No opposition to federalism implied in issues raised by Cabinet, Roque says

ECONOMIC managers expressing concerns about a recent Supreme Court ruling increasing the share of local government units (LGUs) of national government revenue do not represent a dissenting faction within the administration towards broader moves to a federalist system.

Questions posed by President Rodrigo R. Duterte’s economic managers about the ruling on the LGU revenue share, known as internal revenue allotments ( IRAs) do not amount to “opposition” to federalism, Presidential Spokesperson Herminio L. Roque, Jr. said on Tuesday.

“I don’t think there is really an opposition. It was a matter of clarifying that the shift to federalism, including implementing the decision on Mandanas vs. Executive Secretary on the proper computation of the IRA does not entail additional spending and therefore will not create additional trade deficit which may be the basis for reduction in our credit rating,” Presidential Spokesperson Harry L, Roque, Jr. said in a press briefing at the Palace on Tuesday morning, July 24.

He was referring to a petition filed with the Supreme Court by former Batangas governor Hermilando I. Mandanas, also a former member of the House of Representatives for that province’s second district. Mr. Mandanas had asked the court to rule on the “just share” of LGUs of national government revenue.

Economic managers have said the ruling may force the national government to devolve some of its functions to LGUs alongside their corresponding budgets, though concerns about LGUs’ ability to perform these functions have also raised the possibility of raising spending, thereby expanding the budget.

Mr. Roque described the process of possibly devolving the functions to LGUs as “moving money from one pocket to another. So, the money that used to be appropriated for line agencies of the various departments will now have to be appropriated to the LGUs ( local government units), but the total budget will remain the same.”

On July 4, the SC, sitting en banc, ruled in favor of the Mandanas petition. Mr. Mandanas claimed that IRA paid out to local governments were in arrears by about P500 billion during the period 1992 to 2012. The SC ruling was based on a definition of “the ‘just share’ of local government units as being based on all national taxes and not only national internal revenue taxes.”

Budget Secretary Benjamin E. Diokno said in a panel discussion on July 11 that the government’s fiscal position may be at risk due to the ruling. “We don’t know how much the damage sa national government. There are varying estimates: it’s P1.2 trillion to about P6 trillion. That is the estimated effect on the government,” he said.

He also said the national government will file a motion for reconsideration through the Office of the Solicitor General.

Last week, Finance Secretary Carlos G. Dominguez III expressed doubts about some LGUs’ capacity to deliver some national government missions. “We also don’t know what functions they will take over. We cannot just give them the money and say: ‘ We’re leaving you in charge.’ I don’t think we can do that.”

Also last week, Socioeconomic Planning Secretary Ernesto M. Pernia said President Duterte’s economic team believes not all regions in the country are ready for federalism. “It’s unlikely that the regions will be ready... The momentum of infrastructure improvement in the regions is going to be disrupted,” he said.

Former chief justice Hilario G. Davide, Jr., in a Senate presentation titled “Charter Change, Chaining Our People to a Future of Tyranny, Injustice, Corruption, Poverty and Penury,” said the SC’s ruling on Mandanas is de facto federalism by other means, rendering Constitutional amendments unnecessary. —