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Manila Bulletin devider Philippines devider National devider JV Ejercito: Automatic Income Classification of LGUs Act to boost their economic growth, local autonomy

JV Ejercito: Automatic Income Classification of LGUs Act to boost their economic growth, local autonomy

Published Oct 27, 2023 08:37 am

The newly-signed law that institutionalizes the automatic income classification of local government units (LGUs) will help boost the economic growth and local autonomy of LGUs and ease the national government’s distribution of financial grants to them, Senator Joseph Victor “JV” Ejercito said.


Ejercito, chairman of the Senate Committee on Local Government, vouched on it as he lauded President Marcos for signing Republic Act No. 11964 or the Automatic Income Classification of Local Government Units Act.


The new law will set the income thresholds for provinces, cities, and municipalities and empower the Department of Finance (DOF) Secretary to regularly reclassify LGUs and revise their income ranges.


“Ipinapaabot ko po ang aming pasasalamat kay Pangulong Bongbong Marcos sa pagpirma upang gawing batas ang (I extend my gratitude to President Marcos for signing into law) Republic Act No. 11964 o Automatic Income Classification of Local Government Units Act na aking pong isinulong at iniakda (which I pushed and authored),” Ejercito said.


The former San Juan mayor said the new law will also guide the national government in efficiently allocating its resources for the compensation of local government personnel and the distribution of financial grants to LGUs.


“Sa pagkakapasa nito, inaasahan po natin na makatutulong ang batas sa national government sa pagsusuri ng financial capacity ng mga LGU at sa pagtukoy po ng angkop na uri ng tulong sa kanila (With its passage, we hope that the law will help the national government in evaluating the financial capacity of the LGUs and in determining the appropriate type of assistance to them),” the senator emphasized.


“Ang amin pong layunin sa batas na ito ay malinaw: i-synchronize ang reklasipikasyon ng mga LGU sa termino ng mga lokal na opisyal na inihalal (Our goal in this law is clear: to synchronize the reclassification of LGUs with the term of local elected officials),” he pointed out.


Under the law, the first general income reclassification will be made within six (6) months of the law taking effect, and then every three (3) years after that. The changes shall take effect on January 1, 2024.


Based on the law, an LGU won't be reclassified to a lower category unless its income falls below the new range during the next reclassification.


The law will also be used to determine the minimum wage for domestic workers as per Republic Act No. 10361, or the Domestic Workers Act or Batas Kasambahay.


The last time an income reclassification was implemented was in 2008, shortly before the Department of Justice (DOJ) issued an adverse opinion on the power of the Finance Secretary to adjust the income ranges under Executive Order No. 249, dated July 26, 1987.


Ejercito said this means that the current income classification of LGUs is based on outdated revenue figures from their 2004-2007 Financial Statements.


Ejercito thanked his colleagues, particularly Senate President Juan Miguel “Migz” Zubiri for supporting passage into law of the measure, and the DOF, particularly the Bureau of Local Government Finance, for their lending their technical expertise to the Senate.


Furthermore, Ejercito said that under the law, the DOF, in coordination with the Department of Budget and Management (DBM), and in consultation with the LGU Leagues, will be tasked to create the necessary implementing rules and regulations (IRR) for RA No. 11964.

The Automatic Income Classification of LGUs Act is the second law Ejercito has passed under the Senate local government panel. The. measures he filed that became landmark laws included the Universal Health Care Act and the Department of Human Settlements and Urban Development (DHSUD) Act.

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