Abstract

Two laws on decentralization and regional autonomy, namely Law No. 9 of 2015 on regional government and Law No. 33 of 2004 on the fiscal balance between the central government and regional governments, are currently the basis for the implementation of political and administrative structures of government, especially finance in Indonesia. Law No. 9 of 2015 regulates the delegation of the implementation of most government affairs to the authority of the regions, while law No. 33 of 2004 regulates the policy of financial balance as a consequence of the division of authority between the central government and regional governments. The implementation of government affairs that are the authority of the regional government is funded from and at the expense of the state revenue and expenditure budget. However, on the other hand, the original capacity of most regions as reflected in the regional original revenue can only collect no more than 15% of the value of the state revenue and expenditure budget. Therefore, the central government must assist with the shortfall through a balancing fund mechanism consisting of revenue-sharing funds, general allocation funds, and special allocation funds that complement each other.