contributing less than 1% of GDP....Rationale: The ARMM is the only region in the country with its own Regional Government (RG). ARMM experience can provide lessons for creating regional

Rationale: The ARMM is the only region in the country with its

own Regional Government (RG). ARMM experience can provide lessons for creating

regional governments under the proposed federal system.

Study Parameters: Reviews the legal framework that defines the—

(1) assignment of government powers, (2) fiscal arrangement, and (3) intergovernmental relations, in the ARMM context.

Identifies key policy and governance issues that may affect the operations of RGs under a federal setup

Background of the Study

ARMM lags behind in economic activity contributing less than 1% of GDP.

Infrastructure development is considerably low (e.g., electrification, water supply, communications, provincial roads, irrigation)

Lowest Human Development Index (HDI)

Fragile peace and security situation

Socio-Economic Conditions

Dependence on Annual Appropriations

o Goes through the national budget process like any line agency

o Appropriations level can depend on the generosity of the Executive or ability of the ARGMM to lobby

o LGUs more fiscally autonomous with the IRA

Issues on Fiscal Autonomy

Financial Accountability to the Center

o Like any public entity that receives appropriations from NG, the ARG is subject to accountability rules by COA and NG/DBM (JC No. 2013-1 on BFARs)

o LGUs coordinate more closely with NG that releases the IRA (a major source of LGU income at about 95%)


Limited program funds

o Overall spending of the ARGMM on the average (2011-2013) was heavy on PS (70%) with some MOOE (18%) and little CO (12%).

o CO share in 2016 is now 46% while PS is 38%, but increase is primarily captured only by DPWH with minimal changes in other departments.

o Unlike transfers from NGAs, HELPS provides more leeway for regional implementation


Limited expansion of the revenue base

o Many exceptions from taxes that continue to be imposed by NG

o Taxes imposed under MMAA 49 are mostly add-ons to LGU impositions under RA 7160

o Unable to borrow due to low capacity to pay

o Internally-generated revenues is only about 4% of total receipts of the ARGMM


Non-full implementation of RG share in internal revenues

Mandated Shares: (1) 50% of revenues from utilization of strategic minerals, (2) 70% of internal revenue taxes (3) 50% of the yearly incremental VAT Remittance Practice: (1) RR 4-1998: to provincial treasurer (30%), regional treasurer (30%), and BTr (40%) through AGDB (2) RR 5-2003: aggregated share (70%) to Office of the Regional

Treasurer (ORT) (3) Joint Circular No. 2004-1: all collections to BTr, for later release by

DBM to ORT (70%) upon BIR certification


Share in internal revenue (cont’d)

o JC 2004-1 covers only withholding taxes collected by NGAs, and cash collections of revenue collecting officers in ARMM

o Unable to cover taxes paid through banks, and large taxpayers with consolidated returns

o ARGMM does not receive shares from incremental VAT and revenues from strategic minerals


Weak exercise of appropriations power

Legal basis: The Regional Governor to submit to RLA the basis of the regional appropriations bill. No funds for infrastructure shall be disbursed without a RAPWA.

Practice:

(1)RLA’s appropriations power is limited to the Local Budget Fund (about 5% of total expenditure).

(2)Infrastructure funds for ARMM was in lump sum until 2013.

(3)RAPWA follows the allocation as detailed in the GAA for ARMM. If passed prior to enactment of GAA, it potentially subjects the regional law to amendment by Congress.


Contending, unstable legal framework

oTwo major laws (RA 9054 and RA 7160) defining the autonomy within the ARMM

oRG powers not constitutionally enshrined

oSome RG powers declared unconstitutional

oExecutive Orders (EOs) defining RG powers can be unilaterally amended by NG

Issues on Assignment of Powers

Unclear assignment of powers and functional responsibilities

oNG powers extend to the geographic and policy jurisdictions assigned to RG

oNG retained some essential functions of offices that were devolved to ARMM

oNG provision of services already devolved to RG

oOverlapping RG and LGU powers and responsibilities


OVERLAPPING POWERS OF THE RG AND LGUS

Policy Area RG powers (RA 9054) LGU powers (RA 7160)

Incentives for investors

Incentives for investors in businesses that contribute to the development of the region

Authority to grant incentives to entities engaged in community growth-enhancing industries

Tourism Primary jurisdiction in the promotion of tourism within the region

Tourism development and promotion programs

Peace and order

Maintenance of and preservation of law and order to ensure the protection of life, liberty and property in the region

Maintenance of peace and order through measures that prevent lawlessness, disorder, riot, violence, rebellion or sedition

ASSIGNMENT OF RG-LGU POWERS IN HEALTH

Powers and Functions RG

(EO 133) LGUs

(RA 7160)

Health Policy Formulation

Food Safety Regulation

Prevention of Communicable/ Non-Communicable Diseases

Health Education/Information

Health Facilities/Hospitals

Purchase of Medicines

Limited autonomy to exercise RG powers

oRegional laws must not conflict national laws

oRG obligation to align regional standards with national standards for public services

oDevolution EOs substantially shape mandates of regional government agencies

o Legislative powers with no implementation authority (e.g., civil service)


Weak mechanism for RG representation in national level policymaking

o No specific members representing the RG’s interest in Congress

o Weak RG voice in the formulation of national policies and standards requiring its compliance

Issues on Intergovernmental Relations

Weak mechanism for RG representation in national level policymaking

oOversight Committee under RA 9054 not convened to review implementation of the Organic Act

oVarious mechanisms for regional representation in national level policy-making not operationalized


Imbalanced and fragmented NG-RG relations

oStrong Presidential control over the RG

oExisting legal and administrative framework orients RG’s accountability towards the NG rather than to regional stakeholders

oRGAs treated as integral to NGAs when it comes to administrative directives but separate in budget allocation and delivery of public services


Imbalanced and fragmented NG-RG relations

o DBM retained the authority to create additional regular positions, and has not substantially addressed the issue of RG’s skeletal organization structure

o Lack of formal IGR mechanisms to foster NG-RG coordination in performing many shared functions


Fragmented RG-LGU relations

oWeak and insufficient formal IGR bodies for RG-LGU coordination

oUnlike higher-level LGUs, RG has no power of review over provincial ordinances

oWeak RG capacity to assist its constituent LGUs

oDirect access of NG to ARMM-LGUs and vice versa weaken RG’s authority over its constituent LGUs


Fragmented RG-LGU relations

oLGU fiscal autonomy and budget accountability to the NG undermine RG’s power to coordinate LGUs

oApplicable national laws orient the accountability of ARMM-LGUs toward NG than to the RG


Importance of Regional Governments

Presence of states (political regions) is a key feature of a federal system.

Establishment of RGs implements two key principles of federalism: self-rule (regional autonomy) and shared rule (with the NG).

Lessons: Assignment of Powers

Enshrine RG powers in the Constitution

o Address contending and unstable legal framework governing regions

o Ensure that RG powers can’t be declared unconstitutional or amended by laws, EOs and administrative guidelines


Enshrine RG powers in the Constitution

oClarify the scope of essentially ‘national’ and ‘regional’ functions.

o Address the issue of fragmented RG powers to make and implement regional laws.

Clearly delineate NG-RG roles and powers within complex government functions


Strengthen RG autonomy in designing regional and local governance systems

o Vest the RG with the exclusive power to formulate laws governing their constituent LGUs.


Ensure independence in regional budgeting

oRGs need to have greater flexibility to determine the preparation, allocation, approval, and utilization of their respective budgets (without need for frequent follow-up or facilitation of fund releases from national offices)

Lessons: Fiscal Arrangements

Develop universal guidelines on accountability and transparency that will apply across levels of government

oMore budget independence requires RGs to promote key budget goals and principles of fiscal discipline, strategic allocation, operational efficiency, transparency and accountability.


Develop universal guidelines on accountability and transparency that will apply across levels of government

o In accordance with these universal guidelines, accountability mechanisms can be developed within regions.

oA more empowered Regional Legislative Assembly can exercise budget oversight along its appropriations power.


Expand revenue sources for the region and automatically release regional shares

oAllow the RGs to impose a supplemental tax on a federal base.

oRevenue collection can be centralized through an independent and intergovernmental revenue authority.


Expand revenue sources for the region and automatically release regional shares ‘

o Fiscal capacities and expenditure needs of regions naturally vary. Thus, equalization transfers (separate from the shares derived from collections in the region) have to be designed.


Establish and strengthen IGR mechanisms for NG-RG coordination and collaboration

o IGR mechanisms help various levels of government to effectively manage complex government functions.

o Expected gains for regions under federalism will depend on the quality of IGR mechanisms for intergovernmental coordination.

Lessons: Intergovernmental Relations

Establish and strengthen IGR mechanisms for NG-RG coordination

Country Examples:

o IGR Act in South Africa

o South Africa’s Presidential Coordinating Council

o Canada’s First Ministers’ Conferences (FCC)

o Council of Australian Governments (COAG)


Ensure RG participation in the formulation of national laws

o Consider the second legislative chamber as a platform for RG representation in national legislation.

o Strengthen regional representation in the formulation and approval of national laws that will affect the establishment of regions.


Strengthen RG representation in operationalizing the assignment of powers

o To avoid unilateral NG imposition, there is a need to ensure RG participation in the formulation of national administrative policies and standards.

o Establish a superior judicial authority to resolve conflicts in policy jurisdictions between the NG and RGs (e.g., Federal Constitutional Court of Germany with assured representation of regions).


Ensure cohesive RG-LGU relations

o Give the RGs the exclusive power over their constituent LGUs.

o In old and more stable federations, LGUs are creations of state governments and only largely deal with their state governments.

o In Switzerland, the federal government deals with the LGU leagues, not to individual LGUs.



o Strengthen RG-LGU mechanisms for coordination and collaboration.

oMainstream the Regional Economic Development Planning Board (REDPB) under the ARMM Organic Act as an RG-LGU IGR mechanism under a federal setup.



Country examples:

o Advisory Commission on Intergovernmental Relations (ACIR) in the State of Connecticut served as a forum for consultation between state and local government officials.

o South Africa’s MINMECs and Premier’s Forum are mandatory IGR mechanisms where regional and local government representatives discuss matters affecting the two spheres of government.


Thank you.

Documents

contributing less than 1% of GDP....Rationale: The ARMM is the only region in the country with its own Regional Government (RG). ARMM experience can provide lessons for creating regional