Under the complex economic conditions characterized by the “triple overlay” challenges, China’s sub-provincial local governments are facing increasingly prominent contradictions between rigid growth in fiscal expenditures and slowing growth in revenues, resulting in mounting fiscal pressures. Improving fiscal expenditure efficiency becomes crucial for optimizing resource allocation. The Third Plenary Session of the 20th Central Committee of the CPC proposed “improving the budget system”, and the rapid development of digital technology provides new solutions to this challenge. Budget networking supervision systems, as digital governance tools, enable real-time monitoring of fiscal revenues and expenditures and early warning of abnormal fund flows, thereby strengthening the dynamic supervisory capacity of Local People’s Congress over the entire budget process.

Based on the quasi-natural experiment of budget networking supervision platform construction across various counties in Sichuan Province, this paper employs a multi-period DID model to quantitatively analyze the impact of the platforms on fiscal expenditure efficiency and its underlying mechanisms. The findings reveal that after the establishment of the platforms, the average fiscal expenditure efficiency of county-level local governments increases by approximately 0.03, primarily through optimizing expenditure structures and standardizing fund usage, thereby improving resource allocation efficiency. Heterogeneity analysis indicates that the effect of the platforms is more pronounced in regions with higher fiscal risks, more developed institutional frameworks, or greater fiscal decentralization, suggesting that the effectiveness of digitalized Local People’s Congress supervision depends on the synergistic interaction between institutional environments and local fiscal characteristics.

This paper not only expands the theoretical boundaries of digital technology applications in fiscal governance, but also offers practical policy recommendations for optimizing budget supervision systems. The study finds that budget networking supervision platforms can alleviate resource constraints in Local People’s Congress supervision through technological empowerment and facilitate the transformation from procedural to substantive supervision, thereby providing a practical model for modernizing China’s budget governance. The findings suggest accelerating the nationwide promotion of the platforms, prioritizing regions with higher fiscal risks and greater decentralization, while enhancing budget governance efficiency through institutional improvements.