JAKARTA, KOMPAS — General allocation funds as a result of adjustment due to failure to achieve tax target will be distributed in the second semester of 2017. The Finance Ministry urged the regional administrations to start making anticipations, one of which is to make efficiency on unproductive budget items.
Director General of Fiscal Balance of the Finance Ministry Boediarso Teguh Widodo said in Jakarta, Tuesday (27/6), that the unproductive expenditure posts include official trips, official meetings, seminars, and team allowances. The regional administrations also need to adjust the contracts with third parties in the implementation of projects or activities funded using general allocations funds (DAU) and/or those fully funded by locally generated revenues by making more flexible contract clauses.
The DAU is distributed every month amounting to 1/12 of the ceiling. For the first semester, DAU is distributed each month amounting to 1/12 of the APBN ceiling. When there is a change of ceiling in the Revised State Budget (APBN-P), adjustments are made in the second half. The calculation is the allocation ceiling of the DAU in the APBN-P deducted by DAU accumulation which has been distributed divided by the number of the remaining months in the budget year.
From the interim simulation, the central government will cut the DAU ceiling by 3-4 percent from the initial ceiling. The cutting is done as a consequence of the net incomes which are estimated to be below target. The 2017 State Budget targeted the net revenues to reach Rp 1.32 quadrillion. The net revenues are the result of the sum of inter-tax revenues and non-tax state revenues, deducted by the state revenues distributed to the regions.
The realization of tax revenues as the main pillar of the net revenues is projected to less that Rp 50 trillion from the target. Meanwhile, the non-tax revenues are estimated to rise. However, due to the larger shortage of the tax side, the net revenues are projected to be below target. The 2017 State Budget allocated DA at Rp 401.13 trillion or 30.23 percent of the net tax revenues. This policy is positive because it is greater than the mandate of Article 27 Paragraph 1 of Law No. 33/2004 on Fiscal Balance between the Central Government and Regional Administrations which stipulate the over DAU of at least 26 percent of the net revenues.
Before 2017, the DAU ceiling was fixed so as to suppress the State Budget when the net revenues are below target. In reality, the net revenues never reach the target. Therefore the government and the House of Representatives agreed to apply the DAU policy which is dynamic starting in 201. It means that the DAU ceiling adjusts to the net revenues. When the net revenues are below target, the DAU will be deducted. Vice versa.
Condition in the regions
Bogor Regent Nurhayanti said the spending for the public interests is much more important. Therefore, an alternative will be sought if the DAU is finally reduced.
The Bogor regency also still has the remaining tender funds which can be allocated to compensate the reduction of the DAU. The Bogor regency’s regional budget is currently reaching R 6.2 trillion, of which Rp 1.9 trillion comes from the DAU. If the simulation of 3-4 percent cut of DAU is realized, DAU of the Bogor Regency will decrease by Rp 57 billion to Rp 76 billion.
Bogor Mayor Bima Arya admitted to have anticipated a budget shortfall of between 2-3 percent each year. This anticipation is done because the tax revenues could be not in line with the projection or there will be adjustment to the special allocation funds (DAK) or DAU. “Therefore, the DAU cuts will be no problem because the central government must also have counted everything,” said Bima.
Batam Mayor HM Rudi said the budget cuts do not necessarily mean the stoppage of infrastructure projects. Batam would suffer from losses for many times if it does not intensify its infrastructure projects.
“The competitive advantages of the regions are supported by the availability of infrastructures,” he said in Batam.
So far the control on the official trips by echelon I-III officials is carried out directly by the mayor. Every day, the heads of offices and equivalent officials are asked to report the development of budget use to Rudi.
“I routinely conduct direct control. Not because of the lack of trust in bureaucracy. I just want to make sure the budget is used optimally,” he said.
Ambon Mayor Richard Louhenapessy will reationalize the number of contract workers whose number reaches about 600 people with a budget burden of almost Rp 8 billion every year. The contract workers who on the basis of incompetent evaluations and less required role, will be dismissed. Richard disclosed it in response to the plan by the Finance Ministry to cut the DAU by 3-4 percent.
Ambon City will be affected by the DAU cuts. Currently, Ambon City’s Regional Budget reaches Rp 1.2 trillion with locally generated revenues reaching Rp 128 billion. It means most of the regional budget comes from the central government. Out of its regional budget, about 73 percent is used to pay salaries of civil servants. If the DAU is reduced, the budget for development spending will be less.
Ngawi Regent Budi Sulistyono said the DAU cuts will burden the Ngawi regency.
“If the DAU cuts are realized, many regions, including Ngawi regency, will face more burdens because the DAU has be programmed in the 2017 regional budget,” Budi said.
DAU constitutes the biggest source to fund the fiscal financing in Ngawi. Nearly 73 percent of the DAU is allocated to pay salaries of the civil servants.
(LAS/RTS/RAZ/FRN/ETA)