<![CDATA[. This study aims to examine the effects of fiscal autonomy and capital expenditure on the financial performance of local governments, with the expenditure consistency ratio as an intervening variable. The study employs a quantitative approach using an explanatory research design. The research data consists of secondary data obtained from the Central Statistics Agency (BPS) for the period 2021–2022. Data analysis was conducted using Partial Least Squares (PLS)-based Structural Equation Modeling (SEM) with the assistance of the WarpPLS software. The results indicate that fiscal autonomy and capital expenditure have a positive and significant effect on the expenditure consistency ratio. Furthermore, both variables were also found to have a positive and significant effect on local government financial performance. Conversely, the expenditure consistency ratio has a negative and significant effect on local government financial performance. These findings suggest that the balance of local government expenditure structure does not necessarily reflect the effectiveness and efficiency of local financial management. This study also demonstrates that the expenditure balance ratio mediates the effects of fiscal autonomy and capital expenditure on local government financial performance through a partial mediation mechanism that tends to weaken these relationships. Thus, improvements in local government financial performance are influenced not only by fiscal capacity and the magnitude of expenditure allocations but also by the quality of budget management.]]>
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