Gov’t to transfer some functions to LGUs

Amid a protracted pandemic, President Duterte will step in to ensure that national coffers won’t bleed as much next year by transferring more public functions to local government units (LGUs) while they enjoy a bigger share of tax collections starting 2022.

The Department of Budget and Management (DBM) told agencies last week that a draft executive order (EO) currently being crafted to fully devolve specific national government functions to LGUs would mitigate the fiscal strain to be inflicted by the Supreme Court’s Mandanas ruling.

The Supreme Court granted in 2018 and reaffirmed in 2019 the petitions of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr., under which LGUs’ IRA (Internal Revenue Allotment) would come from 40 percent of collections of all national taxes—the Bureau of Internal Revenue’s (BIR) tax take plus the Bureau of Customs’ (BOC) collections of import duties and other taxes.

At present, LGU’s IRA only came from two-fifths of national internal revenue taxes collected by the BIR.

As the high court ruling would be implemented next year, the Development Budget Coordination Committee estimates had shown LGUs’ 2022 IRA sourced from 2019 BIR and BOC collections would climb by 27.61 percent to P1.083 trillion or 4.75 percent of gross domestic product, instead of only P848.44 billion or 3.72 percent of GDP under the current computation.

With the Mandanas ruling in full swing, the DBM estimates showed that first-class income provinces would have an increase of about P814 million in their IRA to P4.4 billion next year; highly urbanized cities, up by P394 million to P2.13 billion, and first-class municipalities, up by P187.62 million to P1.01 billion.

As the bigger IRA would carve a bigger chunk from the record P5.02-trillion national budget proposal for 2022, the DBM said the functions to be devolved “must permanently be taken out from national agencies to empower LGUs to assume them.”

The 2021 budget call issued by Budget Secretary Wendel Avsiado in January listed down the national government expenditures to be fully devolved to LGUs, which included health services such as public hospitals as well as communicable and noncommunicable disease control services.

Avisado told the Inquirer last month that amid a prolonged fight against COVID-19, LGUs might have to take a bigger role in public health given their also larger budgets in 2022.

‘Devolution process’

“That’s part of the devolution process, and we will input that into the planning and budgeting process as well,” Avisado said.

The 2022 budget call document cited that Section 17 of the Local Government Code of 1991 also allowed devolution of local infrastructure (for education, irrigation and trade), agriculture, natural resource management, environmental services, revenue mobilization, telecommunications, peace and order, employment facilitation, social welfare, transportation, tourism and housing services functions to LGUs.

The DBM said despite the Local Government Code provisions already devolving these functions, many national agencies continued to implement programs and projects that LGUs should have been taking care of since the law was enacted three decades ago.

According to the DBM, Mr. Duterte’s upcoming EO would delineate the roles of the national and local governments; jump-start preparation of devolution transition plans; establish a growth equalization fund “to address the vertical and horizontal fiscal imbalance across LGUs” as well as create an interagency committee on devolution to be headed by the Executive Secretary to monitor and evaluate implementation by 2025.

The EO would also provide options for national government employees who may lose their jobs once more functions get transferred to LGUs.

The DBM said full devolution would exclude LGUs still transitioning into the newly formed Bangsamoro Autonomous Region in Muslim Mindanao.

While the national government and its agencies will lose certain responsibilities, the DBM said it must “set national policy and service delivery standards, and assist, oversee and monitor LGUs.”

Under the draft EO, the national government will be tasked to “formulate and pursue a long-term institutional program for LGUs to strengthen their capacities and capabilities to fully assume the devolved functions,” the DBM said. INQ