Local Fiscal Self-Sufficiency Rate Below 100% Indicates Revenue-Expenditure Gap
The local fiscal self-sufficiency rate, defined as the ratio of local general public budget revenue to expenditure, is a key indicator of how well local revenue covers spending. A rate below 100% signals a revenue-expenditure gap, a recurring phenomenon that arises from the institutional design of central transfer payments and local government debt issuance. The higher the rate, the better the coverage; the lower the rate, the larger the shortfall.
Local fiscal self-sufficiency rate is the ratio of local general public budget revenue to local general public budget expenditure, measuring the extent to which local own-source general public budget revenue covers expenditure. The higher the ratio, the better the revenue covers expenditure; the lower the ratio, the larger the revenue-expenditure gap.
A local fiscal self-sufficiency rate below 100% indicates a gap between local fiscal revenue and expenditure, a situation that occurs every year. The formation of the gap is related to the institutional design of central transfer payments and local government debt issuance.