Budget Democratic Reform And Local Government Deficit-scale Control

In recent years, the problem of local government deficit has been increasingly serious, and local government debt has been risky in scale.Therefore, this issue has aroused great concern of the central government.Generally there are two ways to control the scale of government deficit:to implement administrative control and to build local government bond market. On the one hand, although the top-down administrative control has been implemented for many years by Chinese government in budget reform, the effect is not obvious; on the other hand, the new budget law, which has been passed recently, has empowered the local government the right to borrow money through bond market, and until now the effect of it is unknown. Fortunately, there are some good cases that show the bottom-up administrative control, as an extend way of administrative control, has something positive effect on controlling the increasing amount of local government deficit. And the case of Xinhe town, Wenling city, Zhejiang province is a typical one to show us the power of it.This paper takes Xinhe town as a case to do the research. Firstly, this paper briefly introduces the background of budget democratic reform of Xinhe town. Secondly, this paper deeply analyzes how the reform is carried out to control the increasing government deficit. In fact, in the reform,local government makes the draft of budget more detailed; local citizens are allowed to participate in the budget progress; local parliament implements the budget authority more positively. Thirdly, this paper makes a conclusion that the effect of reform to control the increase of local government deficit is positive.However,the meaning of the reform is far from it. The reform activates the local parliament system,reconstructs the local power relations and local government’s financial actions are regulated by local parliament and citizens. And thus, the local government uses the public expenditure more reasonably. At last, this article points out some problems in the reform,such as local parliament is not strong enough, financial transparency is too lower and citizen participation is weak. Therefore this paper proposes some methods to dissolve those difficulties.If other areas want to learn the experience of budget reform from Xinhe town, three conditions need to be taken into consideration: a.availability of reform resource; b.the need for reform; c.appropriate administrative level. Besides, in the reform different cultures and external environment are need to be taken into account.