There were so many controversies produced since the passage of 1999 version of the Law Governing the Allocation of Government Revenues and Expenditures. The major reason for these controversies was due to the rules of allocation, which decided by ratios first, followed by formula. Central government manipulates local governments by adjusting the allocation ratios, which causes great dissatisfactions among local governments. Due to the continuous decrease of funding in City of Taipei, Ma's version of Law Governing the Allocation of Government Revenues and Expenditures passed, which adopts fixed ratios to allocate Tax Redistribution Fund. However, fixed ratios do not mean the actual increase in local funding. Central government plans to reduce grants to echo the Ma's financial allocation amendments. After the success of reconsideration, Executive Yuan also proposed the new version of the Law Governing the Allocation of Government Revenues and Expenditures. The contents of the new version of budget allocation act were making progress, including the allocation ratios replaced by formula and the indexes of tax efforts were added. Nonetheless, the unmodified grant systems were the biggest weakness in this new version of budget allocation Act. Except the controversies of Tax Redistribution Fund, the financial problems of local governments include insufficient self-funding of local governments, the problems of grant systems, local governments lacking the power to tax, insufficiency of tax efforts, high level of personal expenditures and too much waste in local governments, and the problem of "central treat, local pay," etc. Recently passage of General Local- Tax Statute and Law of Administrative Fees made great contributions to the self-funding of local governments. Whether heads of local governments are willing to levy new taxes still remains to be observed.