The People Power Party caucus of the Gyeonggi Provincial Assembly, led by floor leader Bang Seong-hwan, has identified a "dysfunctional revenue-estimation process" as the primary cause of Gyeonggi Province's 7 trillion won ($4.93 billion) debt, citing findings from its Fiscal Soundness Innovation Task Force.
An analysis of the province's revenue forecasting record shows that estimation errors turned into large-scale shortfalls starting in 2022. Rather than correcting course, the provincial government allegedly inflated its revenue projections each year to match an overly ambitious spending plan.
In practice, Gyeonggi Province allowed massive local-tax revenue shortfalls to go unaddressed — 1.4 trillion won in 2022, 1.3 trillion won in 2023 and 700 billion won in 2025, measured against final settlement figures relative to the original budgets.
The task force said the province's irresponsible and deliberate neglect of revenue estimation is the root cause of a surplus trend that held from 2016 turning into recurring shortfalls from 2022 onward.
Revenue forecasts are determined through a consultative advisory process drawing on projections from Gyeonggi Province, the Ministry of Interior and Safety, 31 municipal governments, the Gyeonggi Research Institute and the Korea Institute of Local Finance. However, the task force found that the province had been setting its revenue figures to match expenditure targets under an aggressive expansionary spending stance, with no consistent methodology or guiding principles.
According to the task force's analysis, over the past three years the province ignored standard statistical practice, which calls for a trimmed mean that excludes the highest and lowest estimates from all contributing agencies. Instead, it insisted on its own in-house figures, which were consistently the highest of any agency. For the 2026 revenue forecast, the province went further, adopting an irregular benchmark defined as the average of the top three agencies' estimates.
The task force said this pattern strongly suggests that revenue errors were deliberately tolerated and projections inflated to justify an outsized budget.
The result, it said, was a cycle of "wishful-thinking budgets" built on unprincipled revenue estimates, followed each year-end by supplementary budget cuts, inter-fund transfers and bond issuances to plug the resulting shortfalls — a cycle that ultimately saddled the province with 7 trillion won in debt.
The PPP caucus said it plans to use the task force to conduct a thorough investigation into the flawed revenue-forecasting practices and fiscal mismanagement that persisted from the seventh to the eighth elected provincial administrations, and to identify those responsible.
"Gyeonggi Province's 7 trillion won debt is a man-made disaster — the product of ignoring market trends and statistical principles, and of allowing revenue shortfalls to accumulate in pursuit of politically motivated expansionary spending," floor leader Bang said.
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