During Japan’s era of rapid economic growth, budgets increased annually, leading to the expansion of both waterworks and transportation infrastructure. However, as growth stalled and the aging population with a low birthrate became the norm in regional areas, this excessive infrastructure turned into a burden. The expanded water supply and sewerage systems now incur massive maintenance and repair costs, and many local governments are operating their water utilities at a loss. Urban sprawl—expanding from old city centers into the suburbs—has reduced the efficiency of public investments in roads and sewage systems. Population decline is eroding local tax revenues, and as populations shrink, many municipalities face reductions in local allocation tax grants compared to the previous year. Currently, many municipalities lack the financial capacity to provide full-service support to their residents. Yet, despite budget and revenue shortages, some local governments persist in trying to maintain traditional programs and services. This article explores the revitalization of local governments.
Sagamihara City is an example of a municipality that implemented bold reforms after falling into financial distress. Located in Kanagawa Prefecture, Sagamihara is a government-designated city with a population of 725,000. Facing a rapid deterioration of its finances, the city implemented a drastic reform plan to achieve fiscal sustainability. First, it conducted a thorough review of existing public facilities, resulting in the closure or transfer to the private sector of 27 city facilities. Furthermore, the city reviewed subsidies for various organizations—totaling 66 items—and scaled back or revised support measures, such as abolishing celebratory payments for the elderly. Beyond these reviews, Sagamihara adopted a policy of freezing new projects in its initial budget for the 2020 fiscal year and formulated an austerity budget for 2021 that included almost no new initiatives. Faced with a fiscal crisis, the city undertook a comprehensive review of expenditures. However, relying solely on spending cuts inevitably leads to a decline in services for citizens. Amidst fiscal constraints, measures were implemented to enhance the town’s appeal by leveraging private-sector capabilities. As a result of executing this reform plan, the city’s finances saw a rapid recovery by the end of the 2022 fiscal year.
Some local governments take the initiative to generate their own revenue when existing budgets are insufficient. Suttsu Town in Hokkaido—a depopulated area with fewer than 3,000 residents that the fishing industry along the Sea of Japan predominates—is one such example. The town’s wind power generation business is a major revenue driver, generating average annual electricity sales of 750 million yen—an amount that exceeds its municipal tax revenue of just over 200 million yen. Suttsu Town also gained national attention for applying to host a survey for a potential nuclear waste final disposal site. Nuclear waste is stored in the form of vitrified glass canisters. Immediately after production, a single canister generates approximately 2,300 watts of heat—enough energy to raise the temperature of one liter of 20°C water to 100°C in just two to three minutes. If this warm water (20°C or higher) could be freely utilized in Hokkaido, it would enable the year-round operation of plant factories and fish farms. Such capabilities could potentially transform the area into a prosperous region.
