RATIONALIZING LOCAL REVENUE TARGETS: A STRATEGY FOR ADDRESSING THE BUDGETARY GAP AND RESTORING FISCAL HEALTH IN BANDA ACEH CITY
Abstract
Local government fiscal health is the foundation for effective public services. However, the Banda Aceh City Government faced a severe challenge in the 2024 fiscal year: a liquidity crisis and debt accumulation stemming from a chronic gap between unrealistic revenue targets and actual financial capacity. This condition directly disrupts essential public services and the welfare of civil servants, demanding a fundamental policy intervention. This qualitative case study employs SWOT analysis, a Fishbone diagram, and William Dunn's six criteria to deeply dissect the root causes and comprehensively evaluate alternative solutions. The analysis identifies that the root causes are systemic, including the absence of valid potential local revenue data for planning, an expenditure-driven budgeting culture, and weak internal control and compliance mechanisms against external evaluations. This strategic position places the Banda Aceh City Government in a turnaround quadrant, where internal weaknesses must be addressed by capitalizing on external opportunities. Therefore, this policy paper recommends a Hybrid Strategy that combines short-term fiscal stabilization through conservative budgeting with long-term structural reform based on data and technology. This dual approach is selected as the most logical and implementable solution to break the annual deficit cycle, restore fiscal health, and build a foundation for accountable and sustainable budgeting for Banda Aceh City.
Keywords: Fiscal Health, Budget Planning, Local-Source Revenue, Policy Paper, Banda Aceh City
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