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

Romancing the IRA

While we support in principle the demand of LGUs for their rightful, automatic share in the IRA, we must also challenge them to become more accountable in using the IRA and at the same time, explore opportunities to mobilize other revenue-generating projects for their communities.

Studies have showed that local government officials are "totally dependent" on their IRA. The Department of Finance has also scored local officials for failing to implement the provisions of the 1991 Local Government Code (LGC) on income-generation, claiming that these officials only "wait for their IRA share" from the national government.

A study made by the Local Development Assistance Program showed that in the past decade, the IRA accounted for at least 36% of the total local revenues. This went up to 56% in 1992 when the Code was implemented. The study noted that in lower income municipalities, the IRA contributes from 65% to 90% of their total revenues. A trend has already been established. The IRA remains a major revenue source of LGUs as its share to total local income swelled from 50.4% in 1991 to 67.7% in 1994 and more than 72% share in 1997.

However, with the increase in IRA share, there are disturbing reports that LGUs are misusing this fund. A Commission on Audit (COA) report released December 1999 showed that there is a nationwide pattern of LGU misuse of the 20% development fund mandated by the Code. The fund is being manipulated as "unsupervised mini-pork barrel" for tourism projects, bands, and to cover expenses of boy scouts. The COA report did not come as a surprise. Since 1995, the COA reported that under the Audit and Receipt Utilization of IRAs for 1993 and 1994, the 20% development fund of several LGUs were "not actually utilized" for development projects as mandated under Sec. 287 of the 1991 LGC. Instead, many LGUs used their development funds to finance unauthorized expenses, or those that can be charged against the local officials' maintenance and other operating expenses.

In a 1994 study by the UP College of Public Administration, it was shown that two years after the Code's implementation, there was no significant increase in LGU spending on social services. In fact in many areas, there was a marked decrease in spending for health, education and other social services. This study only confirms suspicion that LGUs do not have strategic plans on local development. In also somehow affirmed the cited COA report.

However, LGUs pointed out that the COA report did not look at the whole picture. They criticized the report as being skewed in favor of infrastructure-related projects. Former League of Municipalities of the Philippines President Agnes Devanadera pointed out that "what projects that easily pass through COA are infrastructure-related." COA demands that all local projects must obtain COA approval prior to the finance department's release of funds from the IRA or the pro-rata share of local governments from national government revenues. Likewise, given the COA's bias for infrastructure projects, local chief executives are encountering difficulties in getting livelihood and capability-building funds. The LMP pointed out that this bias for buildings and infrastructure projects belittles the need for the proper training of who will deliver these services and if they are not properly trained.

Based on the Batman or the Barangay-Bayan Governance Consortium experiences, such bias prevents local governments and local-based NGOs-POs conduct bottom-up planning using participatory tools. In Davao Oriental, many barangays which have undergone participatory barangay development planning and budgeting sometimes get frustrated when requests for capability-building are turned down. The Department of Interior and Local Government likewise provided stringent guidelines on who could be accredited as a training institute.

NGO-PO Responses

Briefly, I would state that the following responses to the IRA issue are necessary:

1. In critical partnership with LGUs, civil society must demand from the national government and Congress the full recognition of local autonomy and fiscal autonomy. A policy framework that recognizes the IRA as an "automatic share of LGUs from national taxes" and not as a "national government assistance to LGUs" must be pushed for.

A research study on strengthening fiscal autonomy must be conducted. The implementation of provincial-regional strategic budget planning workshops with NGOs-Pos/LGUs/private sector will help this endeavor.

2. Civil society must demand for greater accountability and transparency from LGUs in their use of the IRA. This means that there should be an increase in the share of social services expenditures on real terms and percentages from previous budgets. This calls for the exploring of ways of doing participatory local budgeting and the identification of the criteria or set of indicators for a "developmental budget." Innovative approaches on local budgeting that involves participation from the grassroots must be promoted.

3. LGUs must adhere to the two-pronged objective of decentralization, which are devolution and democratization. LGUs should implement provisions of the Code on NGO-PO representation in local special bodies, push for the local sectoral representation, and participatory local development planning and budgeting.

This calls for the mainstreaming of participatory barangay development planning and budgeting with the use of participatory rural appraisal tools. The call must be made for LGUs to enact ordinances to improved access to and use of resources by local communities and disadvantaged groups, improved access to justice, and participatory land use mapping.

 

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