Managing city finances<\/p>\n
Jakarta Governor Surjadi Soedirdja submitted to the City
\nCouncil on Wednesday his proposal for a 5.18 percent increase in
\nthe administration's spending for the year starting April 1.
\nLater on, he said the overall budget is only a fifth of what is
\nideally needed to manage a city as big and as complex Jakarta,
\ncurrently home to over nine million people. Of course, given the
\ncity's limited financial resources, the governor cannot be
\nexpected to have his way.<\/p>\n
But his point makes it difficult for the City Council, which
\nhas to approve the administration's spending plans, to deny him
\nthe modest increase he is seeking. Considering that the Central
\nGovernment is gunning for an 11 percent increase in the current
\nfiscal year, Surjadi's request looks moderate and realistic.<\/p>\n
In his proposal, the governor is proposing total spending of
\nRp 3.37 trillion ($1.46 billion), including Rp 1.39 trillion in
\npublic sector investment, in the 1997-98 fiscal year. This would
\nbe financed by Rp 2.03 trillion to be raised locally, and the
\nrest would come from Central Government contribution.<\/p>\n
In his budget speech, Surjadi laid out his priorities. Sectors
\nthat will receive the highest budget allocations include the
\nadministration's personnel (mainly for skill upgrading), housing
\nand settlement, regional development and transportation.<\/p>\n
What is significant about the administration's finances is its
\ndrive to become financially more self-reliant, in spite of
\npressures to continue raising spending. In 1997-98, locally
\ngenerated revenues are envisaged to account for 60 percent of the
\nadministration's total finances. This is not only easing the
\nburden on Central Government, but it also means greater autonomy
\non how the City administration runs its affairs. We have often
\nheard how the governor has too many bosses in the central
\ngovernment, whose interests need not necessarily be the same as
\nthose of residents. By relying less on Central Government
\nfunding, let's hope the governor can once in a while turn down
\nany special request or order from officials that go against the
\ncommon interest of his residents.<\/p>\n
Greater financial self-reliance also means that more and more
\nof the city's spending plans will have to be funded by residents,
\nchiefly in the form of local taxes. The House of Representatives
\nis currently deliberating a government-sponsored bill that will
\nsimplify local taxes and allow local administrations to impose
\nnew taxes. These include a maximum of 5 percent gasoline tax and
\na maximum 20 percent tax on land-water exploitation. Other taxes
\npermitted under the proposed law are 10 percent for street
\nlighting tax, hotel tax and restaurant tax; 25 percent for
\nbillboard tax; and 35 percent for entertainment tax. All these
\nnew taxes offer tremendous potentials for the city administration
\nto bolster its revenues in the future. As long as the
\nadministration can convince that every rupiah collected is spent
\neffectively, residents have no reason to refuse.<\/p>\n
With more and more of the city's spending now being
\nunderwritten by residents, this calls for greater accountability
\non how the administration spends every rupiah it collected from
\nthe public. The administration must also work harder to meet and
\nto respond to the needs of residents and address their
\ncomplaints. In short, the administration must be prepared for a
\nmore critical and demanding public.<\/p>\n
While we see no reason for the City Council not to endorse
\nSurjadi's request for the 5.18 percent budgetary increase, we
\nhope council members will give the proposal a thorough reading,
\nmaking sure that the every rupiah collected is spent effectively
\nand efficiently, and that at the end of each year, every single
\nrupiah is accounted for.<\/p>",
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