By Luisa Maria Jacinta C. Jocson, Reporter
LOCAL government units (LGUs) face an uphill task in staffing up to implement devolution and taking charge of irrigation in the wake of the Supreme Court’s Mandanas-Garcia ruling, mayors said.
“We are supportive of devolution. It’s just that there are limitations on the part of the local government unit,” Real, Quezon Mayor Diane D. Aquino said in an interview on Wednesday.
Ms. Aquino said that devolving the functions from the National Government (NG) in a short period may be “too much,” due to the challenge of hiring more personnel.
“We have to hire more technical personnel and there is a cap or ceiling when it comes to creating new positions in the LGU… a big factor is salary, (which) takes up 40-50%. If you add the job orders from the municipality, more than 50% of the funds goes to personnel,” she said.
“All in all, it’s all right for (devolution) to proceed as long as the financial resources are commensurate with the (devolved functions),” she added.
She also cited the readiness or capacity of barangays to take on certain frontline services.
The ruling granted LGUs a larger share of the national taxes by expanding their 40% cut of NG revenue to also include revenue from Customs duties.
“In the next two years, I hope there will be a slow transition. I hope we will not be rushed,” Ms. Aquino added.
Last year, President Rodrigo R. Duterte signed Executive Order No. 138, which transfers some basic services to LGUs by 2024 to offset the reduced share of revenue retained by the NG.
In November, the Department of Budget and Management (DBM) said it plans to delay the devolution of some National Government functions to 2027 from 2024.
“They are suspending the implementation to 2027, so hopefully by that time, we are fully recovered and we have proper income when it comes to the functions devolved,” Gumaca, Quezon Mayor Webster D. Letargo said.
As a result of the Mandanas-Garcia ruling, LGU allocations rose 37.89% to P959 billion in 2022.
LGUs by law are given 40% of NG revenue. The ruling clarified that LGUs are also entitled to a cut of Customs revenue. The original wording of the Local Government Code defined the LGU share as the “Internal Revenue Allotment (IRA),” which the NG interpreted to mean 40% of the collections of the Bureau of Internal Revenue (BIR).
The court rejected that interpretation and ordered the law to be rewritten to redefine the LGU allocation as based on all taxes. The IRA is now known as the National Tax Allotment (NTA).
However, because of decreased revenue collections in 2020 due to the pandemic, the allotment for next year is estimated to decrease by 14.47% to P820 billion. The NTA is 40% of NG collections from three years prior.
“Although we support this ruling and our (NTA) got bigger, because of collections during the lockdown, it went down by 14%. Agriculture, health, education have all been delegated to us. There are so many devolved functions,” Mr. Letargo added.
“We need to spend so much. Personnel for agriculture, school buildings, bridges, all of that. It’s heavy. Next year we expect belt-tightening,” he said.
Mr. Letargo cited irrigation as one challenge among the devolved functions.
“That was given to us and it’s a bit out of reach for us. It takes hundreds of millions to construct irrigation,” he said.
To aid LGUs in funding their devolved services, the DBM said that under the proposed budget for 2023, it will allocate P28.9 billion under the Local Government Support Fund in addition to the P820.3-billion LGU share from the 2023 national tax collection.