Manila deep in debt –COA

As if his problems with mounting garbage caused by the recent typhoon were not enough, Manila Mayor Alfredo Lim may find his city in a financial bind after the Commission on Audit (COA) reported the other day that the local government unit does not have enough cash to pay its debts caused by a bloated workforce.

In the latest report uploaded on its website, the COA said the Manila city government has unpaid debts of P3.553 billion, or more than three times its cash holdings of P1.006 billion.

State auditors said Manila’s payroll exceeded the mandatory spending limit of 45 percent of the total annual income from regular sources realized in the preceding fiscal year.

The COA estimated that Manila should have forked out only P2.458 billion in 2011 based on its P5. 462 billion income in 2010.

But the city actually shelled out P3.424 billion in salaries and retirement benefits, on top of the P260.95 million in “financial assistance” it gave to its officials and employees.

The COA said the huge sums were erroneously recorded under the maintenance and other operating expenses account, when they should have been classified under personal services.

Apart from its tax dues to the Bureau of Internal Revenue, the COA said the city did not remit employee contributions to the Government Service Insurance System, Home Development Mutual Fund (Pag-Ibig) and Philippine Health Insurance Corp (Philhealth).

There were also delays in the turnover of the revenue share of the city’s 896 barangays worth P511.391 million, hampering the delivery of basic services and the implementation of development projects and programs of the city, it added.

The COA questioned the decisions of city officials not only in collecting penalties, surcharges and interest from 6,126 delinquent tax payers, but also in giving them P40.812 million in tax discounts without any legal basis, further reducing the city’s revenues.

“The City Treasurer gave the assurance that the tax discounts granted without legal basis shall be included in the computation of the business taxes, fees and charges due the concerned taxpayers in the succeeding year,” said the COA.

Apart from maintaining a shaky balance sheet, the COA also questioned Manila’s accounting policies.

It said an annual physical count of Manila’s property, plant and equipment yielded only an inventory worth P6.718 billion, or P7.060 billion of its supposed total asset holding, with an acquisition cost of P13.778 billion.