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2000 INTERNAL REVENUE ALLOTMENT UPDATE
Dennis S. Lopez

Background

For Calendar Year 2000, the Local Government Units (LGUs) were supposed to get P121.788 Billion as their Internal Revenue Allotment (IRA). Due to the poor state of government finances, Congress substantially reduced the IRA. The President and the Department of Budget and Management (DBM) imposed measures to control the release of some portions of the IRA.

President Joseph E. Estrada signed into law Republic Act 8760 otherwise known as the CY 2000 General Appropriations Act (GAA) last February 16,2000. Under the 2000 GAA, the Internal Revenue Allotment (IRA) of the Local Governance Units (LGU) was allocated at P111.778 Billion, P10 Billion less from the P121.778 Billion. This P10 Billion cut was classified as "unprogrammed fund" under the 2000 GAA. This would mean that the P10 Billion would be given to the LGUs if the funds were available. Furthermore, there is also a provision in the GAA the amount of P5 Billion, earmarked as the Local Government Service Equalization Fund (LGSEF).

Prior to the enactment of the 2000 GAA, there were already attempts to reduce the IRA. The 2000 GAA bill that emanated from House of Representatives was passed without any reduction of the IRA. At the Senate however, the Finance Committee headed by Senator John Osmena proposed a P30 Billion IRA cut from "Programmed Fund" to "Unprogrammed Fund."

The LGUs through the Union of Local Authorities of the Philippines (ULAP) lobbied against the reduction. They even held two mass rallies and threatened to stage a four-day work stoppage. The NGO community through the Caucus of Development NGOs (CODE-NGO) and other NGOs supported the position of the LGUs and issued a one-page newspaper release in January.

On the eve of the start of LGU work stoppage, President Estrada called a meeting of the members of Congress, The ULAP and to avert the LGU strike. A compromise was reached with the Senate contingent agreeing to restore the P30 proposed IRA cut Subject to the issuance of two Executive Orders.

In early January 2000, Finance Secretary Jose Pardo presented to Congress a more conservative estimate of revenue targets. The figures cited by Secretary Pardo prompted Congress to place P10.Billion of the IRA as an "unprogrammed fund."

On December 21,1999, Executive Order No. 189 was issued by the President "DIRECTING ALL LOCAL GOVERNMENT UNITS TO SUBMIT TO THE DESPARMENT OF BUGET AND MANAGEMENT THEIR RESPECTIVE ANNUAL INVESTMENT PLAN." Subsequently, Executive Order No. 190 was also issued on the same day entitled "DIRECTING THE DEPARTMENT OF BUDGET AND MANAGEMENT TO REMIT DIRECTLY THE CONTRIBUTIONS AND OTHER REMITTANCES OF LOCAL GOVERNMENT UNITS TO CONCERNED NATIONAL GOVERNMENT AGENCIES (NGA), GOVERNMENT FINANCIAL INSTITUTIONS (GFI) AND GOVERNMENT OWNED AND/OR CONTROLLED CORPORATIONS (GOCC)."

 

The National Government Impositions on the IRA

The P10 Billion "Unprogrammed Fund"

The P10 Billion "unprogrammed fund" will only be released to the LGUs based on the availability of the funds. Thus, during the 15th National Executive Board meeting of ULAP held last February 23, 2000, DBM Secretary Benjamin Diokno pledged that the P10 Billion "unprogrammed fund" will be funded by April 2000.

Last April 26, 2000 President Estrada met with the Governors and Officers of ULAP in Malacanang. The President instructed the DBM Secretary to release the P2.5 Billion or 25% of the P10 Billion. According to the May 20, 2000 article of the ULAP Newsletter, the 25% release represents only the first quarter. However, some local officials present during the meeting did not hear anybody saying that this is going to be a quarterly release. If this will be a quarterly release there should have been news or indication already that next trance will be available this month of June.

The Notice of Cash Allotment (NCA) and the Sub-Allotment Release Order Regional Operations for the P2.5 Billion as mid-year bonus for national government employees. Early this year, P4 Billion was release to national government agencies for the payment of salary adjustments.

Executive Order 189

"DIRECTING ALL LOCAL GOVERNMENT UNITS TO SUBMIT TO THE DEPARTMENT OF BUDGET AND MANAGEMENT THEIR RESPECTIVE ANNUAL INVESTMENT PLAN."

The issuance of the two Executive Orders (189 & 190) is a result of a compromise agreement between Congress, ULAP and the Executive Department. At first glance these documents look harmless to E.O. 189 was issued last March 14, 2000 by the DBM, it was evident that the release and utilization of the LGUs 20% development Fund will be the dictate of the national government.

DBM Circular 70 on Item 2, general Policies, outlines the eleven(11) priority considaration areas for the utilization of the 20% Development Fund:

a) Solid waste management which may include purchase of related equipment, trucks and compactors, as well as purchase of land for sanitary land fill purposes;

b) Purchase of lots for hospitals, health centers, day care centers and similar facilities including the construction, repair and maintenance of such facilities;

c) Purchase of lots for resettlement of squatters, including construction of housing units and facilities.

d) Activities in support of the Food Security Program, Livestock Dispersal, Fisheries Development and Fish Culture Farming Program;

e) Initiative in support of cooperative development;

f) Construction, maintenance and/or repair of post harvest facilities, irrigation and other agricultural production systems;

g) Construction, maintenance and/or repair of local roads and bridges;

h) Construction, maintenance and /or repair of water and sewerage systems, as well as, power and communication facilities;

i) Construction, maintenance and/or repair of public buildings which may include purchase if equipment necessary in the implementation of infrastructure undertaking;

j) Other infrastructure or capital outlay projects supportive of the annual component of the development plan of LGU concerned, e.g, flood control projects;

k) Payment of loans covering goods and services in connection with projects herein listed, subject to budgeting and accounting rules and regulations.

 

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