In Government Regulation No. 105 in 2000, states that the local finance is all right and kewjiban area in connection with implementation of local government can be assessed with the money in it all forms of wealth including the other relating to the rights and obligations of the region within the framework of the budget.
In connection with the importance of the financial position, financial area as an indicator to determine the ability of regions to organize and manage his own household. With the promulgation of the law on regional autonomy, have consequences for the region that would cause regional disparities with one another, especially in the area of financial capability, among others (Nataluddin, 2001: 167):
Area capable of implementing regional autonomy.
Approaching the area capable of implementing regional autonomy.
A slightly capable of implementing regional autonomy and
Areas that are less able to carry out the affairs of regional autonomy
Besides the main feature that shows a region capable of implementing regional autonomy is as follows (Nataluddin, 2001: 167):
Financial capacity of the area, meaning the area must have the authority and the ability to explore the sources of finance, manage and use their own finances are sufficient to finance the operation of government.
Dependence on central assistance should be as minimal as possible so that the original income (PAD) should be part of the largest financial resources, supported by the policies of central and local financial balance, so that the role of local government becomes bigger.
Relating to the nature of regional autonomy that is related to the devolution of decision-making policy, the management of public funds and the regulation of activities in the administration of government and community services, the role of financial data area is needed to identify the sources of financing of the region as well as types and amounts of your spending to be incurred in order financial planning can be carried out effectively and efficiently. The financial data areas that provide statistical overview of the development and realization of the budget, both revenue and expenditure and analyzing it is an important information primarily to make policy in the financial management area to see the ability / local independence (Yuliati, 2001: 22)
Conceptually, the pattern of the relationship between central and local governments should be conducted in accordance with the fiscal capacity to finance the implementation of governance and development, although the measurement of the financial capacity of these areas will make a difference. Paul Hersey and Kenneth Blanchard introduced "Situational relationship" in the implementation of regional autonomy (in Nataluddin, 2001: 168-169):
Instructive relationship patterns, the role of government puasat more dominant than the independence of local government (areas that are not capable of implementing regional autonomy)
Relationship patterns Konsultif, intervention of the central government has begun to decrease, because the area is considered a little more able to implement autonomy.
Participatory relationship patterns, the role of the central government wane, given the areas concerned to approach the level of independence is capable of carrying out the affairs of autonomy.
Relationship patterns discretionary, central government intervention is not there because the area has been completely capable and independent in carrying out the affairs of regional autonomy.
Starting from the theory, because of the potential of natural resources and human resources are different, there will be also differences in the pattern of the relationship and level of independence between regions. For guidance in relation to the ability to see patterns region (financially) can be expressed as the following table:
Regional Capability Level Relationship Patterns
The pattern of relationships
Source: Abdul Halim (2002: 169)
Regional Revenue Management
According to Law No. 32 of 2004 and Article 157 of Law No. 33 2004 Article 6, as well as PP 105 of 2000 and Government Regulation No. 64 of 2000, sources of revenue can be itemized as follows:
a. Local Revenue (PAD)
Sources of local revenue is dug out of the financial resources in the area concerned. Sources of local revenue consists of:
Local taxes, in accordance with Government Regulation No. 65 of 2001 on local taxes, is a local tax, hereinafter referred to as taxes are compulsory contributions made by the individual or entity the head area without direct payment balance that can dilaksakan based on legislation in force are used to finance the implementation of the government local and regional development.
Retribution, according to Government Regulation No. 66 2001 about retribution, is a retribisi area is local charges as payment or services, or certain specific licensing or provided and supplied by the local government for the benefit of private persons or entities.
Results of regional-owned company, is the result of the wealth management area separated. The types of revenue, including the results of other asset management area separated include share of profits, dividends and sale of shares belonging to the area.
Other regional revenue valid, among others, the sale of state assets and current accounts.
b. Fund Balance
Balance funds are funds coming from revenues the local budget (APBD) which is allocated to the regions to finance the needs of the region in the implementation of decentralization. The equalization fund mengisisi and complement each other. The posts of the equalization fund consists of:
Part of the reception area of land and building tax, Tax on Acquisition of Land and Building and revenues from natural resources such as forestry, fisheries, mining, oil and gas.
General Allocation Fund is a fund sourced from APBN allocated with the purpose of financial equalization between regions to fund the needs of the region in the implementation of decentralization. (Act No. 33 of Article 1, paragraph 2)
Special Allocation Fund is a fund sourced from APBN allocated to a particular region with the aim to help fund special activities of regional affairs and in accordance with national priorities. (Act No. 33 of 2004 article 1, paragraph 23).
Measures that can be implemented so that the area could be improved revenues are as follows (in Nirzawan, 2001: 75):
a. Intensification, will be carried out in the following manner:
Implement orderly determination of taxes to be paid by the taxpayer, orderly in the collection to the taxpayer, in the orderly administration and the orderly administration and orderly in the deposit.
Implement an optimal taxation and levies in accordance with the potential objective is based on existing regulations.
Monitoring and control in a systematic and continuous (ongoing) to anticipate the occurrence of voting irregularities in the implementation on the ground by officers.
Forming a task force team (task force) on yng related agencies in charge of overseeing the collection in the field by officers.
Provide incentives (stimulus) specifically to government officials is PAD can exceed receipts from the set targets.
Held a persuasive approach to the taxpayer in order to meet its obligations through outreach activities.
Perform other control measures in order to avoid deviations from the implementation of local regulations regarding the management and the determination of taxes and levies.
b. Extending, carried out by way of, among others, as follows:
Develop program policy and strategy development and explore potential new levies object with a higher priority to the levies to be determined and translated into local regulations.
Revisiting the tariff provisions and development objectives in accordance with existing local regulations and review the proposed changes to local regulations.
Conducting comparative studies to other areas in order to get information on the types of taxes and other levies which allows it to be developed.
Expenditure Management Areas
In the Government Regulation No. 105 in 2000, states that regional expenditures are all cash expenditure areas relevant fiscal year period which includes recurrent expenditure (operational), development expenditure (capital expenditure) and unexpected expenditures.
a. Routine shopping
Routine expenditure is expenditure that benefits only for one fiscal year and increase asset / wealth for the region. Routine expenditures consist of:
1) General and administrative spending:
Shopping tour of duty
2) All operation and maintenance of facilities and infrastructure
b. Shopping Investivasi / Development
Investment spending is spending that benefits are likely to exceed one fiscal year and will add to asset / wealth of the region, and will further add to the regular budget for regular expenses for operating and maintenance costs. Investment spending consists of:
Public spending. Expenditure which benefits can be enjoyed directly by the society. Public expenditure is capital expenditure (capex) in the form of physical investment (infrastructure) that have economic value more than a year and resulted in the addition of regional assets.
Apparatuses your spending is spending that benefits not directly enjoyed by the public, but it is felt directly by the apparatus. Shopping apparatus led to the addition of fixed assets and other non-current assets. Shopping apparatus is expected to provide benefits in the current period and future periods.
Spending transfer is the transfer of money from local governments to the following criteria:
Do not receive direct exchange for goods and services like the purchase and sale transaction.
Do not expect to be repaid in the future, as expected on a loan.
Do not expect any revenue, like that expected in an investment.
This transfer consists of expenditure on: installment loans, grants reserve fund.
c. Spending Not Suspect
Spending is not the suspect is provided for financing:
Extraordinary events such as natural disasters, events that could endanger the area.
A bill last year that has not been finalized or is not available in the budget for the year.
Intake of acceptance that is not right or acceptance freed (canceled) or excess receipts.
Spending the area should be managed by observing some basic principles that should be considered, among others (Nirzawan, 2001: 77):
Accountability is the obligation pemerinta regional spending areas to provide accountability, present and report on all the activities and events related to the use of public money to the party that has the right and authority to hold accountable those (Parliament and the public at large). Important aspects that should be considered by the regional managers are:
Legality of regional spending that every transaction expenses incurred must be traceable to their legal authority.
Management (stewardship) on spending a good area, protection of physical and financial assets, prevent wastage and mismanagement.
The principles of accountability of spending areas:
A system of accounting and budgeting system which can ensure that the consistency of regional spending is done in accordance with the legislation in force.
Expenditure areas that do can indicate the level of achievement of goals and objectives that have been set.
Expenditure areas that do can be oriented to the achievement of the vision, mission, outcomes and benefits to be obtained.
b. Value of Money
Regional spending should base the concept of value of money, namely:
Economy, is the relationship between market (value for money) and input (input). Economics is the purchase of goods and services at the desired quality and at the best possible price. Economic sense should include also expenditure area cautious or careful and optimal use of local finance without wastage of (appropriate). An operational activity is said to be economical if it can eliminate or reduce the costs deemed unnecessary. Thus virtually no similar understanding between efficiency and economy, because both of whom require removal and reduction in costs.
Efficiency, closely linked to the concept of effectiveness, which is the ratio that compares the output to input used. The process of operational activities carried efficiency can be said when a certain performance targets can be achieved by using the resources and costs as low as possible.
Effectiveness, is a connection or relationship between the output of a central responsibility with the purpose or objectives to be achieved. Effectiveness in Local Government can be interpreted timely completion of activities and within the limits of the available budget, can mean achieving the goals and objectives as well as what has been planned. However, although there is implemented deviating from the original plan, but have a beneficial impact on the target group receiving the benefits, then it can be said to be effective. The greater the contribution of expenditure made to the value of the achievement of a specified goal or target can be said to be effective working process of the work unit in question.