Senator Sherwin Gatchalian (Senate PRIB)



Senator Sherwin Gatchalian is proposing a legislation that would institutionalize automatic income classification of local government units (LGUs) to improve public services. This followed his filing of Senate Bill (SB) No.2067, also known as the Automatic Income Classification Act for Local Government Units (LGUs) Act. Gatchalian said the proposed automatic income classification of LGUs shall serve, among other purposes, as the basis for the determination of administrative and financial aids to local governments, the determination of the financial capability of local government units to undertake priority projects, and for the implementation of salary laws and administrative issuances on allowances that local government officials and personnel may be entitled to. “This measure will empower LGUs in terms of governance and improving their services for their constituents,” he explained. The proposed measure aims to resolve a quandary relating to the income classification of LGUs which stemmed from Section 9 of Executive Order (EO) No. 249 series of 1987, which grants the Secretary of Finance (SOF) the administrative authority to review and recommend the appropriate changes of income ranges of the income classifications of cities, provinces, and municipalities at least once every four years. The Department of Justice (DOJ), however, issued a legal opinion on LGU income that the SOF has the authority to reclassify, every four years, all provinces, cities except for Manila and Quezon City, and municipalities based on the schedule of their annual income during the last four consecutive calendar years. The legal opinion emphasized that the SOF’s authority to revise or modify the schedule of income or “income ranges” is merely recommendatory to the proper authority, which is Congress. This was reaffirmed in another DOJ opinion that a congressional amendment of EO 249 is needed for the establishment of income benchmarks. The DOJ opinions resulted in the abeyance of the income reclassifications in 2012 and the succeeding cycles. The latest issuance by the DOF secretary on the reclassification was in 2008. Since then, the unchanged income classifications have not been congruent with the prevailing economic conditions and actual financial standing of these LGUs, Gatchalian said.. “By instituting the measure, we are also paving the way for local government personnel to receive any increase in their pay which they deserve. This also paves the way for LGUs to hire additional personnel in boosting their services to their constituents,” he added.