Financing Philippine Local Governments

Financing Philippine Local Governments Presented by: Berlin I Allan

OVERVIEW

• Local Fiscal Administration a. Supervising Authority b. Fiscal Officers • Budgeting and Fiscal Management a. Local budgeting Process b. Budgeting Problems and Issues

LOCAL GOVERNMENTS’ FISCAL STRUCTURE • •

•

Fund Structure Major Sources of Revenues 1. National Allotment and Aid a. Regular Allotment b. Revenue from National Aid fund 2. Local Levies a. Real Property Tax b. Taxes, Fees and charges authorized under PD 231 Other Sources of Revenues

Local Fiscal Administration A. Supervising Authority As provide under PD 477, the Ministry of Finance shall exercise general supervisions over the financial affairs of the local governments. It performs the ff functions: a. Formulates and executes fiscal policies that will promote the financial stability and growth of local governments; b. Provides the local governments with policy guidelines in the preparation and adoption of sound financial plans and reviews the local budgets in order to enhance the maximum utilization of local funds and resources. c. Adopts and enforces the necessary measures that will improve local treasury operations and foster effective financial management at the local levels and; d. Ensures the proper use, custody and safe

B. Fiscal Officers The officials in charge of the collection and disbursement of the local governments are the provincial or city treasurer, the administration deputies, municipal or municipal district treasurers and the assistant municipal district treasurers. The following are the specific responsibilities of these officials:

1. Provincial City Treasurer- the chief

financial officer of the local government. He is appointed by the president upon the recommendation of the Minister of Finance 2. Sub-Provincial Treasurer- performs duties and functions that are designed to him by the Provincial Treasurer in accordance with the laws and regulations.

3. Assistant Provincial or City Treasurerassists the provincial or city treasurer and performs such other duties as the latter may assign to him. He has the authority to administer oaths concerning notices and notifications to those delinquent in the payment of the real property tax. 4. Administrative Deputy 5. Assistant Municipal or Municipal District Treasurer- assists the municipal district treasurer and performs such other duties as the latter may assign to him.

BUDGET AND FISCAL MANAGEMENT (a). Preparation. The head of the offices and the treasurers of the local governments submit to the local executive their expenditures proposals and budget proposals, respectively, Using these as hases, the Chief Executive prepares the budget for the ensuing fiscal year setting forth the following . 1. estimates all income certified collectibles by the treasurer concerned ; and 2. the total appropriation covering. a. the current operating expenditures, and b. capital outlays.

(b) Legislation On or before the end of the fiscal year, the local board or council approves through the enactment of an appropriation ordinance the annual budget for each type of funds that goes to the local government units for the ensuing fiscal year on the basis of the statement of the certified estimated income and budget proposals submitted by the local chief executive. In case of cities, the budget enacted by the local board or council required the approval of the majority of the members thereof. The Summary of the board or council furnishes the local treasuries with atleast 3 copies of the approved appropriation ordinance within 10 days after its approval. In case of provinces or cities, the local auditor is also furnished with the copies.

(c) Effectivity The approved annual budget takes effect at the beginning of the fiscal year, On the other hand , the supplemental budget takes effect upon its approval or on the date set for its effectivity. (d) Changes in budget and Failure to Enact an Annual Budget Changes in annual budget should be made within the fiscal year by way of supplemental budget which should be enacted in the same manner as the annual budget but not more than once a month, except for additional supplemental budgets in case of emergency.

(e) Budgetary Requirements The budget of provinces, cites and municipalities for any fiscal years are required to comply with the following specifications : a. The aggregate amount appropriated shall not exceed the estimated income certified collected by the local treasurer b. Full provisions shall be made for all statutory and contractual obligations of the local government concerned ; c. Twenty per cent of the national internal revenue allotment accruing to the general fund of the local government shall be appropriated for developing projects or activities; d. Aids to legally constituted barrios shall be provided in amount not exceeding P 500.00 per barrio; and e Two percent of the estimated revenue from the regular sources shall be set up as a yearly unappropriated reserved to cover unforeseen. expenditures arising from the occurence of natural calamities or financial dislocation on account thereof.

(g) Duration of Appropriations Appropriations for ordinary administrative purposes terminates within fiscal year and all unexpected balances reverts to 30th of June of each year to become unappropriated account by way of special budget. (h) Barrio Budget Prepared by the barangay captains and is submitted to the barrio council for approval, not later than May 16 of the year. If approved by the council through appropriations ordinance, it takes into effect at the beginning of the fiscal year.

(i) Disbursement of Appropriations for

Development Projects Appropriations for development projects funded from 20% of the annual internal revenue allotment of the local government and from the barrio development fund is restricted in the sense that they could be disbursed only after the corresponding work programs are reviewed by the Minister of Local Government.

A. Budgeting Problems and Issues (a) Fund Transfer (b) Supplemental Budgeting (c) Capital Budgeting (d) Budget Reviews and Financial Control