A Divergent Pattern of Local Government Revenues and Spending in Election Year - A Case of Indonesia

Abstract

Purpose of the study: The purpose of this study is to empirically examine the difference in budgeted own-source revenues and social expenditures between districts headed by incumbent candidates and non-incumbent candidates in the Indonesian head of district elections in 2015. The difference between both budgets indicates the use of public money by incumbent candidates to win the election.
 Methodology: This study focuses on local governments/districts in Indonesia. Using the Slovin formula, 226 observations were analysed. The sample was classified into two groups, namely 75 districts with incumbent candidates (or 66.4%) and 38 districts with non-incumbent candidates (or 33.6%). Data was compiled from the official district's budget for 2014 and 2015 (the election year) and analysed using pair t-test and independent t-test.
 Main Findings: This study revealed that in the budgets of incumbent candidates, own-source revenue and grant expenditures are statistically higher in the election year as compared to the pre-election year, except for the social aid fund. Additionally, local owned revenues, grant and social aid expenditures in the budgets of districts with incumbents were statistically higher than districts where there were no incumbent candidates in the general election.
 Applications of this study: The results of this study confirm a strong indication of the public money used by incumbent candidates for their political interest. Thus, the regulation of local government budgets, especially in the election year should be amended and tightened up.
 Novelty/Originality of this study: Studies on how public money is exploited by incumbent candidates are still scanty, especially in developing countries where a direct vote election system is adopted.