The national government has set into motion the ramping up of the devolution of key functions to local government units (LGUs) starting in 2022. The Department of Budget and Management (DBM) estimates an increase in the Internal Revenue Allotment (IRA) of LGUs, from P695.49 billion in 2021 to P1.084 trillion, a whopping increase of P387.24 billion or 55.7 percent. This would mean an increase in the LGUs’ share of gross domestic product (GDP) to 4.75 percent.
To fully appreciate the significance of this massive reallocation of resources from the national government to the LGUs, recall that the Supreme Court granted in 2018 and affirmed in 2019 the separate but related Mandanas-Garcia petitions questioning the basis of the internal revenue allotment (IRA) of the LGUs. Previously, the LGUs’ IRA equaled 40 percent of the national internal revenue taxes collected by the Bureau of Internal Revenue (BIR).
The Supreme Court ruled with finality that, in accordance with the 1987 Constitution, the “just share” of the LGUs should be 40 percent of all national taxes consisting of the taxes collected by the BIR, as well as the duties and taxes collected by the Bureau of Customs. Based on the DBM’s estimates, first-class income provinces’ IRA would increase by P814 million to P4.4 billion on 2022; highly urbanized cities’ share, by P394 million to P213 billion; and first-class municipalities, by P187.62 million to P1.01 billion.
As an offshoot, an executive order has been in the drawing board since February, in order to establish the concrete parameters for ensuring an orderly devolution and transfer of functions from national agencies to LGUs. The simultaneous transfer of functions and funds would enable and empower the LGUs to perform effectively functions already assigned to them --- but had remained lodged in the national government despite the enactment of the Local Government Code more than three decades ago.
According to a DBM study, the salient functions and services that would be devolved include: agricultural extension and on-site research; community-based forestry projects; tourism facilities, promotion and development; telecommunication services; field health and hospital services; public works and infrastructure; housing projects for provinces and cities; investment support and industrial research and development; school building program; and social welfare services.
In the guidelines issued by the DBM for the preparation of the 2022 budget that will be enacted by Congress this year, communicable and non-communicable disease control services as well as public hospitals would be fully devolved to the LGUs, underlining the larger role they would play in the protracted efforts to contain the pandemic.
As thousands of national government employees would be affected, sufficient safety nets should be readied --- beyond options such as inter- and intra-agency transfers, retirement, or separation, and preference for hiring in vacant positions in the LGUs. Fund imbalances would also have to be rationalized. With only six months remaining, it is evident that so much still needs to be done within such a short time span. Hopefully, the quality of public services would not be impaired.