The city of Leiyang suffered a severe shortage of treasury funds and decided to distribute retirement pay first while postponing payment to civil servants, the Bureau of Finance of Leiyang apologized in an announcement that was posted on news website rednet.cn, news website yicai.com reported.
Leiyang relied too much on the coal industry, Shi Zhengwen, a tax law expert at China University of Political Science and Law, told yicai.com.
The fiscal revenue of Leiyang has decreased since 2012 due to a weakening of the coal-based economy, the bureau said, noting the government's income in 2017 from coal fees was one billion yuan ($156.2 million) less compared with 2012.
Located in southeast of the province, Leiyang has 45 kinds of proven minerals including 560 million tons of recoverable coal reserves and a power generating capacity of 1.4 million kilowatts.
According to the official website of Leiyang government, the general budget revenue in the first four months of 2018 was 636 million yuan, a decrease of 23.69 percent compared with 2017.
The government's fixed expenses, including citizens' wages and spending on people's livelihood projects, continued to rise despite declining income, said the bureau.
The decrease in local revenue was because of fluctuating standards of tax collection and management, Shi added, noting that the local government should stick to legal standards to levy taxes.