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The Ira Issue And
Ngo-Po Responses
Tom S. Villarin, KAISAHAN
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.
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.