The Effect of Local Own Income and Transfer Funds on Fiscal Independence with Capital Expenditures as an Intervening Variable

Fiscal independence is the goal of implementing regional autonomy. Through independence, the budget can regulate local government can give authority that has been given properly or not. The phenomenon that occurs in Indonesia according to the Minister of Finance Sri Mulyani, depending on the region on TKDD is still very high. This study aims to discuss and study regional transfers and funds towards financial independence with capital expenditure as an intervening variable. This type of research is causal comparative with quantitative research. The technique of collecting data in this study uses documentary techniques. The sample selection method uses census techniques. The samples used in this study were 28 districts and 8 cities in East Java Province. The analysis technique used in this study is path analysis (path analysis). Based on the results of the analysis, it can be concluded that the Regional Own Revenue (PAD) affects the fiscal independence, the transfer of funds affects the fiscal independence, regional original income is not related to capital expenditure, the transfer of funds is not to capital expenditure, capital expenditure is not appropriate to the independence of the PAD tax does not influences fiscal independence through capital expenditure, and transfers of funds do not agree to fiscal independence through capital expenditure.