This study aims to analyze the Regency/City local budget in North Sumatra in terms of the ratio of regional financial independence. The data used in this study is secondary data in the form of Budget Realization Reports (LRA) for 33 district/city governments in North Sumatra province for 2018-2020, obtained from the official website of the Directorate General of State Fiscal Balance (DJPK). The data analysis technique used descriptive financial ratio analysis. The results of this study reveal that it can be seen that the level of regional independence in the province of North Sumatra is very low when viewed from the average of 33 regencies/cities, which is 8.88%. If it is related to the relationship pattern and the level of regional independence, the level of independence of the regency/city regional government in North Sumatra province is classified in the very low independence category with an instructive relationship pattern. Regency/city regional government in North Sumatra province.
Regional development is an integral part of national development. Because regional development is one of the indicators or supports for the realization of national development. Therefore, the central government makes a policy on Regional Government in which local governments are given broad authority to regulate their own households. This is in accordance with Law Number 12 of 2008 concerning regional government, as a revision of Law Number 32 of 2004. According to Law Number 12 of 2008 that government is carried out based on the principle of decentralization, the principle of deconcentration and the principle of co-administration, in the context of decentralization formed and compiled by the provincial government and the city government as an autonomous region [1,2].
The Regional Revenue and Expenditure Budget (local budget) is the regional government's annual financial plan which is discussed and approved jointly by the regional government and DPRD and stipulated by regional regulations. Local budget is an annual work plan to realize local government activities, both routine and development, which are regulated and calculated with money. The process of preparing the budget, whether it is local budget is often an important issue that is in the public's attention, even the local budget is a political tool used by the government itself and the opposition [3].
Based on the Minister of Home Affairs Regulation number 27 of 2013 concerning guidelines for the preparation of the Regional Revenue and Expenditure Budget (local budget), it can be defined that the local budget is an annual regional government financial plan that is discussed and approved jointly by the regional government and DPRD, and is determined by regional regulations. Where on the one hand describes the estimated maximum expenditure to finance regional activities and projects within a certain budget year, and on the other hand describes the estimated revenue from regional revenue sources to cover the expenditures in question [4,5].
The regional government as the party entrusted with the task of running the wheels of government, development and community services is required to submit a regional financial accountability report to be assessed whether the regional government has succeeded in carrying out its duties properly or not. The ability of local governments to manage finances is contained in the Regional Revenue and Expenditure Budget (LOCAL BUDGET) which reflects the ability of local governments to finance activities for implementing government tasks, development and community social services. Evaluation of regional financial management and regional financial financing will greatly determine the position of a regional government in the context of implementing regional autonomy [6-8].
The approach in this research is a quantitative/associative approach. According to Russiadi, et al. “a qualitative/associative research approach is a study that aims to determine the degree of relationship and the pattern/form of influence between two or more variables. The type of data used in this research is secondary data. The data needed is the data in the Budget Realization Report (LRA) of the Regency/City Government in North Sumatra Province for 2018-2020.The method used to collect data in this research is documentation. Documentation is the collection of data and documents and records related to the problem under study. The data in this study comes from data from the Regional Government Budget Realization Report in the province of North Sumatra in 2018-2020. The data is obtained through recording or softcopy of the required data obtained from the official website/website of BPS and the Directorate General of State Fiscal Balance [9].
The population in this study were all district/city governments in North Sumatra Province, as many as 33 local governments consisting of 25 districts and 8 cities. The technique of taking research samples using saturated sampling technique [10]. According to Sugiyono saturated sampling is a sampling technique when all members of the population are used as samples. This is often done when the population is relatively small. Another term for saturated sample is census, where all members of the population are sampled. Based on this, there were 33 samples of districts/cities in North Sumatra Province during 2018-2020 (Appendix 2) with 99 units of observation analysis (33 x 3) [11].
This study uses descriptive analysis techniques, meaning that research is carried out by explaining and describing and analyzing the data obtained regarding the problems studied. According to Situmorang and Lufti descriptive analysis is the most basic analysis to describe the general state of the data. This description analysis includes several sub menus, one of which is ratio analysis. The data is identified and financial ratio analysis is calculated based on the indicators/formulas that have been determined as a reference in the study. The financial ratio used in this study is the regional financial independence ratio.
The results of the study present the results of the ratio analysis of the financial independence of the districts/cities in the province of North Sumatra for the 2018-2020 period (Table 1).
Table 1: Analysis of Regional Financial Independence Ratio
| No | Information | 2018 | 2019 | 2020 | Average | Classification | Rating |
| 1 | Asahan District | 6.55% | 7.51% | 3.49% | 5.85% | Very low | 19 |
| 2 | Dairi . County | 7.51% | 7.08% | 6.84% | 7.14% | Very low | 15 |
| 3 | Deli Serdang Regency | 21.52% | 22.73% | 22.57% | 22.27% | Very low | 2 |
| 4 | Tanah Karo Kabupaten Regency | 7.77% | 6.34% | 7.37% | 7.16% | Very low | 14 |
| 5 | Labuhan Batu Regency | 14.64% | 11.08% | 10.94% | 12.22% | Very low | 5 |
| 6 | Langkat Regency | 6.85% | 6.46% | 6.37% | 6.56% | Very low | 17 |
| 7 | Mandailing Natal Kabupaten | 3.81% | 5.54% | 5.20% | 4.85% | Very low | 23 |
| 8 | Nias Regency | 14.44% | 11.43% | 11.26% | 12.38% | Very low | 4 |
| 9 | Simalungun Regency | 6.23% | 6.15% | 6.35% | 6.24% | Very low | 18 |
| 10 | South Tapanuli Regency | 12.02% | 11.17% | 6.77% | 9.99% | Very low | 10 |
| 11 | Central Tapanuli Regency | 7.03% | 7.11% | 7.19% | 7.11% | Very low | 16 |
| 12 | North Tapanuli Regency | 7.87% | 8.00% | 8.59% | 8.15% | Very low | 12 |
| 13 | Toba Samosir Kabupaten Regency | 3.54% | 3.73% | 5.88% | 4.38% | Very low | 26 |
| 14 | Binjai City | 9.83% | 10.23% | 11.22% | 10.43% | Very low | 9 |
| 15 | Medan city | 52.08% | 53.79% | 55.37% | 53.75% | Currently | 1 |
| 16 | Pematang Siantar City | 12.21% | 12.01% | 10.35% | 11.52% | Very low | 7 |
| 17 | Sibolga City | 11.30% | 11.01% | 12.35% | 11.55% | Very low | 6 |
| 18 | Tanjung Balai City | 11.21% | 11.06% | 10.88% | 11.05% | Very low | 8 |
| 19 | Cliff City | 13.45% | 14.10% | 15.32% | 14.29% | Very low | 3 |
| 20 | Padang Sidempuan City | 8.51% | 9.61% | 10.61% | 9.58% | Very low | 11 |
| 21 | Pakpak Bharat Regency | 3.43% | 3.47% | 3.79% | 3.57% | Very low | 29 |
| 22 | South Nias Regency | 2.04% | 1.88% | 1.64% | 1.85% | Very low | 33 |
| 23 | Humbang Hasundutan Regency | 4.26% | 4.77% | 4.95% | 4.66% | Very low | 25 |
| 24 | Serdang Bedagai Regency | 7.38% | 6.74% | 8.15% | 7.43% | Very low | 13 |
| 25 | Samosir . Regency | 6.39% | 5.32% | 5.31% | 5.67% | Very low | 21 |
| 26 | Coal District | 5.43% | 5.94% | 5.75% | 5.70% | Very low | 20 |
| 27 | Padang Lawas Regency | 5.12% | 5.08% | 4.11% | 4.77% | Very low | 24 |
| 28 | North Padang Lawas Regency | 3.81% | 3.74% | 2.99% | 3.51% | Very low | 30 |
| 29 | South Labuhanbatu Regency | 5.64% | 4.63% | 5.06% | 5.11% | Very low | 22 |
| 30 | North Labuhanbatu Regency | 4.36% | 4.21% | 4.51% | 4.36% | Very low | 27 |
| 31 | North Nias Regency | 1.44% | 2.90% | 3.64% | 2.66% | Very low | 32 |
| 32 | West Nias Regency | 2.84% | 3.21% | 3.19% | 3.08% | Very low | 31 |
| 33 | Gunung Sitoli | 3.90% | 4.07% | 4.31% | 4.09% | Very low | 28 |
Table 1 shows the results of the calculation of the financial independence ratio of districts/cities in North Sumatra province for the 2018-2020 period which is volatile. There were 16 local governments that showed an increase in regional independence in 2019 and 17 local governments experienced a decrease, while in 2020 there were 16 local governments experiencing a decrease in independence and 17 local governments experiencing an increase in independence. Based on the average, the regency/municipal government that occupies the first level of independence is the city of Medan with an average score of 53.75%, while the district/city government that occupies the last level of independence is South Nias district with an average score of 53.75%. 1.85%.
Based on the results of the ratio analysis in Table 1, it can be seen that the level of regional independence in the province of North Sumatra is very low when viewed from the average of 33 regencies/cities, which is 8.88%. If it is related to the relationship pattern and the level of regional independence (Table 1), the level of independence of the district/city government in the province of North Sumatra is classified in the category of very low independence with an instructive relationship pattern. An instructive relationship where the role of the central government is more dominant than the independence of local governments. However, if viewed by regional government, the city of Medan is the regional government that has the highest independence (an average of 53.75%) out of 33 districts/cities in North Sumatra province with moderate independence with a participatory relationship pattern.
Based on the results of the discussion in Section 4.2 through ratio analysis and different tests in assessing the financial performance of district/city governments in North Sumatra province for the period 2014-2016 it can be concluded that the financial performance of district/city governments in North Sumatra province in terms of the ratio of regional financial independence shows that The level of independence of district/city governments in North Sumatra province is on average very low with an instructive relationship pattern.
However, if viewed by local government, the city of Medan has the highest level of independence out of 33 districts/cities in North Sumatra province, with independence categorized as moderate with a participatory relationship pattern, while the local government with the lowest level of independence is South Nias district.
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