Central Java Secretary Hopes for No Further Cuts to Regional Transfer Funds as Districts Complain of Fiscal Strain

Central Java Regional Secretary Sumarno has acknowledged that many district and city governments in the province are complaining about limited fiscal capacity. Rather than being cut, Sumarno hopes the Regional Transfer Fund (TKD) can be increased in 2027 to provide more fiscal space for local governments, particularly in Central Java. Sumarno admitted he has not yet received information on whether the TKD will be cut again by the central government in 2027. He estimates that certainty regarding the allocation amount will emerge next August. However, Sumarno hopes the TKD will not be cut again. “Yes, the hope is that it will be increased. If there is greater fiscal capacity, we can certainly be more accelerated in developing Central Java,” he said on Friday (26/6/2026). According to Sumarno, the ongoing cuts to the TKD have left the fiscal capacity of district and city governments in Central Java very constrained. “If you say it’s tight, it is tight; our colleagues in the districts and cities are struggling,” he stated. Despite facing limited fiscal space, Sumarno said he has not yet received reports of any district or city government in Central Java being unable to meet its expenditure obligations, including paying Government Workers with Work Agreements (PPPK). “Regarding complaints about fiscal capacity, everyone is complaining. Because the reality is that many transfer funds have been reduced,” he said. Sumarno noted that locally-generated revenue (PAD), both at the provincial and district/city levels, still relies heavily on taxes. However, PAD from the tax sector is not fully optimal due to compliance issues among citizens. There is currently circulating discourse that the central government will again cut the TKD budget in 2027, raising concerns that local government fiscal capacity will be further strangled. The TKD budget began to be cut in 2025. Initially, the TKD was allocated at Rp919 trillion, but it was reduced to Rp869 trillion. The cut to the TKD budget in 2026 was even larger, falling to Rp693 trillion.