It was former president Chen Shui-bian (陳水扁) who originally proposed upgrading the status of Taipei County and Taichung City as a means of getting voter support from those areas during his campaign for re-election in 2004. Now that it has become a popular issue, incumbent Chinese Nationalist Party (KMT) President Ma Ying-jeou (馬英九) is exploiting the proposal to ensure KMT victory in elections for city mayors and county commissioners in December and for the presidential and legislative elections scheduled for 2012.
It was easy for Chen to write out this political check in 2004, but cashing it is a lot harder. Now Ma’s expanded version of the upgrade plan has compounded the problems.
The upgrade proposals have indeed been effective in mobilizing public opinion. The KMT long ago implemented a two-tier system of unequal funding between urban and rural local governments. Because of this, once a county is upgraded, its budget and ability to borrow money will improve, with more funds available for its government coffers. Civil servants will be promoted and their salaries raised, and they will control a bigger share of public funds.
Upgraded counties will be able to hire more personnel. As county commissioners expand their teams, their power will grow.
To make good on his promise, in 2007 Chen had to invent the curious category of “provisional municipality” (準直轄市) to allow for Taipei County’s upgrade.
Having been awarded this status, Taipei County took it as grounds for promoting officials and seeking more government funds.
At that time, the total budget allocation for local governments throughout Taiwan was NT$184 billion (US$5.54 billion), NT$80 billion of which was shared by Taipei and Kaohsiung cities, with only NT$8 billion to NT$9 billion going to Taipei County.
When Taipei County was promoted to a provisional municipality, it demanded a NT$30 billion share of Taipei and Kaohsiung’s NT$80 billion budget. This angered the two cities. The central government had no choice but to give Taipei County more money without taking funds away from Taipei and Kaohsiung cities.
While the central government acceded to the demands of Taipei and Kaohsiung, the rest of Taiwan paid the price. The total amount of central government funding available for all local governments did not grow, meaning that there was less left for everyone else.
Once Taipei County got its hands on this money, the first thing it did was promote officials. Deputy mayors and ranking officials at various levels were promoted one or two grades and their annual salaries raised by between NT$100,000 and NT$600,000. Councilors’ annual salaries will climb to NT$3 million. That was great news — for Taipei County officials, at least.
Furthermore, while Taipei and Kaohsiung cities each have more than 12,000 civil servants, Taipei County had fewer than 4,000. Now it is entitled to nearly 14,000. If it takes on the full number of new officials, the cost will reach NT$6 billion. With pay raises, it may be closer to NT$10 billion.
This means that the most of the extra budget Taipei County gets will go to employing officials. This is more than the central government can swallow, but, despite its efforts to stem the tide, Taipei County has taken on 1,200 new officials and allocated sufficient funds to pay them.
Still, Taipei County feels it is too far behind Taipei and Kaohsiung cities. Now that more cities and counties are scheduled for upgrades, they will demand higher funding as well and the central government will have little power to deny them.