Local governments main gainers in 2022 budget – DBM

MANILA, Philippines — Local government units (LGUs) are the biggest beneficiaries of the record P5.024-trillion 2022 national budget signed into law by President Rodrigo Duterte on Thursday, according to the Department of Budget and Management (DBM).

The LGUs will be getting a record P959.04 billion of next year’s budget through their national tax allotment (NTA), formerly called the internal revenue allotment or IRA.

This year, their IRA amounted to only P695.49 billion.

This big increase was due to the implementation of the Supreme Court’s Mandanas-Garcia ruling, which gave LGUs a bigger slice of the national government’s annual tax collections.

READ: IN THE KNOW: The Supreme Court’s Mandanas ruling

The high tribunal granted in 2018 and reaffirmed a year later the petitions of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr., saying that the LGUs’ IRA should come from 40 percent of the collection of all national taxes by the Bureau of Internal Revenue (BIR) and the Bureau of Customs.

Up to this year, the IRA represented 40 percent of taxes collected only by the BIR.

Added responsibilities

However, while the Mandanas-Garcia ruling will provide local governments with more money, they are expected to struggle in spending their bigger budgets to implement big-ticket programs and projects passed on to them by the national government through Executive Order No. 138.

Signed last June, the EO transfers to LGUs the responsibility to implement projects in local infrastructure, agriculture, social welfare, health care, and livelihood, among other sectors.

For instance, the World Bank had estimated that LGUs might fail to spend as much as P155 billion from their NTA next year.

Finance Secretary Carlos Dominguez III, who heads President Duterte’s economic team, said earlier this month that based on their estimates, the implementation of the Supreme Court’s 2018 ruling would yield lower economic growth because local governments use funds less efficiently.

Dominguez said the national government spends more than twice as efficiently as LGUs.

“Lower spending efficiency as a result of the Supreme Court decision to expand the share of LGUs from the NTA must be adequately addressed by the next administration’s economic team,” he said.

The 2022 budget proposal had included a P10-billion growth equity fund (GEF) to assist the “poorest and least-capable” LGUs during their transition to the Mandanas-Garcia ruling, but this funding had been slashed by Congress to P4 billion, according to Budget Undersecretary Rolando Toledo.

President Duterte also signed the measure extending the validity of the 2021 budget to Dec. 31, 2022. This means unspent appropriations under this year’s budget can still be released until next year.

Omicron concern

But Duterte said he was concerned about a surge in COVID-19 cases due to the Omicron variant, which has been causing spikes in infections in other countries.

He said that if the Omicron spreads in the Philippines due to its easy transmission, the government might need to use up more resources to address the increase in cases and thus hamper plans to rebuild the economy.

Duterte noted that the 2022 budget, the last spending plan of his administration, aims to build resilience amid the pandemic, sustain the momentum toward recovery and continue his legacy of infrastructure development.

“The 2022 budget reaffirms the government’s strong commitment to provide a more comfortable and productive life for each Filipino,” he said.

Election war chest

However, an opposition lawmaker described the 2022 budget as a huge election war chest for President Duterte and his allies.

“The P5.024-trillion 2022 national budget is glaringly short on cash subsidies and funding for direct health services but is overwhelmingly generous on infrastructure projects, war spending and discretionary funds which serve as an election war chest for Duterte and his favored bets,” Gabriela Rep. Arlene Brosas said in a statement on Thursday.

She pointed out that the budget had discretionary funds worth P406.49 billion in the form of budgetary support to state-run corporations, the Local Government Support Fund, and funding for executive offices.

These budget allocations were prone to misuse for patronage and election-related purposes, Brosas claimed.

She added that infrastructure projects worth P785.72 billion under the Department of Public Works and Highways accounted for a big chunk of the 2022 budget.

The combined budgets for the departments of national defense and of the interior and local government also amounted to P470 billion, compared to the meager funding for the Department of Health and public hospitals of P103.87 billion.

“Ordinary Filipino families who are still mired in the lingering economic crisis will not fully benefit from a national budget devoid of substantial funding for health and direct cash aid,” she said.

Job creation

Speaker Lord Allan Velasco said in a statement that next year’s budget included initiatives that would help sustain the government’s efforts to beat COVID-19.

He said it provided funding for the benefits and compensation of healthcare workers, procurement of coronavirus booster shots, emergency hiring of medical front-liners, and other programs aimed at fighting the effects of the pandemic, he said.

Marikina Rep. Stella Quimbo also pointed out that the 2022 budget included P51 billion in special risk allowances (SRA) of healthcare workers and P48.2 billion for booster shots.

She, however, noted that these were unprogrammed and urged Congress to be vigilant and continuously help the executive department to make funds available for the SRA and booster shots.

ACT-CIS Rep. Eric Yap, chair of the House committee on appropriations, maintained that the 2022 General Appropriations Act was a COVID-19 response budget, saying that it would also provide employment opportunities and assistance to Filipinos who have lost their jobs or livelihood due to the pandemic.

“Among other things, it is also focused on continuing projects that will improve the lives of Filipinos, our students returning to face-to-face learning, and ensuring national safety and food security,” he said.