LGPF: Welcome Remarks

The IRA Issue and NGO-PO Responses
Tom S. Villarin
Executive Director
KAISAHAN Tungo sa Kaunlaran ng Kanayunan at Repormang Pansakahan

The signing into law by Pres. Estrada of the General Appropriations Act for year 2000 came after a lengthy, contentious and acrimonious debate between Congress and the executive branch on one hand and Congress vs. local governments on the other. The main area of contention was Congress' attempts to cut the budget deficit by reducing the Internal Revenue Allotment (IRA) allocation while attempting to insert provisions to increase their pork barrel allocations. After much protest from the local government leagues, these insertions were vetoed by the President together with other items that were deemed 'non-essentials' (with the objective of reducing the budget deficit), and the IRA cut was restored. (Interestingly, Malacañang did not touch on the issue on the P109.5-B allocation for debt servicing, the second highest expenditure item next to education. Malacañang could have negotiated with its creditors that debt repayments can be negotiated so that more money in the budget can be spend domestically. But that's another story.)

The restoration of the IRA share that was cut by the Senate by some P30-B was a welcome relief. After the leagues of local governments through the Union of Local Authorities of the Philippines (ULAP) steadfastly opposed the cut, Malacañang stood beside the local government units' (LGUs) side in the raging debate. Whether such decision stemmed from a policy framework that supports full local autonomy is another matter.

The threat to cut the IRA share of LGUs threatens the autonomy of LGUs enshrined under our 1987 Constitution and the 1991 Local Government Code. The IRA-the share of LGUs in the national taxes--is mandated by the Constitution. Article X, section 6 of the Constitution provides that, "Local government units have as just share, as determined by law, in the national taxes which shall be automatically released to them."

What outraged LGUs over the year 2000 General Appropriations Act, aside from the significant IRA cut, was the insertion by Congress of a provision that allows any national government agency to forge an agreement with a local government beneficiary for its programs "with the concurrence of the concerned members of Congress." At least seven other special provisions require "prior consultations with members of Congress" for the release of certain funds, including "financial support for development programs of LGUs" and appropriations for irrigation projects. Prior consultations were supposed to be required by lawmakers in the identification of locations for farm-to-market road projects as well as in the restructuring of the Department of Agriculture, pursuant to the Agriculture and Fisheries Modernization Act of 1997. Congress also introduced a form of control over how the "development fund" will be released." This part of the IRA will be released only upon submission of the annual investment plan, which must contain specific development programs, projects and activities and must be submitted to the Department of Budget and Management not later than March 31, 2000. All these acts encroach upon the fiscal autonomy of the local governments.
Despite the veto made by the President over the said provisions, Congress' actions reverses the gains toward local autonomy by clipping the powers of LGUs and thereby ensuring dependence by local governments on the national government. In order to understand what is at stake here we must ask these questions: What are the issues behind the cut on the IRA share? What should civil society's response be to this issue? Will the increase in IRA share lead to improved services and poverty alleviation? I think these are some of the questions that this forum should answer.

The Real Score on the IRA Issue

The IRA issue is indicative of the fact that full local autonomy is still a dream to be realized. National-local power dynamics show that under our presidential form of government, recognition and respect for local autonomy is something that must be fought for. We have a national government that will not let go of its pre-Code powers and pre-martial law practices wherein LGUs remain dependent on national appropriations to finance local public works and other projects. Keeping such practices alive benefits national government players because they are able to control financial resources. However, such practices lead to the allocation of local government funds based largely on vote-getting criteria rather than long term needs and development goals. By controlling the allocation and use of resources, you can ensure victory in elections. With the increased powers of LGUs, the national government's very existence seems threatened. Local autonomy is the foundation of the demand for the lessened role of the national government in local development and for discarding the top-down approach in development.

Fiscal autonomy is also a threat to our present form of government that promotes personality-based, patronage politics. District representatives to Congress have to give something back to their constituents after elections in the form of infrastructures and other services. Thus, rather than working as full-time legislator, members of Congress want to be implementers of vote-getting projects in the localities. Thus they "want to have their pork and eat it too." With the devolution of resources to LGUs, the fund for such patronage politics has been depleted.

The dynamics between the presidency and Congress is a given. While the Constitution gives the power of the purse to Congress, it explicitly gives the power to prepare and implement the budget to the executive. Any encroachment on each other's turf is a big issue even if both belong to the incumbent administration party. Thus, the nature of "pork barrel" funds is anathema to such separation of powers. However, as this has been the standard practice, it has become a culture very difficult to change unless you shift to another form of government.

The key player to the IRA issue is still the president. We have a powerful executive who decides where and how the budget can be spent. During pre-martial law years, the president used the budget as a tool to demand allegiance from local executives. In the present debate, the IRA was used by the presidency to arbitrate between Congress and LGUs. By using his veto powers, the President became an instant hero to the LGUs. By siding with the latter without necessarily alienating Congress, the presidency has the leverage to command allegiance from LGUs.

The bottom line of the IRA issue can be seen in the fruit of this present struggle:
The presidency has consolidated its hold over LGUs;

LGUs are increasingly dependent on the national government;

The "pork barrel" has been revealed as a reality that the executive has to live with and negotiate with Congress yearly;

LGUs have been exposed as bit players in resource allocation and power-sharing dynamics that is still substantially controlled by the national government.

While the IRA cut was restored to LGUs, the brouhaha only magnified the fact that local autonomy is still selectively implemented. While more powers and responsibilities were devolved, the allocation and use of resources is still in the hands of the national government. While the Code provides for the automatic release of the 40% share, the national government still thinks and acts to the contrary. They believe that the IRA is but a share from the national to local governments.