Revised on April 1, 2020 - Q&A about Usage Fees and Charges

Regarding the revision of various usage fees and charges starting from April 1, we have published and informed you in the January 15, 2020 issue of the Inagi Newsletter and on the Inagi City Website. This time, we will organize the opinions and questions received afterward and provide answers related to them. Please note that this Q&A is also published in the March 1, 2020 issue of the Inagi Newsletter.

• Inagi Newsletter March 1, 2020 Issue (Excerpts from pages 2 and 3) (PDF 260.6KB)

Note: For revised amounts and calculation standards, please see the page below. If you have any questions, please contact the relevant department.
Thank you for your understanding and cooperation.

• Various usage fees and charges have been revised from April 1, 2020.
• Calculation Standards for Usage Fees and Calculation Standards for Service Fees

Q What is the purpose of revising usage fees and charges?

This review aims to achieve "sustainable administrative management," "appropriate burden sharing between users and non-users," and "response to the increase in consumption tax rate."

Sustainable Administrative Operations

The operation of the administration and the provision of services incur expenses. The main source of these expenses is the Municipal Tax, but it is not possible to cover everything with Municipal Tax alone. The amount of Municipal Tax is significantly insufficient compared to the total amount of expenditures, and it relies on revenues other than Municipal Tax, such as grants and subsidies from the national and metropolitan governments, as well as usage fees and charges, which are important sources of income for the city.

For example, in the fiscal year 2019, out of the General Fund budget of 35.694 billion yen, the Municipal Tax revenue was approximately 15.337 billion yen, covering only 43%. The city is making efforts to secure other sources of income, but many subsidies from the national and Tokyo metropolitan governments are designated funds with specific usage purposes, and cannot be used freely. On the other hand, recently, mandatory expenses necessary for administrative issues such as Parenting support, Senior Welfare, and Disability Welfare have been increasing steadily, leading to a chronic revenue shortfall (expenditure exceeding revenue), and the city is managing its finances while depleting reserves (savings).

In order to maintain the necessary administrative services, it is essential to secure their funding. If there is no clear prospect for funding, we will have to either abolish or reduce those administrative services. Generally, the fees and charges collected from users of administrative services are set at a level lower than the actual costs incurred, and the shortfall is covered by taxes. Therefore, if the amounts are set too low compared to the actual costs, it will put pressure on the city's finances.

In order to maintain administrative services with limited financial resources such as tax revenue, it is necessary to periodically review usage fees and charges, set amounts that do not burden the finances, and receive appropriate compensation from the users of the services.

Optimization of the burden for users and non-users

Usage fees are collected from users as compensation for the use of administrative property and public facilities. Service fees are collected to cover the costs of administrative tasks performed for specific individuals.

The amounts of usage fees and service charges are set independently by each municipality, taking into account the costs required for service provision and the benefits received by users. However, usage fees and service charges are not inherently good just because they are low. If the amounts are set too low, the amount compensated by taxes will increase, resulting in a reduction of resources available for other administrative services. Since usage fees and service charges are intended to cover the costs necessary for administrative tasks performed for specific users, if the tax compensation amount becomes too large, it will be unfair to those who do not use the service.

Response to the Increase in Consumption Tax Rate

The consumption tax was introduced at 3% in 1989, raised to 5% in 1997, 8% in 2014, and 10% in 2019. On the other hand, many of the city's usage fees and charges have not been reviewed sequentially until now, and the amounts do not properly reflect the consumption tax rate. Therefore, it is necessary to conduct a comprehensive review this time.

Q What is the history of changes in usage fees and charges?

A Regarding usage fees and service charges, from the perspective of fairness in the burden between those who use the services and those who do not, it is necessary for users to bear the appropriate costs based on proper calculation standards. In Inagi City, the "Concept and Calculation Standards for Usage Fees" was established in 1997, and the "Concept and Calculation Standards for Service Charges" was established in 1999, and calculations of usage fees and service charges have been conducted based on these standards.

Since the fiscal year 2011, a new public accounting system based on double-entry bookkeeping and the accrual basis has been introduced, and from the fiscal year 2017, we transitioned to a new public accounting system based on the "unified standards" of the Ministry of Internal Affairs and Communications. As a result, we are now able to grasp the full costs related to the management and operation of facilities and projects, including depreciation expenses, allowing for more accurate cost calculations than ever before.

Based on the above, in order to achieve "sustainable administrative operations" and "appropriate user burden," we have decided to establish new standards for calculating usage fees and service charges that incorporate the perspective of a new public accounting system utilizing full cost information, including depreciation expenses. An explanation was provided at the General Affairs Committee of the City Council on October 29, 2019, and a Request for Public Comments was conducted from October 30 to November 12, during which the opinions received were also taken into consideration in determining these standards.

Based on these calculation standards, the city has reviewed all usage fees and charges stipulated in the ordinance, which were presented at the 4th Regular Session of the City Council in December of the first year of Reiwa.

Q What is the cost based on full cost?

The costs required for service provision (cost) are referred to as full cost based on the results calculated considering all necessary expenses, not just direct costs.

For example, the cost of issuing a certificate, when considering only direct expenses, includes the cost of paper and ink. However, when considering full costs, it is necessary to add expenses for maintaining office facilities, personnel costs for front desk staff, costs for building the database that manages the information used to issue the certificate, and development and maintenance costs for the computer system that issues the certificates.
Note: For details on the cost calculation methods for usage fees and service charges, please refer to the "Standards for Calculating Usage Fees" and "Standards for Calculating Service Charges" established on November 18, 2019.

• Calculation Standards for Usage Fees and Calculation Standards for Service Fees

Q What is the procedure for revising usage fees and charges?

There are opinions questioning whether the city council should decide on important issues that affect citizens' lives without holding an explanatory meeting. However, under the current local government system, we adopt "indirect democracy," which entrusts elected mayors and representatives with the exercise of power for a certain period. While mayors have extensive administrative authority, to ensure fairness and justice, the council's decision-making is involved when determining important issues for the municipality (Local Government Act Article 96).

In this system, usage fees and charges are important matters that affect citizens' lives, and therefore they are stipulated by ordinance. The mayor drafts the original proposal for the ordinance, which is then presented to the city council as a bill. The city council deliberates according to procedures and ultimately votes on it.

Under the current system of indirect democracy, there are no procedural regulations that require the holding of explanatory meetings for citizens at the stage of proposals before the council makes a decision. City council members, elected by citizens through elections, carefully deliberate on the proposals and make their respective judgments on whether to approve or disapprove.

Q Why is a comprehensive and significant revision being made?

There were opinions suggesting that a comprehensive review should not be conducted because it would affect citizens' lives, but limiting the scope of the revision to only a part would ultimately lead to unfairness. Usage fees and charges are meant to be borne by specific individuals who receive the services, but not everyone utilizes all the services equally.

In reviewing usage fees and charges, we do not mechanically revise them to the 'theoretically appropriate price,' but instead adjust them to avoid significant increases, taking into consideration the impact on citizens' lives.

Q What is the specific calculation method for the revised amount?

The calculation of expenses (cost) required for service provision is based on the "fee calculation standards" and "commission calculation standards," and is calculated based on full costs for each individual service. The full cost for one year is calculated, and the amount converted to a per-service unit based on usage performance, etc., is referred to as the "cost per service unit."

However, depending on the type of service, the cost may need to be covered entirely by usage fees and charges, or only partially, which varies in nature. Therefore, we will establish the proportion of public funding based on the nature of the service, and the portion not covered by public funding (user burden) will be considered the "theoretically appropriate price" for usage fees and charges. In addition, if the theoretically appropriate price significantly exceeds the current unit price, we will consider measures to mitigate the sudden increase in burden, and further adjust the revised amount by comparing it with the unit prices of similar services provided by the private sector and surrounding municipalities.
Note: Please refer to the "Usage Fee and Charge Calculation Results" below for the calculation results of individual items.

Q Did the city hall parking lot suddenly become a paid service?

As part of the review of usage fees and charges, we have amended the ordinance to make the city hall parking lot paid. However, this decision was not made suddenly. In June 2011, the city formulated the "Concept of Paid Parking" and reported it to the General Affairs Committee of the city council in July of the same year.

In accordance with this basic policy, we have submitted proposals for the establishment and amendment of ordinances to the city council, and we are sequentially advancing the charging of fees for Inagi Central Park, Shiroyama Park (Tennis Courts), Wakabadai Park, and Inagi North Green Space Park in fiscal year 2012, and for Kenko Plaza, Shiroyama Park (Central Library), and Omaru Park in fiscal year 2011.

Regarding City Hall and the Community Promotion Plaza, the original basic policy planned to implement a fee system in fiscal year 2015. However, due to issues with the parking structure and vehicle arrangement, it could not be implemented as is, so the timing for implementation will be reconsidered after facility improvements.

Regarding the City Hall No. 1 parking lot, a large-scale renovation was completed in fiscal year 2017, and as the surrounding parking lots have also begun to be developed, a proposal was made to charge fees within fiscal year 2020, which has been approved.

Q: It is said that even if the city hall parking lot is made paid, it will still operate at a loss?

A Regarding this ordinance proposal, when we collected reference estimates from parking management operators, it was indicated that the revenue and expenditure would result in a deficit of approximately 9 million yen. This revenue and expenditure forecast was a somewhat conservative estimate for examining the profitability of the business. Until now, the City Hall's dedicated parking lot has been opened for free, prohibiting use by anyone other than City Hall users, and it has been closed at night, based on the actual usage situation to calculate the revenue and expenditure forecast.

During the previous implementation of paid parking in the park, the financial forecast was barely breaking even, but the actual results after the implementation have shown a certain profit. Considering the location of City Hall and the fact that the parking can be used by individuals other than City Hall users after the implementation, it is expected that the finances will balance out.

By the way, the purpose of charging for parking is primarily to prevent inappropriate use by those who are not users of City Hall from parking for long periods, and another purpose is to automatically display available and occupied spaces.

The City Hall parking lots are located separately, and it would be convenient to guide users to the second parking lot when the first parking lot is full. However, this has not been possible until now, causing inconvenience to users. If we want to display the availability of each parking lot while keeping them free, we would need to assign at least one staff member to each parking lot to monitor the availability in real-time, which would incur significant costs. In this regard, by introducing machines and charging fees, we can display the real-time availability of the parking lots on electronic boards.

In other words, even if the parking lot itself has a slight deficit, I believe that the improvement in convenience of being able to display real-time availability is sufficiently cost-effective in comparison.

Usage Fee and Charge Calculation Results

Based on the "Calculation Standards for Usage Fees" and "Calculation Standards for Service Fees," the revised amounts for usage fees and service fees have been calculated for each individual service. The calculation results are as follows.

• Usage Fee and Commission Calculation Results (PDF 470.5KB)

Method for Calculating the 'Theoretical Fair Price'

Full cost per year ÷ usage performance, etc. × (1 - public expense burden ratio) × 1.08
Note: If the public expense burden ratio is 30%, calculate as 0.3
Note: To compare with the old unit price before revision, the consumption tax rate will be set at 8% at the time of calculating the "theoretical appropriate price".