Downside of a Mactan province

When Congresswoman-elect Aileen Radaza of Lapu-Lapu City announced her proposal to convert the city into a province with two municipalities (Olango and Opon also to be created) and one component city (what remains of Lapu-Lapu City after carving out the two new municipalities), her main contention was that doing so would mean a bigger share of the internal revenue allotment (IRA) from the national government would go to the people of the new province.

This year’s IRA or share of national taxes for all local governments units (LGUs) in the country amounts to P302.3 billion which is higher by 37.5 percent than the P219.9 billion distributed in 2012. The big increase is explained by the fact that revenue collection in 2010, the year when the national economy grew by 7.6 percent, was much higher than in 2009. The 1991 Local Government Code says that the annual IRA given to the LGUs is equivalent to 40 percent of the internal revenue of the national government based on the tax collection of the third fiscal year preceding the current fiscal year.

As prescribed in the Code, out of the total IRA to be given to LGUs, 23 percent will be allotted to provinces, 23 percent to cities, 34 percent to municipalities and 20 percent to barangays. These are in turn distributed to the localities based on this formula: 50 percent based on population, 25 percent based on land area and 25 percent based on equal sharing. The share of each barangay is computed as follows: P80,000 for each barangay with a population of not less than one hundred (100) inhabitants. The balance is allocated based on population, 60 percent, and equal sharing, 40 percent.

This year, Lapu-Lapu City is to receive P472 million in IRA. How much would be the total prospective share of the proposed new Province of Mactan and its two municipalities and one component city assuming they already exist today? Will the total be bigger than that of the current share of Lapu-Lapu City? At the moment, I don’t have the data on land area and population of the two new municipalities to be created and what remained of Lapu-Lapu City so it’s hard to come out with the new IRA figure. However, because of the equal sharing part of the formula being used to determine the LGUs’ share of the IRA and the addition of the province on top of its component municipalities and city, it will most likely be bigger.

Nevertheless, even if the proposed new province and its two municipalities and component city will have more IRA as a whole than the present share of Lapu-Lapu City, it still remains debatable if the move to create the new province will be for the good of the people there. My own view is that it is negative or not good.

One reason it will not be good is that along with the increase in the IRA due to the equal sharing part of the IRA distribution formula, there is also a diminution of the share of the IRA of the proposed province and two municipalities (when carved from the city) because the total amount of the IRA for these groups of LGUs is relatively smaller than what goes to the cities. There are simply more municipalities than cities in the country. In fact, this is why many municipalities have the ambition of becoming cities. As we can see recently in Cebu, for example, the newly created cities of Bogo, Naga and Carcar now have more resources than when they were still municipalities. LGUs have to earn something from local taxes and other sources of income to complement the IRA for their use. Unfortunately, provinces and municipalities have less power to tax and other opportunities to earn compared to cities. This is another drawback to the proposal because the proposed new province and two municipalities will now be very dependent on the IRA for their operation.

The second reason is that with the creation of Mactan province and its two new municipalities, more offices will also be created for the newly elected local officials and department heads and their personnel. As a result, the bulk of the IRA increase that follows with the creation of the new province and its two new municipalities will go mostly to the salaries and wages of these staff and the necessary maintenance and other operating expenses of their offices, thus leaving very little funds for development projects in the end.

The case of the Province of Siquijor is worth looking into. It has six municipalities. This allows them to get more IRA from the equal sharing part of the formula and although it is smaller in population, it has a bigger land area than the present City of Lapu-Lapu which again allows them to have more IRA. Overall, the total IRA for Siquijor province and its six municipalities amounts to P512 million this year. This is bigger than the P472 million received by Lapu-Lapu City. However, Siquijor has many local officials to pay and offices to maintain. It has very little income from local sources. As a result they have very little funds left for development. The overall result is a province with very little development despite its huge potential in tourism.

The last reason I do not favor the creation of the new Province in Mactan is practical management. When you create more LGUs, you only create more problems in coordinating local development. Right now, Lapu-Lapu City as one LGU can better plan and coordinate its development than when there will be four LGUs as proposed for the new Mactan province.

We can examine the case of Davao City, for example. With more than one million people to serve and a much bigger area than the combined three highly urbanized cities of Cebu, I should say that it is better managed as a metropolitan area than the three big cities here in Cebu that are managed separately. That is why we do not hear Davao City clamoring to become a province. The proposed new Mactan province needs intensive study.