<![CDATA[Regional governments require fiscal capacity to support public services and development, with local own-source revenue, general allocation fund, and special allocation fund influencing regional expenditure. This study aims to examine the effect of local own-source revenue, general allocation fund, and special allocation fund on regional expenditure and identify the occurrence of the Flypaper Effect in regencies and cities in Sumatera during the 2022–2024 period. This study employed a quantitative approach using secondary data obtained through documentation methods from 154 local governments. The data were analyzed using panel data regression, coefficient of determination, t-test, and F-test. The results showed that simultaneously, local own-source revenue, general allocation fund, and special allocation fund significantly affected regional expenditure in Sumatera, with an F-statistic value of 97.13212. Partially, local own-source revenue had no significant effect on regional expenditure with a t-statistic value of 0.235865. Meanwhile, the general allocation fund and special allocation fund significantly affected regional expenditure with t-statistic values of 6.711569 and 5.572493, respectively. The findings also confirmed the occurrence of the Flypaper Effect, indicating that regional expenditure remains more responsive to intergovernmental transfers than local fiscal capacity. These results highlight the importance of strengthening local revenue sources to achieve greater regional fiscal independence.]]>
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