the occassion of the submission of papers to the Minister of Finance in accordance with the provisions of Article 17, Paragraph 2 of the Finance Law (Law No.34 of 1947).
(Rent relating to the Facilities of the National Government)
Article 23. With respect to any facilities of the national government which a local public body or the chief thereof manages for which the local public bodies bear expenses necessary for their management, the local public body concerned or the chief thereof may impose rent on the use of the use of the said facilities in accordance with the provisions of by-laws or regulations.
The rent provided for in the preceding paragraph shall be the revenue of the said local public body.
(Rent concerning Property of Local Public Bodies used by the National Government)
Article 24. When the national government purports to use the property or facilities of any local public body, the rent therefor must be borne by the national government according as it may be determined by the said local public body, provided that this shall not apply in a case where the assent of the assembly of the said local public body has been obtained.
(Use of Allotments and others)
Article 25. Allotments and subsidies of the national government as well as allotments of local public bodies must be used in accordance with the provisions of laws, cabinet orders and ordinances.
When any local public bodies contravenes the provisions of the preceding paragraph regarding to this matter, the national government may not deliver the whole or part of such allotment or subsidy to the said local public body or may order the body to refund it.
When the national government contravenes the provisions of Paragraph 1 with respect to the allotment of a local public body regarding to this matter, the said local public body may demand the national government not to defray or to refund the whole or part of the said allotment.
(Reduction of the Distribution Tax)
Article 26. When any local body, in contravention of Law and cabinet orders, disburses an extremely high amount or neglects the collection, etc. of revenue to be secured, the national government may reduce the amount of the Distribution Tax to be granted to the said local public bodies or order the refund of a part of the Distribution Tax which has already been granted.
The amount of the Distribution Tax which has been reduced or ordered to be refunded in accordance with the provisions of the preceding paragraph shall not exceed the amount which has been disbursed or neglected the collection, etc., in contravention of the provisions of the said laws and ordinances.
(Burden to be borne by Cities, Towns and Villages concerning interprises carried out by the Prefectures)
Article 27. With respect to enterprises carried out by a metropolis, district, urban or rural prefecture which shall benefit a city, town or village within its area, the metropolis, district, urban or rural prefecture may cause the said city town or village to bear a part of the expenses required for such enterprise within the limit of benefit received from the said enterprise.
The amount that the city, town or village shall bear with respect to the expenses provided for in the preceding paragraph shall be determined by the resolution of the assembly of the said metropolis, district, urban or rural prefecture after hearing the opinion of the said city town or village.
Any city, town or village which has an objection with respect to the amount which a city, town or village shall bear in accordance with the provisions of the preceding paragraph may file objection with the Prime Minister.
Upon receipt of the filing of objection mentioned in the preceding paragraph and when it is deemed there is a special necessity, the Prime Minister may after the amount to be borne by the said city, town or village.
The provisions of Article 256 and Article 257 of the local Autonomy Law shall be applied mutatis mutandis to the case contemplated in the preceding paragraph.
(Expenses consequent on the Delegation of Affairs of the Prefectures)
Article 28. In a case where the metropolis, district, urban or rural prefecture or the governor thereof causes its affairs to be executed by the city, town or village or the mayor of city, headman of town or village or the employees of ciy, town or village, the metropolis, district, urban or rural prefecture must take such measures as may be necessary concerning financial resources for expenses required in the execution of such affair with respect to the said city, town or village.
Any city, town or village which is dissatisfied with the measures to secure financial resources provided for in the preceding paragraph may submit a statement of opinions to the local Finance Committee thereof through the governor of metropolis, district, urban or rural prefecture concerned.
Upon receipt of the statement of opinion contemplated in the preceding paragraph, the governor of a metropolis, district, urban or rural prefecture must submit it without delay to the local Finance Committee with his opinion attached thereto.
The opinioh contemplated in the preceding paragraph shall be determined upon the resolution of the assembly of the metropolis, district, urban or rural prefecture concerned.
(Disbursement of Allotments of Prefectures)
Article 29. A metropolis, district, or urban or rural prefecture shall, in accordance with the provisions of laws and cabinet orders disburse the amount borne by the metropolis, district, or urban or rual prefecture with respect to the expenses required for the execution of the affairs of a city, town or village within its area (to be referred hereafter as allotment of metropolis, district, or urban or rural prefecture) to the said city, town or village.
A city, town or village shall disburse the amount, the burden for which is borne by it in accordance with Article 27, Paragraph 1 (to be referred hereinafter as city, town or village allotment) to the metropolis, district or urban or rural prefecture concerned.
(The Application Mutatis Mutandis of Relevant Provisions to the Allotments of Prefectures and Cities, Towns and Villages)
Article 30. The provisions of Articles 18, 19 and 25 shall apply mutatis mutandis to the allotments of metropolis, district, or urban or rural prefecture and city, town or village and to the disbursements such as subsidies granted by the metropolis, district or urban or rural prefecture of the city, town or village.
Supplementary Provisions:
(Date of Enforcement)
Article 31. This Law shall come into force as from the day of its promulgation, provided that the date of enforcement of the provisions of Article 14 and Article 15 shall apply to the fiscal year of 1949.
(Sale of Certifications with Prizes)
Article 32. Prefectures, may, if necessary for the time being, for the purpose of obtaining funds for public enterprise provided for the Law for establishment of the Certificate with prizes (Law No.144, 1948), sell certificates with prizes.
(Exceptions to Local Bonds)
Article 33. Local public bodies may, for the time being, with respect to such expenses as the following, make local bonds as their financial resources, notwithstanding the provisions of Article 5:
1. Construction expenses for facilities consequent on the extension of the period of compulsory education.
2. Construction expenses for facilites consequent on the establishment of the local autonomous police.
3. Construction expenses for facilities consequent on the strengthening of fire defence.
Local public bodies may, for the time being, notwithstanding the provisions of Article 5 item 5, make local bonds the financial resources of war damage rehabilitation enterprise expenses and public facilities construction enterprise expenses.
(Exceptions to those Expenditures which are borne in Full by Local Public Bodies)
Article 34. The following expenses shall, for the time being, in accordance with the provisions of Article 10, be borne by the national government and local public bodies:
1. Expenses for construction of facilities consequent on the extension of the period of compulsory education.
2. Expenses relating to the assistance of repatriates.
(Exceptions relating to Hokkaido)
Article 35. The following expenses shall, for the time being, notwithstanding the provisions of Articles 10 and 11, be in accordance with the former provisions:
1. Expenses required for the development of Hokkaido prescribed by cabinet order.
2. Expenses required for public works for such matters as rivers, roads, dykes, harbors and emergency measures for disasters and reconstruction enterprises in Hokkaido as prescribed by cabinet order.
(Powers of the Local Finance Committee)
Article 36. With respect to the exercise of the powers of the Prime Minister in accordance with the provisions of this Law, Local Tax Law and the local Distribution Tax Law (Law No.111, 1948), the Local Finance Committee shall temporarily give assistance thereof.
(Provisional measures to Article 10)
Article 37. Concerning expenses required for the affairs provided for in Article 10, with respect to the categories standard of culculation thereof, and the proportion thereof which the national government and local public bodies ought to bear, shall, except those which are to be otherwise provided in law or cabinet order to be enacted subsequent to the enforcement of this Law, be in accordance with the former provisions until April 31, 1949.
Article 38. A part of the Local Autonomy Law shall be amended as follows.
Article 220, Paragraph 2 shall be deleted.
In Article 226, Paragraph 1, "if and so long as it is necessary to do so for the purpose of repaying its debt or effecting such expenditure, as may be of permanent benefit to ordinary local public body or on account of a natural calamity shall read" in accordance with the provisions of a separate law."
In Article 228, Paragraph 1, "its necessary expenses and" shall read "expenses necessary to carry out public affairs and administrative affairs with such area (excluding those which belong to the said local public body hitherto by laws and ordinances and hereafter by laws and cabinet orders) which do not come under the affairs of the national government." and Paragraph 2 of the same Article shall be deleced.
In Article 245-(2). With respect to the basic principles concerning the operation of the finance of ordinary local public bodies, the relation of the finance of ordinary local public bodies and national finance, except those for which provisions are made in this Law, it shall be provided for in a separate law.