‘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.”