JRSSEM 2022, Vol. 02, No. 5, 670 – 676

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

FACTORS AFFECTING BUDGET CHANGES: SETTING

PLANNING, LEADERSHIP STYLE AND GOVERNMENT

POLICY

Cris Kuntadi

Rita Tri Damayantie

Bhayangkara University Greater Jakarta, Indonesia

STIA LAN Polytechnic Jakarta, Indonesia

e-mail: cris.kuntadi@dsn.ubharajaya.ac.id, rita.damayantie09@gmail.com

*Correspondence: cris.kuntad[email protected]arajaya.ac.id

Submitted

: 08 November 2022

Revised

: 19 November 2022

Accepted

: 27 November 2022

Abstract: Changes that occur in a budget are driven by several factors, which can arise from both

internal and external to an organization. This article examines the factors that influence budget

changes, namely: setting planning, leadership styles and government policies. It is hoped that this

article can contribute ideas to build hypotheses of influence between variables to be used in future

research. The results of this literature review article are: 1) the determination of planning affects

budget changes; 2) leadership style affects budget changes; and 3) government policies affect

budget changes. Each of the factors discussed in this article has a positive influence on the decision

of an organization to make a budget change.

Keywords: Budget Changes, Planning Determination, Leadership Styles and Government

Policy.

Cris Kuntadi, Rita Tri Damayantie | 671

INTRODUCTION

A budget is a plan that is systematically

prepared in the form of numbers that cover

all activities for a certain period or period in

the future. The budget is used as a tool for

planning and controlling government

activities expressed in units of activity and

units of money, which includes the

development and application of

government objectives, specification of

objectives, development of short-term and

long-term strategies, creation of periodic

performance reports and development of

follow-up procedures.

The State Budget as a financial plan

means that the government has a plan for

expenditures and revenues to finance state

interests or government management. In

financial planning, it could be that expenses

are planned as high or as low as possible.

The preparation of the work plan in the

draft state budget is carried out a year

before its implementation, so it is very likely

that there will be adjustments during the

current year. In a period the budget that has

been prepared does not fully capture the

needs of an organization so that it is

possible to make budget changes

(rebudgeting) (Abadiarti, 2014).

Rebudgeting is the way that

governments revise and update the

application of budgets as a continuation of

the annual budget process, rebudgeting

must be a means by which the government

can meet varied and even contrary to

budgeting, including continuity and

control, change and accountability, and

flexibility and predictability (A. B. Wildavsky

& Caiden, 1988).

On March 11, 2020 the World Health

Organization or WHO has announced the

new outbreak of corona virus (Covid-19) as

a global pandemic. WHO then coordinated

global efforts to manage the impact of the

pandemic and declared Covid-19 a global

pandemic on March 11, 2020 (Cucinotta &

Vanelli, 2020). The implications of the

Covid-19 pandemic have had a far-reaching

impact on slower national economic

growth, falling state revenues and

increasing spending, as well as financing.

With the Covid-19 pandemic, the

Indonesian government then prepared

various strategies to deal with it, such as

increasing the budget for the health sector,

social assistance, support for the industrial

sector and efforts to recover the national

economy as well as making policies on the

regional financial side and the financial

sector.

In addition to increasing the budget

for the health sector, social assistance and

support in the industrial sector. The

government also took priority steps as an

effort to overcome the pandemic situation

by asking all Ministries of Institutions (K/L)

to cut spending funds for the 2022 fiscal

year. The request was submitted to each K/L

through a letter dated May 23, 2022. The

government is considered to have to make

a decision by making cuts because of

several things. Increasing global economic

uncertainty that has an impact on the

domestic economy needs to be anticipated

because it will disrupt the momentum of

national economic recovery, among others

by adding automatic adjustments (budget

672 | Factors Affecting Budget Changes: Setting Planning, Leadership Style and Government

Policy

reserves) to all K/L.

Budget changes (rebudgeting) are the

government's efforts to adjust financial

plans to real conditions in the field that

have the aim of improving the performance

of work units (agencies). The process of

preparing budget changes is in principle no

different from the initial budgeting process,

both in terms of substance and politics

(Anessi-Pessina & Sicilia, 2015). In the

implementation of budgeting, it is

important to know that the resulting

budget document is the most important

document in government, because it is the

basis for the implementation of

government functions and public services

(Abdullah, 2012).

A plan can be interpreted that a

budget describes development priorities,

partiality to society and the power of power

of decision makers (budget actors), which

will be implemented during a fiscal period

(A. Wildavsky, 1991). Based on studies

(Anessi‐Pessina et al., 2012) shows that

budgeting and budgeting are two

interconnected things. Based on

explanations (Axelrod, 1988; (A. B.

Wildavsky & Caiden, 1988) explains that a

comprehensive understanding of the

budget requires that there be a shift in

focus towards annual analysis, e.g.

additional and budget shortfalls and other

revisions that may occur as an effort to

safeguard against critical budgets.

Problems that arise in the

implementation of the budget in the first

half of the current year and the results of

the review of the results of the

implementation of the previous year's

budget can be a driver of the emergence of

the need for budget adjustments in the

current year. This change occurs due to

developments that are not in accordance

with assumptions in budget policy, such as

the occurrence of oversight or non-

achievement of regional revenue

projections, expenditure allocations,

sources and use of costs that were not

previously set (Abdul Halim, 2016).

However, budget changes are not

interpreted as a change in the

organization's own goals (Abdullah and

Afrah Junita, 2016).

The Covid-19 pandemic has also

changed the K /L activity plan that was

designed in the year before the COVID-19

pandemic. An example is activities that

travel officially bumped with transportation

regulations and the establishment of

policies for the implementation of

community activity restrictions (PPKM) set

by the government.

MATERIALS AND METHODS

The writing of this scientific article is

compiled using qualitative methods and

conducts a literature review (Library

Research). The step is taken by examining

theories with relationships or influences

between variables from books and

collections of journals both offline in

libraries and online sourced from

Mendeley, Scholar Google and other online

media.

In qualitative research, literature review

should be used consistently with

methodological assumptions. This means

673

that it must be used inductively so as not to

direct the questions posed by the

researcher. One of the main reasons for

conducting qualitative research is that the

research is exploratory, (Ali, 2013).

RESULTS AND DISCUSSION

Based on theoretical studies and

previous relevant research, the discussion

this literature review

article in the

concentration of State Management is:

1. The Effect of Planning Determinations

on Budget Changes.

Planning determination affects budget

changes, where budget planning is an

important element in budgeting in an

organization or agency. Budget planning is

the basis of the activities and objectives of

an organization as a guide and

commitment of an organization to carry

out its activities. Poor planning promotes

poor budget management and makes it

difficult for the organization to achieve its

goals and objectives to be achieved. The

difficulty of achieving goals becomes the

reason for an organization to make budget

changes.

2. The Influence of Leadership Styles on

Budget Changes.

Leadership style affects budget

changes, budget changes are related to the

behavior of leaders who become planning

actors and proposers of activities. The

leader is also the executor of the budget

with the burden of responsibility resting on

the budget ruler. A leader who is proficient

in budget planning and execution will be

far from budget changes. Therefore,

participatory budgeting as a tool to

motivate subordinates should be used by

the leader to maximize the performance of

his budget, so as not to experience bias.

Gaya leadership influences budget

changes, this is in line with the research

conducted by (Abdullah and Afrah Junita,

2016).

3. The effect of government policies on

budget changes.

Government policies affect budget

changes, government policies born from

the conditions of the Covid-19 pandemic

result in budget changes because they are

required to reallocate budgets and

activities to something that is more useful

than the previous thing. Ministries and

agencies refocusing activities, in the short

term, should be focused on providing

emergency assistance to the health sector.

Each agency reassesses what should be

reduced and what components should be

improved to support the acceleration of

handling the Covid-19 pandemic.

Refocusing activities and reallocating the

budget are the reasons for an agency to

make budget changes.

Conceptual Framework

Based on the formulation of the

problem, theoretical studies, relevant

previous research, and discussion of the

influence between variables, then in the

process of thinking about this article as

below.

Cris Kuntadi, Rita Tri Damayantie | 674

Figure 1: Conceptual Framework

Based on the conceptual framework

image above, then: the determination of

planning, leadership styles, and

government policies affects budget

changes.

Apart from these three exogen

variables that affect budget changes, there

are many other variables that affect it

including:

a) Remaining budget: (Arief Kurniawan,

2019), (Marzalita, 2014), and (Isra

Maulina, 2018).

b) Revenue: (Isra Maulina, 2017), (Cut

Ratnasari, 2017), and (Syukriy-2014).

Equalization fund: (Filma ayu, 2018) and

(Srimulyanti,2018).

CONCLUSIONS

Based on theory, relevant articles and

discussions can then be formulated as

hypotheses for further research: 1) Planning

affects budget changes. 2) Leadership

affects budget changes. 3) Government

policy affects budget changes.

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