Abstract
Abstract The purpose of this study to examines and analyze differences the financial performance of local governments before and after decentralization. Through regional autonomy, local government has the authority to explore the role of the allocation of income and perform independently in setting development priorities. It is based on Law No. 23/2014 on Regional Government and Law No. 33/2004 on Financial Balance between Central and Local Government. The sample in this study were all districts in Special Region of Yogyakarta (DIY) in the period of 1994 to 2015. The sample used is districts in DIY namely Bantul, Gunungkidul, Kulon Progo, Sleman Regency, and Yogyakarta City. Data used in this research is secondary data. Data analysis using Paired Sample T - Test. These results indicate that there is no difference of fiscal decentralization degrees in districts in DIY before and after regional autonomy; there is no difference of regional financial independence ratio in districts in DIY before and after regional autonomy; and there is differences of regional financial in harmony ratio in districts in DIY before and after regional autonomy.
Highlights
Regional autonomy is a form of delivery system of government affairs and delegation of authority to regions from central to local government
This study shows that the condition is not ideal from the implementation of regional autonomy
Based on the findings and discussion, it is concluded that there is not an average differences of fiscal decentralization degrees and not an average differences of regional financial independence ratio, but there is an average differences of regional financial in harmony ratio in districts in districts in Special Region of Yogyakarta (DIY) before and after regional autonomy
Summary
Regional autonomy is a form of delivery system of government affairs and delegation of authority to regions from central to local government. Regional autonomy is defined as the right, authority, and obligation of the autonomous regions to regulate and manage their own governmental affairs and the interests of the local community in accordance with the laws and regulations. Local governments have the authority to generate revenue and perform independent allocation roles in setting development priorities. The objectives of regional autonomy are to help increase the national allocation and operational efficiency of local governments and meet regional aspirations; improve overall fiscal structure and mobilize regional and national revenues; improve accountability, transparency, and develop constituent participation in decision-making at the local level; reducing fiscal gaps among local governments, ensuring the implementation of basic community services across Indonesia, and promoting government efficiency goals; and improve the social welfare of the Indonesian people. The policy of regional autonomy as stipulated in Law Number 23/2014 on Regional Government is expected to give more opportunity to the change of democratic regional government which will improve the prosperity of the people as a whole
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