Regional Financial Transformation: Analysis of the Influence of Public Funds on Regional Expenditures

Abstract

Regional Expenditure is used by the provincial, district/city governments primarily to provide public services and to finance the implementation of government affairs authority based on statutory regulations. Regional Expenditure must include the priority of spending to be carried out by the regional government so that it directly impacts the welfare of its people. This study aims to analyze whether or not a flypaper effect has occurred in the influence of DAU, DAK, DBH, and PAD on regional Expenditure in Central Java Province in 2018-2020. This research is included in the type of quantitative research. The data collection method uses secondary data documentation techniques, namely district/city budget realization reports (LRA) in Central Java Province for the 2018-2020 fiscal year obtained from the Central Java Province BPKAD. The population and sample in this study were all district/city governments in Central Java Province, totaling 35. The sampling method was the census method. The data analysis method used is multiple linear regression with the help of SPSS 25 software. The results showed that (1) DAU has a significant positive effect on regional expenditures, (2) DAK does not have a significant effect on regional expenditures, (3) DBH has a significant effect on regional expenditures, (4) PAD has a significant positive effect on regional expenditures, (5) DAU, DAK, DBH and PAD have a simultaneous effect on regional expenditures, (6) the phenomenon of the flypaper effect occurred in Central Java Province.