LGU Fiscal Autonomy Act

JUL -3 P5:53 TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session 111• S.B. NO. 11.9 Introduced by SENATOR IMEE R. MARCOS AN ACT PROMOTING LOCAL GOVERNMENT FISCAL AUTONOMY EXPLANATORY NOTE Article X Section 2 of the 1987 Constitution states that "The territorial and political subdivisions shall enjoy local autonomy". The fiscal autonomy of local government units has been hampered by restrictions on which it can use internally generated funds. The current guidelines on the use of the Special Education Fund, the Local Development Fund, and the Calamity Fund is too rigid and takes away from the ability of local government units to respond to unique challenges and situation in their respective areas. Through the years. Congress has mandated the creation of various positions to the local government units. The on-going devolution of services such as health and agriculture has also created a pressure to absorb personnel. However, local government units are still bound by the 45% Personnel Services cap under Section 325(a) of R.A. No. 7160 or the Local Government Code. In addition, the budget of local government units is also under the supervision of the Department of Budget and Management. Given the current thrust of bringing government closer to the people, it is imperative that we remove the restrictions in the ability of local government units to act in response to their local conditions. As such, the proposed bill expands the possible usage of the Special Education Fund to include payment of teaching and non-teaching staff and other expenditures related to the promotion of accessible public education. The proposed bill also seeks to remove the restrictions on the usage of the Local Development Fund and the Calamity Fund to allow local government units to adopt a more nuanced strategy in allocating their resources. Lastly, the proposed bill removes the Personnel Services Cap in the Local Government Code to allow local government

units to fill all the necessary and mandated positions and to better implement their development projects in their respective localities For the abovementioned reasons, the passage of this bill is earnestly sought. INtER. MARCOS

hot chit" 25 JUL -3 25:53 TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session ---- SENATE S.B. No. 119 Introduced by SENATOR IMEE R. MARCOS AN ACT PROMOTING LOCAL GOVERNMENT FISCAL AUTONOMY Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. This act shall be known as the "LGU Fiscal Autonomy

Act".

SEC. 2. Section 272 of R.A. No. 7160 otherwise known as the " Local Government

Code of 1991" as amended, is hereby amended to read as follows:

Section 272. Application of Proceeds of the Additional One

Percent SEF Tax. - The proceeds from the additional one percent (1%) tax on real property accruing to the Special Education Fund (SEF) shall be automatically released to the local school boards: Provided, That, in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards: Provided, however, That the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings AND LIBRARIES, facilities and equipment, PAYMENT OF SALARIES, ALLOWANCES AND OTHER BENEFITS OF TEACHING AND NON-TEACHING PERSONNEL, COMPETENCY TRAININGS FOR TEACHING PERSONNEL. OPERATION OF ALTERNATIVE LEARNING SYSTEM (ALS) INCLUDING PAYMENT OF SALARIES, ALLOWANCES AND OTHER BENEFITS OF ALS FACILITATORS, educational research, purchase of books and periodicals, TEACHING AIDS, OTHER INSTRUCTIONAL

MATERIALS, sports development, AND ALL OTHER EXPENDITURES RELATIVE TO THE PROMOTION OF ACCESSIBLE PUBLIC EDUCATION TO BE SOLELY determined and approved by the Local School Board."

SEC. 3. Section 287 of R.A. No. 7160 otherwise known as the "Local Government

Code of 1991" as amended, is hereby amended to read as follows: "Section 287. Local Development Projects. - Each local government unit shall appropriate in its annual budget no less than twenty percent (20%) of its annual [internal revenue] NATIONAL TAX allotment for development projects AS DETERMINED AND APPROVED BY THE LOCAL SANGUNIAN. Copies of the development plans of local government units shall be furnished the Department of THE Interior and Local Government."

SEC. 4. Section 324 (d) of R.A. No. 7160 otherwise known as the "Local

Government Code of 1991" as amended, is hereby amended to read as follows: "Section 324. Xxx D. NOT LESS THAN FIVE PERCENT (5%) OF THE ESTIMATED REVENUE FROM REGULAR SOURCES SHALL BE SET ASIDE FOR THE LOCAL DISASTER RISK REDUCTION AND MANAGEMENT FUND (LDRRMF) TO SUPPORT DISASTER RISK MANAGEMENT ACTIVITIES AS DETERMINED AND APPROVED BY THE LOCAL SANGGUNIAN. UNEXPENDED LDRRMF SHALL ACCRUE TO A SPECIAL TRUST FUND SOLELY FOR THE PURPOSE OF SUPPORTING DISASTER RISK REDUCTION AND MANAGEMENT ACTIVITIES OF THE LDRRMCS WITHIN THE NEXT FIVE (5) YEARS. ANY SUCH AMOUNT STILL NOT FULLY UTILIZED AFTER FIVE (5) YEARS SHALL REVERT BACK TO THE GENERAL FUND OF THE CONCERNED LGU AND SHALL BE MADE AVAILABLE FOR OTHER SOCIAL SERVICES AS APPROVED BY THE CONCERNED SANGGUNIAN."

as the "Local

SEC. 5. Section 325 (a) of R.A. No. 7160 otherwise known

Government Code of 1991" as amended, is hereby deleted: (a) [The total appropriations, whether annual of supplemental, for personal services of a local government unit for one (1) fiscal year shalt net exceed forty-five percent (45%) in the case of first to third elass previnces, cities and municipalities, and fifty-five percent (55%) in the case of fourth class or lower, of the total annual income frem regular-setrees realtzed-in the next preceding fiscal year. The appropriations for salaries, wages, representation and transportation allowances of officials and empleyees of the publie ttilities and econemie enterprises ewned, operated, and maintained by the local government unit cencerned shall not be included in the annual budget or in the computation of the maximum amount for personal services. The appropriatiens for the persenat services of such econemie enterprises shall be charget to their respeetive budgets;]

SEC. 6. Section 326 of R.A. No. 7160 otherwise known as the "Local

Government Code of 1991" as amended, is hereby deleted: {Section 326. Review of Apprepriation Ordinances of Provinces, Highly-Urbanized Cities, Independent Component Cities, and Munieipalities within the Metropelitan Manila Area. - The Department of Budget and Management shalt review ordinances autherizing the annual or supplemental appropriations of provinces, -highly urbanized eities, independent compenent cities, and municipalities within the Metropelitan Manila Area in accordance with the immediately succeeding sectien.]

SEC. 7. All sections of R.A. No. 7160 are renumbered accordingly.

SEC. 8. Separability Clause. - If for any reason any part or provision of this Act

shall be deemed unconstitutional or invalid, the other sections or provisions hereof shall not be affected and shall remain in force and effect.

SEC. 9. Repealing Clause. - All laws, decrees, executive issuances, rules and

regulations inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 10. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation. Approved,