Although “repayment of earthquake debt is almost finished”…a dark cloud hangs over the prefectural government of Motohiko Saito! Behind Hyogo Prefecture’s “6 Billion Yen Balance Shortfall

Don’t Blame the Great Hanshin Earthquake

The Hyogo Prefectural Government’s initial budget for fiscal 2025 was greeted with shock when it announced that the prefecture will have a budget shortfall of 6 billion yen in fiscal 2026 and that it will become an “authorized organization” that needs permission from the central government to issue prefectural bonds.

The reason given was that “redemption of prefectural bonds related to the Great Hanshin-Awaji Earthquake will continue and long-term interest rates are expected to rise,” but Nobuzo Nakagawa, 69, policy advisor to the Hyogo Research Institute, denies this , saying, “Most of the debt repayment for restoration and reconstruction projects has already been completed. However, Nobuzo Nakagawa, 69, policy advisor to the Hyogo Research Institute, denies this.

The Hyogo Prefectural Government is simply putting off administrative and fiscal reform by blaming it for the earthquake. Hyogo Prefecture did not receive financial support from the central government for earthquake reconstruction and borrowed 1.3 trillion yen through the issuance of prefectural bonds to pay for the projects, but the latest remaining debt has been reduced to just over 180 billion yen.

However, While various new facilities were developed in the name of creative reconstruction, scrap and build of old facilities did not proceed. A large amount of money still goes out every year to operate and maintain the newly developed facilities.

What are the facilities developed in the name of creative reconstruction?

They include the Hyogo Performing Arts Center in front of Hankyu Nishinomiya-Kitaguchi Station, the Disaster Reduction and Human Renovation Institution (DRI) in Nadahama, the Hyogo Prefectural Museum of Art, the Miki Disaster Prevention Park, and the Shin-Nagata Station South Area Redevelopment Project. The shopping area in front of Shin-Nagata Station created by the redevelopment is burdened with rent and management costs, and many of these stores are vacant.

It would be understandable if those tenant spaces were used by government offices (Kobe City and Hyogo Prefecture), but the prefectural and municipal governments have built new joint government buildings. They have built new hardware for earthquake reconstruction, and put in place a system that will cost money later on, such as continuing to operate and maintain those buildings, as well as disaster prevention events every five years.”

Originally, there were many old buildings in the center of Kobe (Sannomiya and Motomachi). The economic ground has sunk in Sannomiya and Motomachi as a result of the construction of many new buildings in the name of reconstruction without redevelopment of these areas. Nakagawa calls the construction of the International Health Development Center building at HAT Kobe as a symbol of reconstruction and the invitation to the WHO Kobe Center to join the project “absurd.

Hyogo Prefecture has been paying 300 million yen a year for the project and Kobe City 150 million yen a year for 30 years, and I think the prefectural assembly bears a great deal of responsibility for approving a foolish project that will cost 13.5 billion yen in follow-on money (taxes),” Nakagawa said.