Local Budget Supervision Legal System Research

The local budget supervision is an important aspect of the public finance mechanism, which places a main role for restricting the income and expense behaviors and financing activity radius of the government. As a carrier of the public finance supervision of local governments and also a fundamental management mechanism, the local budget supervision was proposed for practical requirements of creating and developing public finance system of local governments, and it has been moved forward with the developing of our democracy and legal system. From the histories of local budget supervision of various countries, to growingly strengthen the budget supervision is one of the effective ways to realize the public finance budget. From the current status of our country, the finance system based on the "revenue-sharing-scheme" has come into being and hence the local government has begun to have certain autonomy, and the local budget supervision also has relative independence and autonomy. However, because the local government does not have full property right and additionally our country places a strict restriction to the local debt financing, the financial resources of local governments thus can not satisfy its increasing economical requirements. Furthermore, in recent years the auditing storm swept the whole country. The phenomena of squeezing, intercepting and misappropriating public funds were often found in the auditing work reports of various levels of governments, and some of them were even fearful and horrible. How to regulate the local budget behaviors and whereby improve the use efficiency of public funds has become an original power to push the local budget supervision. Just under such a background, this dissertation attempts to investigate the local budget supervision from an angle of legal mechanism. Through framing the basic theoretical concepts of local budget supervision, exploring different supervision modes of foreign countries and additionally analyzing the decision-making behaviors of local budgets by using the interval approach, this dissertation systematically constitutes the legal mechanism for local budget supervision from two aspects of the legal and mechanism constraints. The present work seems helpful for improving the democratization and legalization of public budgets. The following main contents are included in this dissertation:1. Framing the fundamental theoretical concepts for local budget supervision. The theoretical basis of the legal mechanism of local budget supervision has been explored through tracing the histories of western and our countries of the local budget supervision. From several different angles, namely, the public product and public choice theory in economics, the constitutional separation of powers and balance theories in politics, and the democratic theory in law, the necessity of strengthening the restriction and supervision to the local budget supervision power has been addressed. Through absorbing the inherent merits of these theories, effective values have been obtained for local budget supervision, which mainly include the local financial order, reasonable arrangement of public funds, fairness and justice of local budgets, etc. The above concepts can provide some important clues for recognizing the legal mechanism of local budget supervision more deeply and systematically.2. Exploring the local budget modes of foreign countries. Through a tabular analysis, the budget supervision modes from the central government to local units are longitudinally compared and analyzed for federal system countries represented by America and France and also the simplex system countries. The independent local budget mode and the mode with a main body composed by the grouping legislature, administrative agency and judicial departments are horizontally analyzed, and the latter is represented by America, Swiss, France and Japan. A conclusion is then summarized through the above analysis that the selection of the budget supervision mode for each country all depends on its own special democracy and legal system and also its local finance system. The legislation practice of the above mentioned countries can be used for reference in the creating and improving process of our country’s budget supervision legal mechanism.3. Creating the decision-making models for local budgets based on the interval analysis. To investigate the effects of the supervision to local budgets, two decision-making models are constructed for local budgets by innovatively introducing the interval analysis technique, which to a certain extent can overcome the deficiency of the traditional probability approach that the precise distributions sometimes can not be obtained due to the limited information on the uncertainty. In the first model, the applying amount of a department budget is described as a function of the appropriated funds of the previous year. In the second model, the difference between the applying amount of a department budget and the appropriated funds in the previous year is also considered in the function. In these two models, the budget appropriation under different circumstances is treated as an uncertain factor and furthermore given a variation interval. By using the interval mathematical theory, the effects of the budget supervision to the budget behaviors of a department then can be quantitatively achieved.4. Optimizing the local budget supervision legislation. Through normative analysis to the constitution, budget law and other relevant laws, and empirical analysis to the local budget supervision regulations of35provinces and cities, we find that though relevant laws and regulations have different degrees of restrictions to local budget supervision they still exist limitations. For examples, the approval rights of the central and local budgets have certain conflicts, the revenue supervision for local budgets lacks constraints, and the mandatory budgetary expenditure contradicts to the balance of payment. Based on the above work, some suggestions are provided in this dissertation for optimizing the budget legislation from three aspects, namely, strengthening constitutional constraints to local budget supervision, overcoming the deficiency existing in the budget law, and improving relevant laws and regulations. Thus a law foundation has been created for constructing the legal mechanism of local budget supervision.5. Constructing a balancing supervision mechanism for local budgets. In this dissertation, the public product and public choice theory in economics as well as the constitutional separation of powers and balance theories in politics are introduced into the behavior analysis of the balancing supervisors of the local budget, based on which the interest demands of the supervisors and also the connecting points of their mutual behavior restrictions can be found. A general thought is then proposed to design a balancing supervision mechanism for local budgets as follows. The first one is to strengthen the interval supervision of the government, and simultaneously establish and improve its interval operational mechanism through setting up the budgeting board, strengthening the financial and auditing supervision, and adding the responsibility system for relevant personnel. The second one is to regulate the external supervision of the government and whereby improve the transparency and disclosure of the local budget, through promoting the personnel quality of the budget supervisors, creating the consulting expert tank, optimizing the vetting process of the people’s congress, entitling a budget supervision right to the citizens, and finally improve the transparency and disclosure of local budgets.