‘Flypaper effect’
Money sticks where it hits.” This is the “flypaper effect.” It shows up in a Commission on Audit analysis of 1,351 year-end reports by local governments that nailed 182 officials who squandered their “20 Percent Local Development Fund.”
“The LDF is the ‘most abused’ budget item today,” Local Government Secretary Jesse Robredo asserts. Of 182 profligate LGUs, 80 splurged for junkets (lakbay aral), parties, ghost employees, honoraria—for themselves. “Wasting money is like water soaking into sand,” a Japanese proverb says.
Yet the LDF had been “crafted” at the 1972 Stockholm Conference as a safety net for the neediest. The Philippines and 112 countries agreed to earmark 20 percent of resources for the most deprived.
Nutrition, health care, sanitation, primary schooling, etc., can curb disease and death rates, Stockholm’s “20-20 Pact” stressed. Unmet human needs usher more pre-school Filipino children into premature graves than in Egypt or Kenya, Asian Development Bank notes.
Former senator Aquilino Pimentel stitched that 20 percent safety net into the Local Government Code. Internal Revenue Allotments (IRA) would underwrite LDF. Politicians promptly converted LDF into mini-pork barrels.
Even more damning, 102 other LGUs never fully implemented LDF funded projects, Robredo said. “LDF unutilized balance surged to P650.6 million.” Quick to junket or crib allowances for themselves, many local officials prove inept—or indifferent—at spending to relieve hunger, sickness or ignorance.
Indigent pregnant and nursing mothers are denied nutrition and safe delivery facilities. Kids lack vaccines and clean water. Such lapses are paid for in blood. Maternal death rates remain stubbornly high. Here, 19 infants die in every thousand live births. Compare that to five in Taiwan.
Ill-fed kids are deprived from “10 to 14 percent of their potential intelligence quotient (IQ),” ADB noted. Among stunted kids, cognitive loss can top 10 percent. That loss is irreversible. Up to their often earlier graves, these children are boxed into lives far below God-given potentials.
These also cut life spans. A child in Tawi-Tawi has a life expectancy of 54 years; if born in Cebu, 74 years. “Life is the threshold at which all other hopes begin.”
LDF was designed to ensure that kids cross that threshold. What is the track record?
Lapu-Lapu City Mayor (now congressman) Arturo Radaza bankrolled Christmas parties. In 2010, Maguindanao’s total IRA soared to P3.56 billion. Much of that went pfffffft, a special COA audit found. Cotabato City dissipated P44.3 million of its P55-million LDF for salaries.
IRAs are “blank checks.” They are unconditional grants from national government. There is no mechanism for monitoring. So, why are we surprised at the resulting mayhem?
“(Local) bureaucrats tend to maximize spending with the perception that they could manage to spend substantial sums as long as they are allies of the President,” notes Tax Research Journal.
“Urdaneta in Pangasinan is the only city that consistently spent more than 20 percent of its LDF on education, health, culture, etc. National Statistical Coordination Board’s Romulo Virola writes. Urdaneta—which gained cityhood status only in 1998—spent 24 centavos out of every IRA peso for human needs.
Cabanatuan, Valenzuela, Calamba, Las Piñas, Makati, Tagaytay, Manila, La Carlota in Western Visayas and Pasay spent about 16 percent of their total income on health, nutrition and family planning.
IRA checks of Quezon City, Davao, Manila, Zamboanga City, Caloocan, Puerto Princesa and Cebu, tower over that of Urdaneta and company. They could have spent more for human development. But “money sticks where it hits.” They penny-pinch for human needs.
Does the “flypaper effect” encourage laid-back-panhandling? asks Tax Research Journal. Does it squelch efforts by local governments to generate local income to become self-reliant?
Don’t judge a book by its cover. Many municipalities appear “rich.” But that doesn’t come from locally-generated income. They’re propped up by IRAs: In the Autonomous Region of Muslim Mindanao, 28 towns draw 99 centavos of every peso in their budgets from IRA.
The 10 most “self-reliant” municipalities, in contrast, cluster in the Calabarzon Region, namely: Cabuyao, Cainta, Bacoor, General Trias, Biñan, Imus, Dasmariñas, Carmona, Pantabangan and Calaca, Batangas.
The flypaper effect stems from “monopolistic, budget maximizing local politicians and bureaucrats. Overdue reforms of the IRA and LDF should avoid ‘unconditional grants.’ Tax Research Journal also recommends padlocking the stable door before the mares bolt: Have COA pre-audit LGU budgets to curb today’s excessive or fraudulent spending.
Local sahibs can no longer make whoopee with LDF, Secretary Jesse Robredo ruled last December. DILG circular memo 2010-138 lists seven “thou shalt nots.”
Effective immediately, these expenses billed against LDF would be bounced: salaries, honoraria, travel, fiestas, cash gifts, bonuses, food allowances, uniforms, supplies, meetings, water and light, gasoline etc. That’s the stick.
More significant is the carrot: A Performance Challenge Fund offers half a billion pesos, as counterpart, to 344 LGUs—if they funnel LDFs into essential projects: water, sanitation to post harvest facilities.
That should help “unstick” the “flypaper effect.” “Man has enough for his needs,” as Mohandas Gandhi put it: “But not enough for his greed.”
