Review of Regional Finance of Government of Regency and City in West Sumatera Province

This study aims to see the regional financial independence in 12 regencies and 7 cities in West Sumatera Province in the period 2012 to 2016. The data used are secondary data that is the realization of local revenue, total regional revenues, revenue transfer from the central government, others legitimate regional revenue as well as regional loans obtained from the Directorate General of Fiscal Balance at the Ministry of Finance of the Republic of Indonesia. This research is categorized into quantitative descriptive research so that it can give an explanation about the condition of regional financial independence. The results showed that the average ratio of financial independence of regency and municipal governments in West Sumatera Province is in very low category with value of 8.43% and has an instructive relationship pattern. The ratio of municipal autonomy of city government with the value of 11.29% higher than the district government which has a value of 6.77%. Nevertheless, from 2012 to 2016, district and city governments have attempted to raise the local financial independence ratio from 5.55% to 7.70% for district governments and from 9.67% to 12.67% for municipalities. For the district government, which has the highest ratio of regional financial independence in 2012 is Dharmasraya District and in 2013 to 2016 is Tanah Datar regency. As for the city government, starting from 2012 until 2016, the highest ratio of financial independence is obtained by the city of Padang. To improve the regional financial independence ratio, district and city governments are expected to optimize the components of local revenue, build better and more innovative local financial management systems and maintain sustainable regional investment conditions.