ANALYSIS OF THE CONTRIBUTION OF REGIONAL TAXES, GENERAL ALLOCATION FUNDS, AND SPECIAL ALLOCATION FUNDS ON LOCAL GOVERNMENT CAPITAL EXPENDITURE

Regional governments continue to face challenges in allocating the Regional Revenue and Expenditure Budget (APBD), particularly in terms of regional spending. A significant portion of the budget is allocated to operational expenditures, especially personnel expenses, which dominate the budget and are often used inefficiently. In contrast, capital expenditure receives a relatively small portion, which can negatively impact infrastructure development, healthcare facilities, and other public services. This issue is prevalent across most regencies and cities in Central Java. This research examines the effects of regional tax revenue, general allocation funds, and special allocation funds on capital expenditures across 35 districts and cities in Central Java from 2018 to 2023. The study period was deliberately chosen to capture budget conditions before, during, and after the COVID-19 pandemic. The research population includes all local governments in Central Java. The study uses a saturated sampling technique, yielding 210 samples. Data were collected through documentation methods, source from annually published APBD realization reports. Data analysis was conducted using multiple linear regression with SPSS 26. The results show that regional taxes and general allocation funds positively affect capital expenditure. However, special allocation funds have no significant impact on capital expenditure due to their predetermined allocation criteria based on national priorities and regulations. This study suggests that regional governments should optimize tax revenue by streamlining and improving the effectiveness of transparent tax collection systems. Additionally, better management of both general and special allocation funds is essential to maximize capital expenditure outcomes.