| For the past few years, the predicament of basic level public finances has become the difficult problem which is necessary to be resolved and has been the hotspot which the theory circles are studying. Many scholars place extra emphasis on the angle of fiscal system to investigate the causes of formation and outlets of the predicament of basic level public finances, but not explain why the unreasonable system can exist for a long time and is difficult to be revised; There are some scholars who investigate the causes of formation and outlets of the predicament from basic level public finances themselves and think that overstaffed organizations, low efficiency of public expenditures, the undeveloped second and third industry, limited financial resources, etc. lead to the predicament of basic level public finances. Obviously, the causes themselves which they point out are the problems that are necessary to be resolved. If these problems cannot be resolved, basic level public finances of course cannot break away from the predicament. If we want to resolve the problems which cause the problems of the predicament of basic level public finances, speaking according to logic, we should investigate the causes of the causes of the predicament of basic level public finances, i.e. we should seek the crux of the problems of the predicament of basic level public finances, should trace to the source for many kinds of causes of the predicament of public finances, find the common root. This article points out that radically speaking the predicament of basic level public finances is the inevitable result of the particular system structure which stipulates the power allocation relationship and is morphed under the condition of market economy.Analyzed from the angle of "it should be", the government public finance is a kind of special system arrangement which is devised by the people to decrease the transaction cost during the course of the supply of public goods. Current multilevel governments evolved and developed from the original single level "little government". Controlled by the transaction cost, the government which can appear must be the "little government" which involves a few people and has limited coverage range. "Little governments" in order to decrease the transaction cost of public goods whichbenefit range beyond the respective popedom, set up a higher level government whichpower is awarded by "little governments" and which can coordinate and manage theconduct of "little governments", provide the public goods which beyond the popedomof "little governments", then the single level government may be displaced by the twolevels government. By parity of reasoning, for decreasing the transaction cost ofpublic goods which benefit range beyond respective popedom, many high levelgovernments may set up a higher level government, the degree of governmenthierarchy will be deepened for this, but can't continue for ever. Because a highergovernment displace the horizontal transaction among lower governments by thevertical transaction between itself and lower level governments, although maydecrease the transaction cost of public goods' supply, by the increase of governmentslevels, the marginal horizontal transaction cost decreases and the marginal verticaltransaction cost increases, when both are equal, the government level will realizeequilibrium. This kind of mechanism of the decrease of transaction cost of publicgoods' supply of government levels indicates that basic level governments firstlyoccupy the necessity and rationality of existing (this article names it " logicalpreexisting "). Therefore, the thought of awarding power "from bottom to top" mustbe followed when fiscal management system is constructed. Under the condition ofthe government hierarchy, the realization of the fiscal function of basic levelgovernments, cannot avoid the influence of high level governments. Because both ofthem are methods and ways to decrease the transaction cost during the course ofpublic goods supply in the sense of essence, both comparative advantages need to bebrought into play when the fiscal function of basic level governments is defined.There are comparative advantages for basic level public finances to provide basiclevel public goods, the principles of both fairness and efficiency may be well reflected,therefore, providing public goods is the centralizing embody of the function of basiclevel public finances, this indicates that expenditures match along with these kinds ofpublic goods must be arranged by basic level governments and can't be replaced byhigh level governments. This constitutes the function ranges of basic level governments. However, high level governments have more comparative advantages for raising revenue. According to the principle of dividing taxes among governments, considerable parts of the revenue for providing basic level public goods need to be collected by high level governments, which implies that basic level governments depends on high level governments for raising revenue and rely on the transfer of high level governments, therefore a kind of risk comes into being. i.e. if high level governments benefit themselves, they raise revenue but not arrange enough transfer, which can make the realization of the function of basic level public finances run into obstacles. But if the awarding power thought "from bottom to top" is adopted for dividing the power relationship among governments, this kind of risk is merely reflected into a kind of possibility.Analyzed from the angle of "being", basic level governments of our country locates in double chains of trust agency, one is horizontal trust agency, i.e. basic level governments are responsible for basic level national people's congresses; the other is vertical trust agency, i.e. basic level governments are still responsible for high level governments. In reality, the horizontal trust agency chain is void, but the vertical trust agency chain is solid, which indicates basic level governments of our country obviously depend on high level governments, which is centralizing embodied that high level governments may decide the appoint and dismiss of basic level governments' officials to a degree, then basic level governments are mainly embodied to be responsible for high level governments. There exist great limits for the vertical trust agency chain "from top to bottom" in which basic level governments state. At first, for the initial principal, the trust agency chain is too long to supervise the behavior of basic level governments. Investigation from the angle of realizing the interest aim of the initial principal, the striving degree of basic level governments will decrease. Secondly, there are problems for the belonging of trust power. For high level governments' behaviors are supervised more easily than those of basic level governments', the status of providing public goods is more important for basic level governments, so trust power should be grasped by basic level governments. But the trust agency chain "from top to bottom" distorts the relationship and leads to information asymmetry between high level governments and basic level governments. Under the precondition that public servants of governments are "economic men" and governments benefit themselves, serious opportunism behaviors can be created by this. Firstly, high level governments in order to benefit themselves may concentrate revenue power and demote expenditure power, which makes basic level governments' duty distorted and function weak; Secondly, although basic level governments are in a weak status comparing with high governments and only can arrange their activities of public finance under the framework which is decided by high level governments. But basic level governments are not passive completely, after all they occupy obvious information advantages, decision makers of basic level governments may make use of this kind of information advantages and snatch private interest by opportunism behaviors, which equally can make the duty of basic level governments distorted and function weak. Finally, by the common role of external factors (the extrusion of high level governments) and internal factors (the dissimilation of behaviors of basic level governments), serious contrasts and conflicts come into being between the function and the duty of basic level public finances, then at last which makes basic level public finances sink into the predicament.Since our country was set up, the relationship which basic level governments rely on high level governments has been remained. Although the system of collection and allocation of funds by the central government at the period of just setting up the country and the system of "deciding revenue by expenditure, changing every year" from 1952 to 1979 which is a version of the former weakened the status of basic level public finance, both of them didn't lead to serious difficulties of basic level public finances. The contract system of "deciding expenditure by revenue, unchanging for a few years" from 1980 to 1993 is the dividing power reform which was carried out by the central government suffering the economic pressure. This kind of reform has more color of classification management, but the central government still grasps the power of formulating systems. After the central government finds that local governments excavate its revenue, then the central government carries out the dividing taxes system which has obvious color of concentrating power. Since the dividing taxes system was carried out ten years or so ago, the pattern that the power of raising revenue has been concentrated and the power of expenditure has been dispersed appears investigated totally. Basic level governments are in a state of being extruded. Because they have no low level governments to disperse the expenditure power and concentrate the revenue power, for a time they only can concentrate revenue from peasants who are main objects they manage and serve. But after the agriculture tax is cancelled, the convolution space of basic level public finances becomes small, and the special status in which basic level public finances situate make them have no way to adjust the fiscal allocation relationship with high level governments. Then it is inevitable that basic level public finances sink into the predicament It is different with the reform of state-owned enterprises which is relatively carried out entirely, the reform of fiscal dividing power of our country walks up the road of concentrating power once more. This is because the mighty competition which non-state-owned enterprises bring to state-owned enterprises forces governments carry out the entire reform of state-owned enterprises. However there is still no dissident force for the reform of fiscal dividing power which is predominant by high level governments. Under the condition that successes have been achieved for the reform of state-owned enterprises, economic performances have been promoted obviously, economic pressures suffered by high level governments alleviate greatly and the original motive of dividing power has vanished, high level governments walk up the road of concentrating power making use of the power of controlling basic level governments. Although the circulation of "taking back and offloading" can relieve the predicament of basic level governments temporarily, under the system fracture nowadays, resolving the predicament of basic level public finances may sink into the predicament.High level governments make basic level public finances sink into the predicament by using of the status comparing with basic level governments, which may restrain the enthusiasm of basic level governments, while which may restrain high level governments' own benefits. Then high level governments carry out the "promotion championship contest" for basic level governments, examine the achievements of policy makers of basic level governments by the index of the growth rate of GDP, etc. to improve their enthusiasm. But the status of high level governments make them have information weakness naturally to test basic level governments, which leads to serious opportunism behaviors of basic level governments, which are reflected in behavior dissimilation of competitions, investment, raising funds, setting up organizations and employing people of governments. Opportunism behaviors of basic level governments deepen the predicament degree of basic level public finances.Since the predicament of basic level governments roots in the institution arrangement which formulates the special relationship between high and basic level governments, then the realization of resolving the predicament of basic level public finances needs to be realized by the transition of institutions, transforming from dividing power "from top to bottom" to awarding power "from bottom to top", but there exists obvious "path dependence" for realizing this kind of institution transition in our country. Investigating no matter objective factors or subjective factors, high level governments or basic level governments, behaviors of masses or policy makers of governments, we find that it is difficult to realize this kind of institution transition in a short period of time, however the impossibility of realizing the institution transition in a short period of time doesn't indicate the unreasonable institution may keep in the state of "locking" for ever. Investigated for a long time, the transition may be realized by two kinds of ways: one is passive transition. When fiscal risks caused by opportunism behaviors of basic level governments accumulate to specific degree to become social risks and threaten the benefit of high level governments' own, high level governments will be compelled to give up the vertical trust agency chain "from top to bottom", developing the supervising role to basic level governments of the sister power organizations that occupy the comparative advantages and transform to the institution of awarding power "from bottom to top". The second is active transition, i.e. when high level governments especially the central government realizes that there are shortcomings which are difficult to overcome for the trust agency chain "from top to bottom" by the accumulation of knowledge, realizes that it is objective rule which must be obedient to realize above-mentioned institution transition, and realizes that fundamentally speaking it is also advantageous for maximizing its own benefit to realize this kind of institution transition, high level governments especially the central government may support and improve this kind of institution transition. Internal regulations formulated during the course of supplying public goods in basic level communities of our country frequently deepen the comprehension of the people for the necessities about the institution transition and make the people bring about desires and requests to promote the transition of institutions. The extension of the scale of private property rights will eventually make the first group which promotes the institution transition come into being. High level governments especially the central government may serve as the second group which supports the institution transition, the combination of both of them can eventually promote the institution from dividing power "from top to bottom" to awarding power "from bottom to top". Since then, the institutional reasons which cause the predicament of basic level public finances will disappear, the predicament of basic level public finances may be resolved in the sense of effecting a permanent cure. It is necessary to point out, this kind of institution transition not only isn't to be contrary to the principle of "unified leading and classification management", but also can make the principle be realized really.
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