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The Philippine Star - LGU champion

In The News
13 September 2011

By Mary Ann Ll. Reyes | The Philippine Star

PHIL-MARY-ANNUnder the law, local government units have to share in a combined Internal Revenue Allotment (IRA) equivalent to 40 percent of national revenue, to be divided among them on an equal-sharing formula based on the total land area and population of each locality.

But with new provinces and cities being created, the shares are getting smaller and smaller.

Common sense holds that given inflationary pressures and the expected annual increase in the General Appropriations Act (GAA) or the national budget, the IRA—and the respective shares of local governments—is supposed to get bigger by the year.

But because of a provision in the Local Government Code that computes a particular fiscal year’s IRA on actual revenue earnings on the third preceding year, local executives now expect to get lower IRA shares for their respective LGUs for the next two years owing to poorer tax collections in 2009 and 2010.

Next year, for instance, the IRA outlay is due for a 4.8 percent reduction (owing to a 4.8 percent drop in the national government’s revenue earnings in 2009), even if there is a 20 percent increase in the Palace-proposed GAA for 2012.

Good that local executives have found a new champion in Sen. Ferdinand “Bongbong” Marcos Jr., chairman of the Senate local government committee, who is now calling on the executive department to find innovative ways of restoring this almost five percent reduction, so as not to adversely affect the LGUs’ delivery of basic services.

For starters, he says, the Palace could source the P13.3 billion (equivalent to the 4.8 percent slash) from national-government savings, which hit P26.25 billion last April alone.

With 55 percent of every LGU’s annual budget going to personal expenditures, another 10 percent to maintenance and other operating expenses, and 20 percent to the development fund, Marcos said the IRA cutback will mean “there will be very little left for them to do anything.”

As a former governor for nine years, Marcos said he understood the predicament of these LGUs facing IRA cutbacks.

This is not run-of-the-mill grandstanding as Marcos’ knows from his extensive experience as a local elective official in his Ilocos Norte home province that the success of local programs and projects are contingent in large part on the amount of money that the Provincial Capitol can spend.

Marcos, a seasoned LGU official and a product of Wharton Business School (which produced the likes of Manny Pangilinan and Lance Gokongwei), definitely knows what he is talking about.