Financing Philippine Local Financing Philippine Local GovernmentsGovernments

Presented by:Presented by:

Berlin I AllanBerlin I Allan

OVERVIEWOVERVIEW

• Local Fiscal AdministrationLocal Fiscal Administrationa. Supervising Authoritya. Supervising Authorityb. Fiscal Officersb. Fiscal Officers

• Budgeting and Fiscal ManagementBudgeting and Fiscal Managementa. Local budgeting Processa. Local budgeting Processb. Budgeting Problems and Issues b. Budgeting Problems and Issues

LOCAL GOVERNMENTS’ LOCAL GOVERNMENTS’ FISCAL STRUCTUREFISCAL STRUCTURE• Fund StructureFund Structure• Major Sources of RevenuesMajor Sources of Revenues

1. National Allotment and Aid1. National Allotment and Aida. Regular Allotmenta. Regular Allotmentb. Revenue from National Aid fund b. Revenue from National Aid fund

2. Local Levies 2. Local Levies a. Real Property Tax a. Real Property Tax b. Taxes, Fees and charges b. Taxes, Fees and charges

authorized under PD 231authorized under PD 231• Other Sources of Revenues Other Sources of Revenues

Local Fiscal AdministrationLocal Fiscal Administration

A. Supervising AuthorityA. Supervising AuthorityAs provide under PD 477, the Ministry of Finance As provide under PD 477, the Ministry of Finance

shall exercise general supervisions over the financial affairs shall exercise general supervisions over the financial affairs of the local governments. It performs the ff functions:of the local governments. It performs the ff functions:

a. Formulates and executes fiscal policies that will a. Formulates and executes fiscal policies that will promote the financial stability and growth of local promote the financial stability and growth of local governments;governments;

b. Provides the local governments with policy b. Provides the local governments with policy guidelines in the preparation and adoption of sound guidelines in the preparation and adoption of sound financial plans and reviews the local budgets in order to financial plans and reviews the local budgets in order to enhance the maximum utilization of local funds and enhance the maximum utilization of local funds and resources.resources.

c. Adopts and enforces the necessary measures that c. Adopts and enforces the necessary measures that will improve local treasury operations and foster effective will improve local treasury operations and foster effective financial management at the local levels and;financial management at the local levels and;

d. Ensures the proper use, custody and safe d. Ensures the proper use, custody and safe

B. Fiscal OfficersB. Fiscal Officers

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

1.1. Provincial City Treasurer- the chief Provincial City Treasurer- the chief financial officer of the local financial officer of the local government. He is appointed by the government. He is appointed by the president upon the president upon the recommendation of the Minister of recommendation of the Minister of Finance Finance

22. Sub-Provincial Treasurer- performs . Sub-Provincial Treasurer- performs duties and functions that are duties and functions that are designed to him by the Provincial designed to him by the Provincial Treasurer in accordance with the Treasurer in accordance with the laws and regulations. laws and regulations.

33. Assistant Provincial or City Treasurer- . Assistant Provincial or City Treasurer- assists the provincial or city treasurer and assists the provincial or city treasurer and performs such other duties as the latter performs such other duties as the latter may assign to him. He has the authority to may assign to him. He has the authority to administer oaths concerning notices and administer oaths concerning notices and notifications to those delinquent in the notifications to those delinquent in the payment of the real property tax.payment of the real property tax.

44. Administrative Deputy. Administrative Deputy

55. Assistant Municipal or Municipal District . Assistant Municipal or Municipal District Treasurer- assists the municipal district Treasurer- assists the municipal district treasurer and performs such other duties treasurer and performs such other duties as the latter may assign to him.as the latter may assign to him.

BUDGET AND FISCAL BUDGET AND FISCAL MANAGEMENTMANAGEMENT(a). Preparation(a). Preparation..The head of the offices and the treasurers of the local The head of the offices and the treasurers of the local

governments submit to the local executive their governments submit to the local executive their expenditures proposals and budget proposals, respectively, expenditures proposals and budget proposals, respectively, Using these as hases, the Chief Executive prepares the Using these as hases, the Chief Executive prepares the budget for the ensuing fiscal year setting forth the following budget for the ensuing fiscal year setting forth the following ..

1. estimates all income certified collectibles by the 1. estimates all income certified collectibles by the treasurer concerned ; and treasurer concerned ; and

2. the total appropriation covering.2. the total appropriation covering. a. the current operating expenditures, and a. the current operating expenditures, and b. capital outlays. b. capital outlays.

(b) Legislation(b) Legislation On or before the end of the fiscal year, the On or before the end of the fiscal year, the

local board or council approves through the local board or council approves through the enactment of an appropriation ordinance the enactment of an appropriation ordinance the annual budget for each type of funds that goes to annual budget for each type of funds that goes to the local government units for the ensuing fiscal the local government units for the ensuing fiscal year on the basis of the statement of the certified year on the basis of the statement of the certified estimated income and budget proposals submitted estimated income and budget proposals submitted by the local chief executive. by the local chief executive.

In case of cities, the budget enacted by the In case of cities, the budget enacted by the local board or council required the approval of the local board or council required the approval of the majority of the members thereof.majority of the members thereof.

The Summary of the board or council furnishes The Summary of the board or council furnishes the local treasuries with atleast 3 copies of the the local treasuries with atleast 3 copies of the approved appropriation ordinance within 10 days approved appropriation ordinance within 10 days after its approval. In case of provinces or cities, the after its approval. In case of provinces or cities, the local auditor is also furnished with the copies.local auditor is also furnished with the copies.

(c) Effectivity(c) Effectivity The approved annual budget takes The approved annual budget takes

effect at the beginning of the fiscal year, effect at the beginning of the fiscal year, On the other hand , the supplemental On the other hand , the supplemental budget takes effect upon its approval or budget takes effect upon its approval or on the date set for its effectivity.on the date set for its effectivity.

(d) Changes in budget and Failure to (d) Changes in budget and Failure to Enact an Annual BudgetEnact an Annual Budget

Changes in annual budget should be Changes in annual budget should be made within the fiscal year by way of made within the fiscal year by way of supplemental budget which should be supplemental budget which should be enacted in the same manner as the enacted in the same manner as the annual budget but not more than once a annual budget but not more than once a month, except for additional supplemental month, except for additional supplemental budgets in case of emergency. budgets in case of emergency.

(e) Budgetary Requirements(e) Budgetary Requirements The budget of provinces, cites and municipalities for any The budget of provinces, cites and municipalities for any

fiscal years are required to comply with the following fiscal years are required to comply with the following specifications : specifications :

a. The aggregate amount appropriated shall not exceed a. The aggregate amount appropriated shall not exceed the estimated income certified collected by the local treasurer the estimated income certified collected by the local treasurer

b. Full provisions shall be made for all statutory and b. Full provisions shall be made for all statutory and

contractual obligations of the local government concerned ;contractual obligations of the local government concerned ; c. Twenty per cent of the national internal revenue c. Twenty per cent of the national internal revenue

allotment accruing to the general fund of the local government allotment accruing to the general fund of the local government shall be appropriated for developing projects or activities; shall be appropriated for developing projects or activities;

d. Aids to legally constituted barrios shall be provided in d. Aids to legally constituted barrios shall be provided in amount not exceeding P 500.00 per barrio; and amount not exceeding P 500.00 per barrio; and

e Two percent of the estimated revenue from the regular e Two percent of the estimated revenue from the regular sources shall be set up as a yearly unappropriated reserved to sources shall be set up as a yearly unappropriated reserved to cover unforeseen. expenditures arising from the occurence of cover unforeseen. expenditures arising from the occurence of natural calamities or financial dislocation on account thereof.natural calamities or financial dislocation on account thereof.

(f) Review of the Budget(f) Review of the Budget

(g) Duration of Appropriations(g) Duration of Appropriations Appropriations for ordinary Appropriations for ordinary

administrative purposes terminates within administrative purposes terminates within fiscal year and all unexpected balances fiscal year and all unexpected balances reverts to 30th of June of each year to reverts to 30th of June of each year to become unappropriated account by way of become unappropriated account by way of special budget.special budget.

(h) Barrio Budget(h) Barrio BudgetPrepared by the barangay captains and Prepared by the barangay captains and

is submitted to the barrio council for is submitted to the barrio council for approval, not later than May 16 of the year. If approval, not later than May 16 of the year. If approved by the council through approved by the council through appropriations ordinance, it takes into effect appropriations ordinance, it takes into effect at the beginning of the fiscal year.at the beginning of the fiscal year.

(i)(i) Disbursement of Appropriations for Disbursement of Appropriations for Development Projects Development Projects

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

B.B.Budgeting Problems and IssuesBudgeting Problems and Issues

(a) Fund Transfer (a) Fund Transfer

(b) Supplemental Budgeting(b) Supplemental Budgeting

(c) Capital Budgeting(c) Capital Budgeting

(d) Budget Reviews and Financial (d) Budget Reviews and Financial ControlControl