Bill institutionalizing LGU income classification gets House panel's nod

The House Committee on Local Government on Thursday, Nov. 17, approved the measure seeking to institutionalize the automatic income classification of provinces, cities and municipalities to boost the capacities of local government units (LGUs) in providing socio-economic benefits to LGU personnel.

Valenzuela City Rep. Rex Gatchalian (Photo from Rep. Gatchalian via Facebook)

The House panel, chaired by Valenzuela City 1st District Rep. Rex Gatchalian, held the deliberation of the Automatic Classification Act for LGUs.

It is a consolidation of Gatchalian’s House Bill (HB) No. 5290, HB 1817 of Siquijor Lone District Rep. Zaldy Villa, and HB 6121 of Sorsogon 2nd District Rep. Wowo Fortes.

The authors pointed out that the last income reclassification of provinces, cities and municipalities was done in 2008, which is to the detriment of the LGUs and its personnel.

Gatchalian said that after 14 years since the last income reclassification in 2008, the income classifications of LGUs “extremely deviate” with the prevailing economic conditions and the overall financial status of LGUs.

“The income classification of LGUS serves, among other purposes, as basis for fixing the maximum tax ceilings imposable by the local governments; for determining administrative and statutory aids, financial grants and other forms of assistance to local governments; the determination of the financial capability of local government units to undertake developmental programs and priority projects; and for the implementation of salary laws and administrative issuances on allowances and emoluments that local government officials and personnel may be entitled to,” he explained.

Executive Order No. 249, series of 1987, which provides for the income classification of LGUS, authorizes the “Secretary of Finance... to review the income ranges, at least once every four years, and recommend such appropriate changes or revisions.”

However, in 2012, the Department of Justice (DOJ) opined and emphasized that the Secretary of Finance merely has a recommending authority in making changes or revisions in the income classifications of LGUs.

This resulted in the suspension of the income reclassification in 2012 and the succeeding cycles.

The House Committee on Local Government chair lamented that LGUs are currently using outdated income classifications, and that the “moratorium not only impaired the capability of LGUs to undertake developmental programs and priority projects for their constituents, but also adversely impacted their ability to institute compensation adjustments for LGU personnel as provided under the Salary Standardization Law (SSL) of 2015.”

He said the passage of the proposed measure is needed “to fix the deficiencies in the Local Government Code to ensure that the LGUs remain dynamic and consistent.”

“By instituting the Automatic Income Classification Act, we are now paving the way for local government personnel to receive the increase in their pay scale or salary grades that they rightfully deserve, and empower them economically amid these trying times. This also paves the way for LGUs to hire additional personnel in boosting their services to their constituents,” Gatchalian added.

“With better salary grades, the local government can attract more talents to work in the LGU that will cater to the growing needs of the community.”