Senator Joseph Victor “JV” Ejercito on Wednesday, May 10 sponsored the proposed Automatic Income Classification of Local Government Units (LGUs) or Senate Bill No. 2165, one of the priority measures of the Marcos administration.
The bill primarily seeks to institutionalize the automatic classification of the LGUs where provinces, cities and municipalites shall be classified into six income classes that reflect their true financial capability and position.
“This measure has two objectives: first, it aims to institutionalize the automatic classification of the local government units. Provinces, cities, and municipalities, shall be classified into six income classes that will truly reflect their financial capability and position. Second, this bill seeks to grant authority to the Secretary of Finance to regularly reclassify the LGUs every three years and review or revise the income ranges provided in the substitute bill,” Ejercito said in his sponsorship speech.
According to Ejercito, the last income reclassification of LGUs was made in 2008 before the issuance of an adverse Opinion from the Department of Justice (DOJ) regarding the power of the Secretary of Finance to adjust the income ranges provided under Executive Order No. 249, dated July 26, 1987.
“This means that the current classification of our LGUs are based on an outdated revenue figures or more specifically, on their 2004-2007 Financial Statements,” he explained.
According to Ejercito, the salient provisions of the bill include:
- Fixing the reclassification of LGUs every three years to synchronize with the term of local elective officials in order to foster accountability and promote competitiveness and creativity to improve local revenues;
- Setting the income thresholds for provinces, cities, and municipalities to ensure that the income ranges are equitably set by Congress and is not left entirely to the discretion of the implementing agency;
- Defining the power of the Secretary of Finance to regularly reclassify the LGUs, and more importantly to review and revise the income ranges. The bill also empowers the Secretary to classify an LGU which is created before the regular reclassification. “A newly created city, for instance, need not carry its income classification when it was still a municipality,” Ejercito said.
- And providing a transitory provision “to ensure that during the first reclassification as provided in our measure, no LGU will be downgraded, provided that the concerned LGU will not continue to fall below its income range during the next reclassification,” the senator said.
“Further, the measure ensures that no official or employee in the concerned LGU shall suffer any diminution of salary and benefits only during the first income reclassification,” he pointed out.
“Mr. President, many of us here started our humble beginnings in public service in the local government units. I trust that we understand the importance of this measure in realizing the full economic potential of LGUs,” Ejercito stressed.
The lawmaker also reiterated that knowing the LGUs’ financial capabilities and position will also help the national government determine whatever intervention is needed to improve their situation and in order to promote and strengthen local autonomy.
“I believe that it is for this purpose that this measure is included in the priority legislative measures of this administration,” he said.