LGU locally raised revenue share targeted for 37% by 2022

THE Bureau of Local Government Finance (BLGF) said it wants local government units (LGUs) to source at least 37% of their revenue from local collections, partly by modernizing their fiscal operations.

BLGF Executive Director Niño B. Alvina said the target for locally sourced LGU income compares with the actual share of 33.8% recorded in 2015.

Local governments derive some of their revenue from the central government in the form of internal revenue allotments ( IRAs), the channel by which some national revenue is allocated by law to provinces, cities, towns and barangays. The IRA funding pool in any given year is set at 40% of national collections three years prior, though the allocation can be suspended when national fiscal conditions are unstable.

Municipalities receive 34% of the IRA funds, while provinces and cities each get 23%, while barangays are entitled to 20%.

Raising the proportion of locally sourced revenue would make LGUs less reliant on central government funds.

“The following strategies have been identified… to improve the contribution of locally sourced income of LGUs as a component of their total current operating income (target is 37% by 2022 in aggregate level), given the existing taxing powers and revenue generation mandates of the LGUs,” Mr. Alvina said in an e-mail.

The initiatives include the updating of local finance manuals, stepping up LGU fiscal monitoring and performance evaluation through standardized reporting tools, clarifying policy guidelines, keeping LGUs compliant with standards for developing the local revenue base, and capacitybuilding.

Finance Undersecretary Antonette C. Tionko has said that LGUs’ locally generated revenue accounts for less than 1% of gross domestic product (GDP).

Mr. Alvina said that it is also supporting legislative proposals in Congress to boost the LGU revenue base, including the Real Property Valuation and Assessment Reform Bill, the LGU Income Reclassification Bill, and the Mandatory Calamity Insurance Bill, among others.

The Department of Finance (DoF) in October signed a memorandum of agreement with the Civil Service Commission to require treasurers to take the Standardized Examination and Assessment for Local Treasury Service (SEAL) Program to professionalize LGU personnel. The program is a three-level certification system for designation, promotion and appointment purposes of local treasurers/assistant local treasurers.

“In addition to the above programs, the DoF has also directed us to regularly update and issue the LGU Fiscal Sustainability Scorecards to support LGU resource mobilization goals and for transparency and citizen engagement to improve local finance accountabilities, and establish in 2018 a national awards system to recognize top performing local treasurers and assessors excelling local financial and fiscal management,” he added.

Ms. Tionko has said some LGUs rely on IRAs to fund 99% of their operations and programs, not having maximized their own revenue- raising powers under the Local Government Code.

The code gives LGUs the power to levy taxes, fees or charges on items not covered by the National Internal Revenue Code, as revenue-raising measures, with the scope of taxing powers for provinces, municipalities, cities, and barangays.

The IRA funding pool for 2017 is P486.885 billion, up 13.59%. In 2018, the pool rises to P522.75 billion. —