New LGU income classification soon
The new income classification for local government units (LGU) in Cebu Province is expected to be released within the next two quarters.
Republic Act (RA) No. 11964, otherwise known as the Automatic Income Classification of Local Government Units Act, which was signed into law by President Ferdinand R. Marcos, Jr. on October 26, 2023, is expected to help the Department of Finance (DOF) boost LGU revenues, ensuring fiscal sustainability of local governments.
The law accordingly updates the income classification of LGUs according to their current financial capabilities.
It empowers the DOF to efficiently and systematically determine LGUs’ financial capabilities and fiscal positions in line with the economy and local development.
R.A. 11964 classifies provinces, cities, and municipalities into five classes according to their income ranges, based on the average annual regular income for three fiscal years preceding a general income reclassification.
Atty. Kevin Soon, Bureau of Local Government Finance in Central Visayas’ (BLGF) local treasury operations officer, disclosed during a meeting at the Capitol with Governor Gwen Garcia and other elected officials in the Province a simulated number of LGUs per income class for Cebu Province.
“I made a Cebu Province simulation, but this is not official, and with the exemption of six LGUs nga kuwangan og usa ka tuig ang ilahang na-report,” Atty. Soon said. The six LGUs were identified as Balamban, San Fernando, Tabogon, Medellin, Boljoon and Alcoy.
The unofficial re-classification as disclosed by Atty. Soon now has Toledo City from third to first income class city.
The City of Talisay goes one notch higher, from third to second class while Danao, Naga and Carcar will be at third income class, while Bogo will be fourth-income class city.
For cities, it has to have an annual regular income of P1.3 billion; second-class, between P1 billion to P1.3 billion; 3rd-class between P800 million to P1 billion; 4th-class at P500 million to P800 million, while the 5th-class falls below P500 million.
“Annual regular income refers to revenues including fees and receipt actually realized which are reported yearly on a cash basis by provinces, cities and municipalities from regular sources,” Soon explained.
For municipalities, there are close to 20 LGUs in Cebu Province set to become first-class municipalities including Consolacion, Minglanilla, Liloan, Bantayan, Daanbantayan, Argao, Tuburan, Dalaguete, Barili, Pinamungajan, Cordova, Asturias, San Remegio, Carmen, San Francisco, Dumanjug, Compostela, Sibonga, and Moalboal.
Due for second-class municipalities are Badian, Madridejos, Balamban, Oslob , Sogod, Tabuelan and Borbon, while five LGUs moved to third-class municipalities: Catmon, Santa Fe, Aloguinsan, Tabogon, Alegria and Poro.
Another seven LGUs are elevated to fourthclass municipalities–Samboan, Ronda, Malabuyoc, Santander, Ginatilan, Medellin and Alcantara, while two municipalities will be at fifth class status— Tudela and Pilar.
For municipalities, P200 million is the threshold to be first class, P160 million to 200 million as 2nd class, P130 million to 160 million for third class, P90 million to P130 million for fourth class and less than P90 million ARI for fifth class.
This is subject to the final release of the Department order so to that effect.
“As far as we know, there is already a draft IRR subject to review of the BLGF and DOF before pa siya e-release. We are hoping for first quarter of this year but if dili up to second quarter,” Soon said.
Though still unofficial, Gov. Gwen and the mayors are excited to know of the improvements in Cebu, according to the Provincial government’s official news network, as this will also impact the LGUs’ ability to undertake development projects, access financial grants from various sources, and determine the salary of their personnel accordingly.