As the momentum of local tax revenue growth diminishes, many local governments seek to increase non-tax revenues by activating existing asset resources in order to achieve a fiscal balance. Under the current tight fiscal balance, some less developed regions face more severe fiscal difficulties.

According to the latest official data, from the beginning of this year to April, China's local general public budget revenue amounted to 4.5676 trillion yuan, a slight increase of 0.1% compared to the same period last year. However, it's noteworthy that in April, the local general public budget revenue decreased by about 2.5% compared to the same period last year, indicating a growth trend turning from positive to negative.

There is a significant disparity in the revenue situation among specific provinces, with generally low growth rates. For example, data shows that 9 provinces realized growth in local general public budget revenue in the past four months, specifically: Jilin at 10.9%, Sichuan at 5.4%, Gansu at 4.4%, Hunan at 3.6%, Guizhou at 2.5%, Jiangsu at 1.7%, Ningxia at 1.4%, Zhejiang at 0.5%, and Yunnan at 0.3%.

Meanwhile, some regions found that growth had slowed down after comparing with the first quarter's revenue increase rate, such as Jilin, Zhejiang, Hunan, Guizhou, Yunnan, and Gansu. Taking Jilin Province as an example, the province's local general public budget revenue in April dropped sharply by 11.5% year-on-year. The reasons are partly due to the concentrated implementation of the VAT refund policy, preferential tax policies for advanced manufacturing, and the boost from the tax policy for small and micro enterprises from last year. On the other hand, intense competition in the automobile market and a decrease in land and real estate transaction activities also played a role.

Furthermore, during this period, local general public budget revenues in four other provinces witnessed a decline: Hebei by 0.8%, Jiangxi by 3.1%, Guangxi Zhuang Autonomous Region by 7.2%, and Shanxi by 16.2%. The slackening growth in local fiscal revenues is partly related to the impact of some of the tax easing policies for manufacturing and small and micro enterprises implemented by the national government last year, which were reflected in this year's revenue, as well as the four tax reduction policies introduced in the middle of this year, leading to a trailing tax cut.

If these special factors are excluded, the actual growth rate of local fiscal revenue would show some improvement. For example, in Zhejiang, a province with significant fiscal revenue, the local general public budget revenue increased by 0.5% year-on-year in the past four months. However, if special factors are deducted, the actual growth could reach 6.7%.

The local general public budget revenue is mainly composed of tax revenue and non-tax revenue, with tax revenue playing a dominant role. Since tax is an important indicator of economic conditions, its revenue situation attracts much attention. Of the 13 provinces mentioned above, most saw their local tax revenue decline to varying degrees in the first four months, with only a few regions like Yunnan and Jilin achieving growth. However, once the special factors were excluded, some provinces effectively achieved positive growth in tax revenue.

In the first four months of this year, Jiangsu Province achieved a cumulative general public budget revenue of 413.9 billion yuan, an increase of 1.7% over the same period last year. Of this revenue, tax revenue amounted to 315.9 billion yuan, reflecting a 4.4% decrease. Nonetheless, if the special factors affecting revenue are excluded, the tax revenue actually had a comparable increase of 2.4%. Factors that caused the slowdown in the growth of local fiscal revenue include the overall economic growth rate decline, operation difficulties faced by some enterprises, the slump in the real estate market, and the persistent negative growth of the Producer Price Index (PPI).

In the context of sluggish growth in tax revenue, multiple local governments are seeking to balance their financial status by integrating existing asset resources and tapping into non-tax revenues. According to publicly available financial data from various regions, provinces such as Jiangsu, Zhejiang, Sichuan, Hunan, Jilin, and Gansu have witnessed rapid double-digit increases in non-tax revenue in the first four months of this year. As an example, data released by Jilin Province's Department of Finance shows that non-tax revenues reached 16.17 billion yuan in the first four months, with an increase of 33.3%. Among these, income from the compensated use of state-owned resources (assets) accounted for 6.92 billion yuan, up by 68.3%, mainly due to local governments activating resources and assets in various ways; while income from fines and confiscations reached 2.29 billion yuan, up by 60.2%, mainly due to the concentration of major cases handled by public security departments and income from fines and confiscations by discipline inspection and supervision departments.

Jiangsu Province's Department of Finance detailed that the growth rate of local non-tax revenue in the first four months of this year reached 28%, mainly originating from multi-level promotion of state-owned resource asset operations, which generated income, including rentals, lending, and disposal revenues from administrative institutions' state-owned assets, as well as compensated use income from municipal public resources.

In addition to regular public budget revenues, there are also local government fund incomes led by land sale revenues, which are also an important source of funds for local governments. However, affected by the continued slump in the urban property market and the decline in land transaction volume and price, the reduction in local government income from land sales has expanded. According to data released by the Ministry of Finance, the budgetary income at the local level of local government funds for the first four months of this year was 1.2158 trillion yuan, a drop of 9.3% compared to the same period last year, of which income from the transfer of state-owned land use rights was 1.0536 trillion yuan, a decrease of 10.4% over the same period.

The decline in governmental fund income varies across the country. For instance, Hebei Province saw a decrease of 13.8% in governmental fund income in the first four months compared to the same period last year, while Jiangxi Province saw a decline of 21%, with land transfer income falling by as much as 30%. Under the principle of "budgeting based on revenue," the lackluster growth in local government revenue also limits the increase in fiscal expenditure. According to data from the Ministry of Finance, the national local general public budget expenditure in the first four months of this year was 7.8215 trillion yuan, an increase of 2.6% over the same period last year, while the budget expenditure from local government funds was 2.1758 trillion yuan, a sharp decline of 21.2% year-on-year.

An observation of the growth rates of public budget expenditures in the first four months of this year for 13 provinces reveals that Jilin Province had the highest growth rate, reaching 7.6%, while Guangxi had the lowest, at -3.7%. Local fiscal expenditure mainly gives priority to securing basic livelihoods, wages, and normal operations.

In order to achieve a balanced fiscal revenue and expenditure, local governments usually adopt a strategy of increasing revenue and reducing expenditures. This includes strengthening income tax collection management, nurturing new sources of taxation, comprehensively promoting the clearance of tax arrears, activating stock assets, accelerating the transfer of state-owned land, and other methods to increase fiscal revenue. At the same time, they insist on frugality, reducing general, non-essential, or emergency expenditures, and by optimizing the structure of fiscal expenditures, they aim to improve the efficiency of the use of fiscal funds.

In order to continue strengthening the financial capabilities of local governments, the central government is increasing its support for local finances. This year, it is estimated that there will be a central to local transfer payment of 10.2 trillion yuan, according to data from the Ministry of Finance. As of early April, transfer payments amounting to 8.68 trillion yuan have already been allocated to local governments. Among them, the funds for projects related to general transfer payments and common financial authority transfer payments that meet the criteria have been fully distributed at the local level.

In addition, after two ministries completed the selection process for this year's local government special bonds projects, the issuance of 3.9 trillion yuan of new special bonds is expected to accelerate. Moreover, a massive issuance of 1 trillion yuan in ultra-long-term special treasury bonds has begun, of which half, 500 billion yuan, will be used by local governments. A series of actions demonstrate that the central government is speeding up the issuance of special bonds and special treasury bonds. This not only provides essential funds for infrastructure investments by local governments but also helps alleviate the financial pressure on grassroots governments, increase fiscal expenditure, and in turn, stimulate economic growth.

Fiscal experts have expressed that such measures will promote local investment and solve some fiscal issues. A director of a local finance bureau also mentioned that although the local debt burden is heavy and income is greatly affected by the market, fiscal expenditure is a rigid demand, which means there is still a significant contradiction between fiscal revenue and expenditure in the short term.