Abstract: How to strengthen the legalization of budget supervision of local People's Congress and restrain the expansion of local government expenditures is a key issue to prevent and resolve financial risks under the increasing contradiction between fiscal revenue and expenditure. Taking the provincial budgetary examination and supervision legislations at different regions from 1999 to 2017 as a quasi-natural experiment, this paper studies weather strengthening the budget supervision of the local People's Congress through legislation can effectively reduce local government expenditures and its functioning mechanism. The findings show that provincial budgetary supervision legislation can significantly reduce both local government budgetary expenditure and final account expenditure by around 8%. And this effect is further enhanced after the implementation of the new Budget Law since 2015. The inhibiting effect of provincial budgetary examination and supervision legislations on the scale of government expenditures is greater in areas with higher degree of fiscal decentralization or with stronger promotion incentives for officials. The results of the mechanism analysis show that the effect of the budget examination and supervision regulation legalization on the reducing of the local government's economic construction expenditure is most significant. Therefore, in order to give full play to the inhibiting effect of the budget examination and supervision regulation legalization by People's Congress on the scale of government expenditures, we should expand the power and scope of budget supervision of local People's Congresses, strengthen the supervision of key fiscal expenditures, and constantly promote the legalization of budget supervision of local People's Congresses.

Key words: budgetary supervision of the local People's Congresses, budgetary examination and supervision regulation legalization, scale of government expenditures, fiscal risks