JRSSEM 2022, Vol. 02, No. 2, 214 – 223
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI : https://jrssem.publikasiindonesia.id/index.php/jrssem/index
THE EFFECT OF BALANCED FUNDS AND LOCAL OWN-
SOURCE REVENUE ON REGIONAL EXPENDITURE AND
ECONOMIC GROWTH BEFORE THE COVID-19 PANDEMIC
IN SAMARINDA CITY
Kristin Wulansari
1*
Della Olivia Caterina Kalangit
2
Suminto
3
Dyah Kusrihandayani
4
1,2,3,4
Politeknik Negeri Samarinda, Indonesia
e-mail: [email protected]
1
2
3
,
4
Correspondence: kristinwulansari@polnes.ac.id
Submitted: 02 August 2022, Revised: 22 August 2022, Accepted: 19 September 2022
Abstract. The aims of this study are to analyze the effect of balancing funds and local own-source
revenue on regional expenditure and economic growth before the covid-19 pandemic in
Samarinda City. The data used in this study is secondary data, which was obtained in 2014–2019.
The analytical tool used is path analysis with IBM-SPSS Version 24. Research results showing that
the Balancing Fund take effect direct and not significant to regional expanditure, strengthened
score significance 0.356 > 0.05, with score influence direct of -0.318. Balancing Fund take effect
direct and not significant to economic growth, strengthened score significance 0.127 > 0.05 with
score influence direct of -0.390. Local own-source revenuehas an effect direct and significant to
Regional Expenditure, strengthened score significance 0.031 < 0.05 with score influence direct of
1,126. Local own-source revenue has an effect direct and significant to Economic Growth,
strengthened score significance 0.027 < 0.05 with score influence direct amounted to 1,879.
Influential Regional expanditure direct and not significant to Economic Growth, strengthened score
significance 0.106 > 0.05 with score influence direct of -0.728. Local Own-source revenue has no
direct and insignificant effect on Economic Growth through Regional Expenditures with the effect
of a score of 0.231. Balancing Fund has no direct and not significant to Economic Growth through
Regional expenditure with score influence of -0.819.
Keywords: balanced fund; local own-source revenue; regional expenditure; economic growth.
Kristin Wulansari, Della Olivia Caterina Kalangit, Suminto, Dyah Kusrihandayani | 215
DOI : https://jrssem.publikasiindonesia.id/index.php/jrssem/index
INTRODUCTION
Economic growth be one condition
achievement development economy, but
what is necessary noticed no only number
statistics that describe rate growth,
however more to who created economic
growth that is only few people or part big
society (Rogerson & Rogerson, 2010); (Ocal
& Aslan, 2013). If only few people enjoy so
economic growth no capable reduce
poverty and reduce inequality, on the other
hand if part big join participate in
enhancement economic growth so poverty
could be reduced. Economic growth
becomes hampered if in fulfillment of
government capital area only rely on
transfer from government center as one
form delegation management finance to
area. Benefit positive from high balance
fund government center is if transfer funds
are used for consumption related goods
and services with smoothness activity
economy, transfer for expenditure
consumption goods and services from
government center have connection
positive to growth economics (Devarajan et
al., 1996).
Certain regions can be more
independent in managing regional
revenues designated for the process of
realigning regional development. Good
regional development conducted by
sustainable in accordance priorities and
needs of each region with root and target
development national which has set
through development period long and
long term short. One component
decentralization fiscal that is Local own-
source revenue. Local own-source revenue
(PAD) is one of the source reception areas
which is also the basic capital government
area in get development funds and fulfill
regional expanditure.
Indicator important success ability
finance area reflected in ability something
area in dig income original the area (PAD)
for finance shopping routine and regional
development that. Success decentralization
fiscal clear require success area in manage
potency finance the area. Besides of PAD,
component reception other is a balancing
fund namely DBH, DAU, and allocation
funds special (DAK). Destination main
balancing fund is for even distribution fiscal
on each area (equalizing transfer). Since
decentralization fiscal start implemented in
2001, the balancing fund is component
biggest in transfer allocation to area so that
have very important role in support
implementation decentralization fiscal.
1. Balancing Fund
Based on Constitution Number 33
of 2004, balancing funds is the source
of funds from allocated state budget to
area for fund needs area in skeleton
implementation decentralization (Omar
et al., 2021). Balancing fund aim for
reduce the fiscal gap between
government center and government
area as well as Among government area
other. However, the government area
no balance fund sleep as source income
in development. Whereas actually
financial assistance from government
center the just for stimulation for area
for more increase source reception
income original the area , which is part
important from source reception area ,
not make it as priority main in reception
area . Types of balancing funds shared
Becomes four namely, Tax Revenue
216 | The Effect of Balanced Funds and Local Own-Source Revenue on Regional Expenditure
and Economic Growth Before The COVID-19 Pandemic in Samarinda City
Sharing (DBH), Non Profit Sharing
Taxes/Resources Power Nature,
Allocation Fund General (DAU), and
Allocation Fund Special (DAK).
2. Local own-source revenue (PAD)
Regional original income is one
source of regional revenue that has an
important role in development. Local
revenue is income derived from local
revenue sources and is managed by the
government. Regional original income
is bone back financing, therefore
economic capacity can be measured by
the size of the contribution of regional
original income to the APBD, the
greater the possibility of the
contribution made by regional original
income to the APBD, meaning that the
region is less dependent on the
government to assist regional
governments.
Regional Original Revenue (PAD) is
regional revenue obtained from
existing sources in the region which is
collected by itself based on regional
regulations in accordance with
applicable laws and regulations.
According to Law Number 33 of 2004,
the income collected based on the laws
and regulations consists of Regional
Taxes, Regional Levies, Separate
Regional Management Wealth and
other legitimate income (Yani, 2013);
(Suprihati et al., 2018).
3. Regional Expenditure
Regional expenditure, according to
Regulation Government Number 24 of
2015 concerning Standard
Accountancy Government Statement
Number 2 is: " All the expenditure from
State/ regional general treasury account
that reduces current fund equity in
period year budget concerned who do
not will obtained the payment back by
the government” (Stadler & Nobes,
2018)
Minister of Home Affairs Regulation
Number 13 of 2006 concerning
Management Regional Finance Article
23 paragraph (2) states that regional
expanditure cover all expenditure from
general cash account reducing area
fund equity, is obligation area in one
year budget and not will obtained the
payment back by areas.
Regional expenditure in Minister of
Home Affairs Regulation Number 13 of
2006 concerning Guidelines
Management Regional Finance says
that regional expanditure used in
skeleton fund implementation affairs
government that becomes authority
province or regencies/cities consisting
of from affairs mandatory, business
choices and matters to be handled in
part or field certain that can held
together Among government and
government area or between
government designated area based on
regulation legislation. Regional Income
earned good from Local own-source
revenueand from the balancing fund
naturally used by the government area
for finance Regional expenditure.
4. Economic Growth
Economic growth according to
Simon Kuznets in Todaro, state that
economic growth is increase capacity in
period long from a country concerned
for provide various goods economy to
its inhabitants (Mades & Kulkarni,
2015). Ascension capacity that alone
Kristin Wulansari, Della Olivia Caterina Kalangit, Suminto, Dyah Kusrihandayani | 217
determined or made possible by the
presence progress or adjustments
technological, institutional and
ideological to various existing situation.
Economic growth is a process of
increase in output per capita in period
long time (Pastor et al., 2018). Economic
growth covers 3 aspects namely:
a. Economic growth is a process
(aspect economical) an economy
growth, change from time to time.
b. Economic growth is related to an
increase in output per capita per
year. These are two important
aspects, namely the total output
and the total output of the
population per capita, where the
total output is divided by the total
population
c. Economic growth is associated with
a long-term perspective, it is said to
grow if in a long period of 5 years
there is an increase in output.
METHODS
This study uses path analysis, where the
research design consists of elements that
refer to the form of research in a natural
setting that shows a minimal and moderate
level of researcher intervention.
Researchers only collect data without
giving any treatment to the data, with the
intent and purpose of finding solutions to
the problems that have been formulated,
so that some of the hypotheses that have
been made can be tested empirically.
This research is a quantitative study
using secondary data obtained based on
official information from the government,
such as the Balancing Fund, Regional
Original Income, Economic Growth and
Regional Expenditures in Samarindai City
within a period of 7 years starting from
2010 to 2016. The aims and objectives This
study is to analyze the positive and
negative effects and contributions of the
Balancing Fund (X 1), Loca own-source
revenue (X 2), Regional Expenditures (Y 1)
and Economic Growth (Y 2). The
independent variable in this study is the
Balancing Fund, Regional Original Income,
while the dependent variable is Regional
Expenditure and Economic Growth. Data
Analysis using Statistical Product and
Service Solutions (SPSS 23).
Hypothesis test in study this used for
explain connection causal among variable
of each variable selected for ensure that by
quantitative connection the there is by
positive or negative, the hypothesis put
forward in study this is as following:
H1:
Allegedly Balancing Fund take
effect positive and significant to
Regional Shopping in Samarinda
City .
H2:
Allegedly Balancing Fund take
effect positive and significant to
Economic Growth in Samarinda
City .
H3:
Allegedly Local own-source
revenuehas an effect positive and
significant to Regional expanditure
in Samarinda City.
H4:
Allegedly Local own-source
revenuehas an effect positive and
significant to Economic Growth in
Samarinda City.
218 | The Effect of Balanced Funds and Local Own-Source Revenue on Regional Expenditure
and Economic Growth Before The COVID-19 Pandemic in Samarinda City
H5:
Allegedly Regional expanditure
take effect positive and significant
to Economic Growth in Samarinda
City.
H6:
Allegedly Balancing Fund take
effect positive and significant to
Economic Growth through
Regional Shopping in Samarinda
City .
H7:
Allegedly Local own-source
revenuehas an effect positive and
significant to Economic Growth
through Regional Shopping in
Samarinda City
The data source used is secondary data,
where secondary data is needed from 2014
– 2019, before the covid-19 pandemic. The
data includes data on the development of
the realization of balancing funds and
regional original income in the city of
Samarinda, the development of GRDP at
constant prices according to the business
field of the City of Samarinda, and the
development of regional spending in the
City of Samarinda through the relevant
agencies, namely the Central Statistics
Agency for the City of Samarinda and East
Kalimantan, Samarinda City Regional
Revenue Agency (Bapenda), Samarinda City
Regional Asset Management and Finance
Agency (BPKAD) and Samarinda City
Planning and Development Agency.
RESULTS AND DISCUSSION
This study was conducted in Samarinda
City, with looking for secondary data
needed from 2014 – 2019 through relevant
agencies namely the Central Bureau of
Statistics Province city Samarinda and East
Kalimantan (Acemoglu, 2012), data needed
for analyzed is as following:
Table 1. Data on Balanced Funds, Local own-source revenue, Regional Expenditures
and Economic Growth in 2014 - 2019 Cities Samarinda
Year
Balancing Fund
PAD
Regional Shopping
Economic
Growth
(Million Rupiah)
(Million Rupiah)
(Million Rupiah)
(Million
Rupiah)
2014
1,538,150,051,351
435,498,980,673
3,201,662,936,936
3,950,630,530
2015
1,397,006,873,330
419,745,787,641
3,238,561,121,093
3,952,322,310
2016
2,046,222,356,100
391,404,293,290
2,331,928,898,582
3,961,410,190
2017
1,768,909,871,610
519,423,886,710
2,283,031,685,050
4,127,497,229
2018
2,119,660,334,830
498,888,664,160
2,515,289,346,000
4,331,591,070
2019
2,702,425,917,90
560,454,549,360
3,067,184,401,110
4,546,987,952
Source: Secondary Data Processed, 2022
This path analysis method was chosen
to determine the magnitude of the
influence (not predicting) in the pattern of
relationships between variables on the
direct or indirect effect of a set of
independent variables (exogenous) on the
dependent variable (endogenous). To find
out the Effect of Balancing Funds and Local
Kristin Wulansari, Della Olivia Caterina Kalangit, Suminto, Dyah Kusrihandayani | 219
own-source revenueon Regional
Expenditures and Economic Growth in
Samarinda City, assisted by using SPSS
(Statistical Package for Service Solution)
software version 23.
1. Classic Assumption
Hypothesis testing using regression
analysis is necessary to test the classical
assumptions. The purpose of testing
the model is to obtain certainty about
the consistency of the estimation
model that is formed based on the
underlying economic theory. The
classical assumption deviation test is
intended to ensure that the estimated
model is free from autocorrelation,
multicollinearity, and
heteroscedasticity disorders which are
applied to the two structural equations
below.
2. Normality test
Normality test aims to determine
the distribution of data in the variables
used in the study. Data that is good and
feasible to use in research is power that
has a normal distribution or not. The
normality test method used in this
study is a graph plot where the
assumption of normality is met if the
points on the graph approach the
diagonal axis and the Kolmogrov-
Smirnov method with a constant value
greater than 0.05.
3. Multicollinearity Test
Multicollinearity Test required for
knowing is there is whether or not
variable independent who owns similar
with variable other independent in one
Detection model multicollinearity in a
model can be seen if Variance Inflation
Factor (VIF) value is not more of 10 and
the Tolerance value is not not enough
of 0.1, then the model could said free
from multicollinearity . Based on from
the multicollinearity test in the table
can seen from tolerance value and VIF.
Balanced Fund variable tolerance value
(X1) 0.512, more big of 0.10. Temporary
that the VIF value of the Balancing Fund
variable (X1) is 1.952 more small from
10.00. So that could concluded no
occur multicollinearity . PAD variable
tolerance value (X2), 0.512, more big of
0.10. Temporary that PAD(X2) variable
VIF value is 1.952 more small from
10.00. So that could concluded no
occur multicollinearity in the regression
model in study this.
4. F test (simultaneous test)
The calculated F value in this
research model has a real or significant
effect on the Balancing Fund variable
(X1), Local own-source revenue (X2),
simultaneously on Regional
Expenditure (Y1) from the output of the
model above, the calculated F can be
9.941 with a significant level of 0.000
<0.05, it is concluded that the
independent variables simultaneously
have a significant influence on Regional
Expenditures.
The calculated F value in the
research model by simultaneous there
is real influence or significant Variable
Balancing Fund (X1), Local own-source
revenue(X2), simultaneous against the
Regional Expenditure (Y1) and
Economic Growth (Y2) from the output
of the above model can be calculated F
of 37,728 with level significant 0.000 <
0.05 then taken conclusion that the
independent variable by
220 | The Effect of Balanced Funds and Local Own-Source Revenue on Regional Expenditure
and Economic Growth Before The COVID-19 Pandemic in Samarinda City
simultaneously give significant influence to Economic Growth.
Source : Secondary data processed
Figure 1. Coefficient Track On Second Structural Equation
Based on on figure 1, the could
depicted pattern connection each variable
in influence economic growth which where
could is known that connection track fund
balance to economic growth give influence
of -0.390. Local own-source revenue there
is economic growth give influence of 1,879
and connection track Among regional
expanditure to economic growth of -0.728.
The size influence each independent
variable to the dependent variable is as
following:
1. Influence direct independent variable
to the dependent variables:
a. Effect of X1 Y1 = -0.318
b. Effect of X2 Y1 = 1.126
c. Effect of X1 Y2 = -0.390
d. Effect of X2 Y2 = 1.879
e. Effect of Y1 Y2 = -0.728
2. Influence no direct independent
variable to the dependent variable
through variable intervention:
a. Effect of X1 Y1 Y2 = -
0.318 x -0.728 = 0.231
b. Effect of X2 Y1 Y2 = 1.126 x -
0.728 = - 0.819
3. Influence totals:
a. The total effect of X1 Y2 =
-0.390 + 0.231 = -0.159
b. The total effect of X2 Y2 =
1.879 + (-0.819) = 1.06
Table 5.16 shows influence direct ,
influence no direct and total effect of
each independent variable X1 and X2 as
well as the intervening variable Y1 in
affect the dependent variable Y2.
5. Discussion
Coeficient test results
determination showing that the
independent variable could explain the
effect to the dependent variable of
86.90 % or R
2
= 0.869, in the equation
structural first , while in equation
structural both independent variables
could explain the effect to the
dependent variable of 98.30 or R2 =
0.983
.
Temporary that , based on
simultaneous test results is known that
the independent variable by
simultaneously give significant
influence to the dependent variable in
the equation structural first with score
significance 0.047 < 0.05. On the
Kristin Wulansari, Della Olivia Caterina Kalangit, Suminto, Dyah Kusrihandayani | 221
equation structural second
simultaneous test results It is also
known that the independent variable
by simultaneously give significant
influence to the dependent variable
with score significance of 0.026 < 0.05.
H1:
Effect of Balancing Fund (X1) on
Regional Expenditure (Y1)
Count-value for variable funds
balance is -1.088, meanwhile value
of t - table u for n = 6 with level 5%
significance is 3.182, which means t
- count < t - table (-1.088 <3.182),
so could interpreted that the
variable of funds transition no take
effect significant to regional
expanditure. Results analysis this
strengthened score significance
0.356 > 0.05 which means the
effect of variable funds balance no
significant to regional expanditure.
H2:
Effect of Balancing Fund (X1) on
Economic growth (Y2)
Count-value for variable funds
balance is -2.537, meanwhile value
of t - table u for n = 6 with level 5%
significance is 4.302, which means t
- count < t - table (-2.537 <4.302),
so could interpreted that the
variable of funds transition no take
effect significant to economic
growth. Results analysis this
strengthened score significance
0.127 > 0.05 which means the
effect of variable funds balance no
significant to economic growth.
H3:
Influence Local own-source
revenue (X2) to Regional
Expenditure (Y1)
Count-value for Income variable
original area is 3,855, while that t-
table value for n = 6 with level 5%
significance is 3.182, which means t
- count > t - table (3,855 > 3.182),
so could interpreted that the
income variable original area take
effect significant to regional
expenditure. Analysis result this
strengthened score significance
0.031 < 0.05 which means income
variable effect original area
significant to regional expenditure.
H4:
Influence Local own-source
revenue (X2) to Economic
Growth (Y2)
Count-value for Income variable
original area is 5,917, while that t-
table value for n = 6 with level 5%
significance is 4.302, which means t
- count > t - table (5.917 >4.302),
so could interpreted that the
income variable original area take
effect significant to economic
growth. Analysis result this
strengthened score significance
0.027 < 0.05 which means income
variable effect original area
significant to economic growth Sig
H5:
Influence Regional expanditure
(Y1) against Economic growth
(Y2)
t - value for shopping variable Area
is -2,829, meanwhile t- table value
for n = 6 with level 5% significance
is 4.302, which means t - count > t
- table (2.829 < 4,302), so could
interpreted that the spending
variable area no take effect
significant to economic growth.
Results analysis this strengthened
score significance 0.106 > 0.05
which means the influence of
222 | The Effect of Balanced Funds and Local Own-Source Revenue on Regional Expenditure
and Economic Growth Before The COVID-19 Pandemic in Samarinda City
shopping variables area no take
effect significant to economic
growth.
H6:
Influence Not directly the
Balancing Fund (X1) to Economic
Growth (Y2) through Regional
Expenditure (Y1)
Influence Value no direct is is 0.231,
so that interpreted that influence
no direct balancing fund variable to
economic growth through regional
expanditure no significant. With
Thus, the hypothesis H6 in study
This is what reads "Balancing Fund"
take effect no direct and significant
to economic growth through
regional expanditure" rejected.
H7:
Influence Not direct Local own-
source revenue (X2) to Economic
Growth (Y2) through Regional
Expenditure (Y1)
Influence Value no direct Local
own-source revenueto economic
growth through Regional
expenditure is equal to - 0.819, so
that interpreted that influence no
direct variable income original area
through economic growth through
regional expanditure no significant.
Tidak sig
CONCLUSION
In general, the results of this study can
be concluded that Balancing Fund (X1)
have no significant to Regional Expenditure
(Y1) and Economic growth (Y2), Local own-
source revenue (X2) have significant to
Regional Expenditure (Y1) and Economic
Growth (Y2), Regional expanditure (Y1)
have no sifnificant Economic growth (Y2),
and for the last influence no direct
independent variable to the dependent
variable through variable intervention :
Balancing Fund (X1) and Local own-source
revenue (X2) to Economic Growth (Y2)
through Regional Expenditure (Y1) is
rejected.
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© 2022 by the authors. Submitted
for possible open access publication
under the terms and conditions of the Creative
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(https://creativecommons.org/licenses/by-sa/4.0/).
