Former senator and incumbent Sorsogon Governor Francis “Chiz” Escudero on Sunday urged local government units (LGUs) not to depend too much on the additional P234-billion in Internal Revenue Allotment (IRA) expected this year as the national government complies with the Mandanas ruling of the Supreme Court.
Escudero pointed out that the cost of the full devolution of services mandated by Executive Order 138 would be twice as much as what LGUs are entitled to receive from the national tax collection.
Using 2021 data to estimate the gap between the increased IRA and the increased cost of newly devolved services, the former lawmaker said it is inevitable that LGUs would still stand to experience insufficient funding.
“Inisa-isa ko iyon sa national budget ng 2021 dahil line item naman ng budget. Ang kabuuang halaga ng dini-devolve nila sa LGU ay humigit-kumulang P1.3-trillion samantalang ang dagdag na IRA na bigay ng Mandanas ruling ay P695-billion lamang (I scrutinized the national budget of 2021 one by one because its line item. The whole amount they will devolve to the LGUs is about P1.3-trillion, while the additional IRA that would be given in compliance with the Mandanas ruling is only about P695-billion only),” Escudero explained.
“In other words, they devolved double the amount of what they will be giving LGUs. Iyon pa lang kukulangin palagi yung pondo ng LGUs (With that, LGUs will still have insufficient funds),” he said.
“Hindi dapat umasa ang mga LGUs sa sinasabing windfall from Mandanas ruling kasi mas matindi ang windfall ng trabaho at pagkakagastusan nila dahil sa EO 138 (LGUs should not count on the so-called windfall from the Mandanas ruling because the amount of work and their expenses due to EO 138 would be much greater),” said Escudero who is seeking a Senate comeback in the upcoming May 2022 elections.
“Gaya din ng naranasan natin ngayong COVID-19 pandemic at nitong nakaraang Typhoon Odette, kanya-kanyang diskarte ang mga LGUs para tugunan ang pangangailangan ng kanilang mga constituents. Ganun din ang inaasahan nating mangyayari sa (like what we experienced during this pandemic and typhoon Odette, LGUs were forced to come up with their own strategy to respond to the needs of their constitutents. That’s what we also expect would happen when there’s) full devolution,” he pointed out.
The Mandanas ruling stemmed from petitions lodged by Batangas Governor Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr. seeking the LGUs share in all national taxes, not just from taxes collected by the Bureau of Internal Revenue (BIR) but aslo duties from the Bureau of Customs (BoC).
The Department of Budget and Management (DBM) has said the total IRA for LGUs is projected to increase by 55.7 percent, from P695.49-billion in 2021 to P 1.083- trillion in 2022, which is 4.75 percent of the country’s gross domestic product (GDP).
This is based on the national tax collections in 2019, when the SC made the landmark decision giving LGUs greater share in national revenue.
However, to mitigate the impact of the Mandanas ruling, the Duterte government, through Executive Order 138 signed in June 2021, decided to implement the full devolution of functions, services and facilities to the LGUs no later than 2024. LGUs and national agencies were then instructed to prepare devolution transition plans and capacity development agenda.
Escudero warned LGUs that attaching permanent functions and services to a unstable source of funds could be detrimental and counter-productive in the long run.
Thus, he said, LGUs should be extra cautious in their spending because while the devolved functions and services will remain steady in the coming years, the source of revenue will not.
“LGUs should not create recurring expenditure or permanent positions because next year, they might not have the budget for those,” Escudero said.
“By 2023, the IRA will be based on the 2020 national revenue, and we all know the Philippines had its worst economic performance that year due to the pandemic. Our GDP shrank by 9.5 percent in 2020, the worst since 1947, which means we may also see the worst IRA since then,” he emphasized.