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Aiming at realizing the efficacy and fairness of spatial allocation of land resources, zoning is one of the most widespread tools adopted by governments around the world. However it also brings imbalanced land development which will lead to the "windfall-wipeout dilemma" of stakeholders. Local government regarded as the regional governor and economic driver, is an important part of stakeholders, and will fall into fiscal dilemma when the land development is restricted. In this paper, we discuss how imbalanced land development affects local fiscal condition based on the theory of farmland preservation externality and finance and taxation system. Taking Hubei Province as an example, the degree of imbalanced land development, and the relationship between local fiscal condition and imbalanced land development are quantified by employing a panel dataset of 88 local jurisdictions (counties or districts) from 2009 to 2014. The results show that: (1) The degree of imbalanced land development in Hubei Province is 0.260 with characteristics of temporal decrease and spatial increase from high urbanized eastern areas to middle, northern agricultural dominate areas to low urbanized western mountainous areas. (2) The imbalanced land development aggravates the local government fiscal difficulty, the higher degree of imbalanced land development, the more serious the fiscal condition is. Therefore, innovation of trans-regional fiscal payment on the basis of the degree of imbalanced land development can effectively address the local fiscal dilemmas and achieve regional coordinated development.