Doubt hovers over Cebu City funds
Cebu City Mayor Michael Rama wants a budget of P18.9 billion and gets P13.4 billion in a trend of increasing expenses (see table below) by the city government that is not matched by increasing revenue. JUNJIE MENDOZA/CEBU DAILY NEWS
CEBU CITY—Officials of the city have determined that the city needs to double its 2014 budget to operate this year, but one unanswered question lingers: Where will the money come from?
On Dec. 19, the city council passed a budget ordinance allotting P13.4 billion for the city’s operations.
But while city officials know how much the city government needs, they are uncertain about how much income the city government can deliver to finance its budget.
This year, the city was short by P1.2 billion to fund its P5.9-billion budget.
One of the programs that suffered is one that distributes cash gifts to senior citizens. The year is over but the city government still owes P2,000 in cash gifts for 2014 to each of the city’s 57,000 registered senior citizens.
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Omen
For Councilor Alvin Dizon, this is ominous.
“I’m worried about the state of the city’s finances,” he said. “It looks like it’s in bad shape,” he added.
In 2013, senior citizens, under the cash gift program, were entitled to P10,000 each. But they got only P8,000 each. The balance of P2,000 for each of the beneficiaries was released in February 2014.
The delay in the release of the cash gifts, however, did not deter the city government from raising the appropriation for the program to P720 million in 2014 to also increase the cash gift from P10,000 to P12,000 per senior citizen.
For the 2014 cash gift, however, the city government was able to release only P10,000 per beneficiary on an installment basis. The latest installment was made on Dec. 22 when the City Hall was able to distribute P3,000 per senior citizen.
Diwa Cuevas, city treasurer, said senior citizens had to wait until January 2015.
The city simply doesn’t have enough money.
On Nov. 30, 2014, the city’s collection was P1.2 billion short of its target.
Cuevas said her office could raise about P350 million more before the end of 2014—P300 million from the city’s Internal Revenue Allotment share and P50 million from real estate taxes.
But due to lack of funds, Cuevas admitted that the city had to borrow funds from an account meant for the reconstruction of Cebu City Medical Center (CCMC), heavily damaged by a strong quake in 2013, just to be able to release the money it owes senior citizens.
Lawyer Remeylio Delute, a senior citizen from Barangay Basak San Nicolas, threatened to file a complaint against Mayor Michael Rama and Cuevas in the Office of the Ombudsman in the Visayas for the delay in the release of the cash gifts.
“They made a promise to the seniors. The appropriation is already budgeted and certified available. Why would they not release it?” Delute said, questioning the diversion of funds for CCMC to the senior citizens’ cash gift program.
“Juggling of funds is a serious offense that may be used as grounds for technical malversation. What is their legal basis when there is no council resolution for realignment?” he said.
Cuevas said funds for CCMC were tapped because these were untouched as the bidding for the reconstruction of the hospital had not been conducted.
She said funds for CCMC would be replenished with new tax collections. She also said funds for CCMC are part of a continuing appropriation that may still be spent on the construction project next year.
Despite having a difficult time financing its P5.9-billion budget in 2014, the city wanted a nearly three-fold increase in its budget next year.
Of the P13.4-billion budget for 2015 passed by the council, at least P7.7 billion, or more than half, will be spent on maintenance and other operating expenses for supplies, gasoline, electricity and other city government needs.
At least P4.5 billion is classified as “capital outlay” that will be spent on projects, vehicles, equipment and “financial assistance.” At least P1.2 billion will be spent on salaries and benefits of City Hall employees, its top officials included.
Mayor Michael Rama had wanted a bigger budget—P18.9 billion— but the council rejected this, slashing the budget by more than P5 billion.
The appropriation for capital outlay got the biggest cut after the council found that some of the items to be financed, including an incubator building, were not urgent.
Councilor Margot Osmeña, chair of the council’s budget committee, said the P13.4-billion budget ordinance passed as a vote of “confidence” on the capacity of the treasurer’s office to generate revenue.
The income projections are technical and vague. At least P10.8 billion is expected from “disposal of assets.” Local revenue is expected to bring in P5.2 billion. Loans from local sources are expected to generate P3.1 billion. “Auction sale” is expected to bring in P50 million while “joint venture sale” could bring in another P50 million.
Condition
Mayor Rama plans to sell a portion of South Road Properties (SRP), a 300-hectare reclaimed property owned by the city, to raise funds. To cut the budget deficit, the council has put a condition before any expenses can be made.
A provision of the budget ordinance reads: “Implementation and purchases of any and all capital expenditure items identified in this annual budget shall be enforceable upon the sale of the SRP lot.”
The council had authorized Rama in August 2014 to negotiate the sale of 45.2 hectares of SRP lots to raise P9 billion.
Councilor Osmeña said that even if Rama is able to seal the deal, the city will get only half of the P9 billion in projected proceeds.
She said that based on the terms of the sale of SRP lots set by Rama, the buyer will pay half of the agreed amount while the payment of the balance will be spread in three years.
The condition set in the budget ordinance angered Rama, who threatened to sue members of the council, especially those belonging to the opposition Bando Osmeña Pundok Kauswagan, for usurping the authority of the mayor.
“We will file cases especially on (sic) acts (sic) that don’t belong to them and it’s constituting (sic) arrogating upon themselves the power of the mayor. That is already going beyond their prerogative and I will bring that to the Ombudsman,” Rama said.
Politics or not, Cebuanos, however, are still waiting for the answer to one of their biggest questions in 2015—where will the money come from?
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