Revenue, Expenditure And Management Of Municipal Governmental Funds

Governmental fund is a part of non-tax revenues and occupies a significant place in the fiscal system of the government. Especially recently,"Land Finance" taken the form of governmental fund has been an import source of income for municipal governments. One of the major attributes of governmental fund is that revenues can only be used for designated purpose only, meaning that revenues from the various items of the fund can only be used for corresponding function.This article mainly focuses only three import issues. First, we study the deeper logic behind governmental fund and why has it become one of the most import source of income for municipal governments; Second, we test the hypothesis whether the expenditure of governmental fund satisfies the requirement of "used for designated purpose only" And last, on the premise that we determined the "used for designated purpose only " rule has been broken, we study the factors affecting the expenditure preference of municipal governments.This article achieves several conclusions, corresponding to the issues listed above.First, we find out that the reason behind governmental fund becoming one of the most import sources of income for municipal governments is twofold. On one side, municipal governments have been dealing with great financial pressure due to the mismatch between "money and responsibilities", and on the other, municipal governments have absolute control over state-owned land, which keeps increasing in value with urbanization process. So exchanging the usage right of state-owned land with money becomes an obvious way out;Second, we find out the relationship between revenues and expenditure for municipal governmental fund does not satisfy the requirement of "used for designated purpose only". Different cities have vastly different expenditure preferences;Third, we find out that cites in the west district tend to underspend on a lot of items. We also find out that cities in the east and west district both roughly satisfy the requirement of "used for designated purpose only" for items in economic services; But cities in the west district tend to underspend greatly on items in social services.This article stands out in that:First, We study governmental fund, which is growing to be more import for the government but hasn’t been thoroughly studies compared to public finance; Second, We focus on the municipal level rather than higher levels likeprovinces. Municipal governments take on more public responsibilities than provincialgovernments and tie to the general public; Last, we focus on the requirement of“used fordesignated purpose only”, which is a major attribute of governmental fund, and study theexpenditure preference of municipal governments utilizing both revenue and expendituredata.