ABSTRACT Fiscal decentralization is widely expected to enhance local responsiveness and development outcomes by devolving authority and resources to subnational governments. Yet in many decentralized systems, expanded fiscal authority has not translated into transformative change. This study examines how local public managers make sense of fiscal constraints under constrained fiscal governance arrangements, using qualitative evidence from provincial and district governments in Southeast Sulawesi, Indonesia. Drawing on interviews with senior and mid‐level officials, the analysis shifts attention from fiscal capacity and performance outcomes to how public managers interpret fiscal constraints and frame policy problems. The findings show that fiscal constraints are framed as structural and externally determined; fiscal indicators function mainly as symbols of administrative compliance; and variation in fiscal capacity does not produce corresponding interpretive diversity. These patterns are reinforced through multilevel governance arrangements, particularly provincial mediation. Conceptually, the study introduces cognitive–institutional autonomy to explain how decentralization may expand administrative responsibility without expanding the perceived scope for policy action.
Alam et al. (Mon,) studied this question.