Collections of locally sourced revenues (LSRs) slightly dipped in the third-quarter, as provinces, cities, and municipalities continue to rely heavily on their respective internal revenue allotment (IRA) shares to fund operations and programs.

In a report to Finance Secretary Carlos G. Dominguez III, the Bureau of Local Government Finance (BLGF) said LSRs of local government units (LGUs) declined 0.33 percent to P208.98 billion in July to September from P209.68 billion in the same period last year.

BLGF said the current operating income of provinces, cities, and municipalities reached P648.7 billion last quarter, representing an increase of 0.38 percent from P646.25 billion a year earlier.

BLGF Executive Director Niño Raymond Alvina said that compared to the second quarter in which the LSRs of LGUs amounted to P169.34 billion, the collections for the third quarter grew by 23.41 percent or P39.65 billion.

He said that based on the performance targets set by the BLGF to local treasurers for this year, the local revenue collections of provinces, cities, and municipalities as of the third quarter already account for 92 percent of the full-year 2021 collection target of P223.9 billion.

Local business tax collections, which account for 47 percent of the LSRs of LGUs, already reached almost 100 percent of the full-year target, Alvina said.

As a share of the current operating income, LSRs made up 32 percent of the total amounting to P208.98 billion.

“Tax revenues contribute the biggest share of the LSRs, mostly from local business tax for the period,” Alvina said.

He said tax revenues as a share of the current operating income of LGUs accounted for P163.09 billion or a quarter of the total.

The contribution of the IRA to the current operating income of LGUs in the third quarter was P414.5 billion or 64 percent, from P386.64 billion or 60 percent during the same period in 2020.

Non-tax revenues accounted for 7 percent of the LGUs’ current operating income while other transfers from the national government accounted for 4 percent, Alvina said.

“On IRA dependence, provinces showed the highest dependency at 81 percent, followed by the municipalities (78 percent) and cities (43 percent) in the third quarter of 2021,” Alvina said.

Alvina said cities collected the highest LSR at P147.89 billion, which is 71 percent of the total LSR of LGUs, followed by municipalities and provinces, with P39.57 billion (19 percent) and P21.53 billion (10 percent).

“In aggregate terms, LGUs’ dependence on external sources (e.g. IRA, other transfers from national government) in the third quarter of 2021 reached 68 percent, which is 0.72 percent or P3.14 billion higher than the third quarter 2020 levels,” he said.

As in the previous years, the National Capital Region (NCR) posted the highest LSR year-on-year collections, which reached P89.28 billion or 43 percent of the total LSRs of all LGUs, Alvina said.

This was followed by Region IV-A (the Cavite-Laguna-Batangas-Rizal-Quezon area or Calabarzon) and Region III (Central Luzon), with a respective P32.54 billion (16 percent) and P19.32 billion (9 percent) in LSR collections.

“On a per-LGU basis, there were 468 LGUs or 27 percent of the total number of provinces, cities, and municipalities that experienced a decline in LSR as of Q3 FY2021. Almost half of the cities had decreased revenues in LSR compared to the same period of the previous year,” he said.