Budget Efficiency and Its Impact on Good Governance Practices in Local Government in the Era of Bureaucratic Reform

Abstract

The budget efficiency policy implemented by the central government raises issues regarding the ability of local governments to administer autonomous governance based on good governance principles, as regional fiscal capacity has narrowed while obligations for public service delivery and governance remain fully in force under statutory regulations. This study aims to analyze the normative relationship between national fiscal efficiency policies and the capacity of local governments to implement transparency, participation, accountability, effectiveness, and responsiveness in local governance. The research employs a normative legal method with a statutory approach through analysis of primary legal materials, namely the State Finance Law, the Regional Government Law, the Government Administration Law, and Government Regulations on Regional Financial Management, supported by secondary materials in the form of administrative law and governance literature. Legal materials were collected through library research and norm inventory and analyzed qualitatively to assess the implications of efficiency policies on regional governance capacity. The results indicate that the narrowing of regional fiscal space creates an imbalance between governmental obligations and financing capacity, so that the implementation of good governance values tends to be administratively minimal, public participation space narrows, program effectiveness declines, and service responsiveness is limited. These findings affirm that national fiscal efficiency policies have structural implications for the quality of local governance within the framework of a rule-of-law state and regional autonomy; therefore, strengthening alignment between central fiscal policies and regional authorities is necessary so that the implementation of good governance at the regional level can proceed optimally.