Fiscal decentralization: Needs improvement - Guv

oAFTER 15 years of implementation, fiscal decentralization still needs a boost; it needs improvement. Gov. Erico Aumentado made this assessment, and presented proposals to improve it Friday during the Forum on Fiscal Decentralization in Support of Local Governance at the Cebu Marriott Hotel. Sponsored by the German Technical Cooperation Office (GTZ) and the Konrad Adenauer Stiftung (KAS), the forum is a prelude to an international seminar tomorrow and on Tuesday at the New Hyatt Manila. Called Revisiting Decentralization in the Philippines , the seminar has Fiscal Decentralization in Support of Local Autonomy as its theme.

Country representative Klaus Preschle of KAS, Dr. Herwig Mayer, GTZ program manager for the decentralization program and Dr. Gaudioso Sosmeña Jr., executive director of the Local Government Development Foundation, the seminar organizer, again invited Aumentado to be a panelist on Tuesday and articulate his advocacies concerning fiscal decentralization. “Fiscal decentralization in its puritan meaning is an elixir to the local government units' desire for more funding to support their delivery of basic services to the people and propel their communities to economic development and reduce poverty in the urban centers and the countryside,” Aumentado said. The national president of both the Union of Local Authorities in the Philippines (ULAP) and the League of Provinces of the Philippines (LPP) has been advocating changes in the releases of the Internal Revenue Allotment (IRA), state-transferred powers and LGU sources of funds.

On the IRA

He said the IRA should be treated as a form of continuing appropriation – local governments should receive their 40% share of the collection of the third fiscal year preceding the current fiscal year even without the passage of an appropriations act. The formula of computing the shares local governments (LGs) is already set in the 1991 Local Government Code (LGC). The release should therefore be ministerial. He also said the just share of LGs in national taxes should not be confined to the IRA but must include external revenues like tariffs and customs since the Constitution does not distinguish. Since the passage of the 1991 LGC, local governments have been deprived of their rightful constitutional share in national taxes, he observed. Aumentado deems it proper to increase the share of local governments in national taxes from 40% to 50%. Being frontline agencies and agents of national government agencies (NGAs), LGs must be entitled to at least 50% of the revenues since they are responsible in delivering basic services and equally accountable in the performance of government powers of the State. National government must increasingly share in the burden of local development, he said.

On State-Transferred Powers

National Government/central powers delegated or devolved to LGs either by legislative or executive fiats must be accompanied by appropriate and sustained funding. The governor said funds transferred to LGs to implement state-mandates must be given in full to LGs without deduction unless NGAs or government corporations have a real role in the implementation thereof, in which case, a reasonable sharing scheme must be put in place. For example, LGs' share in the Motor Vehicle User's Fee must be released to them directly and in full. Powers and responsibilities already delegated or transferred to LGs and existing schemes in revenue generation should not be diminished, but should be further strengthened and enhanced. Attempts to reduce the taxing authorities of LGs, limit the use of the local development fund, qualify the use of the IRA, among others, must be opposed, he said.

On LGU sources of funds

Considering that LGs have residual powers where sourcing of funds is concerned, they are at liberty to generate revenues other than those provided for in the Constitution and the 1991 LGC. Thus, Aumentado said, executive policies and administrative opinions limiting the power of LGs like money market placements, stock investments, among others, should be repealed. Also, statutory restrictions on the availment of funds must be lifted. For one, LGs depending on their track record and financial standing must be allowed to contract foreign loans without need of securing sovereign guarantee from the National Government – and performance grants from Official Development Assistance (ODA)-funding institutions, he said. With the inputs from the LPP, the Commission on Audit must adopt universal policies consistent with the tenets listed in the LG Platform in auditing accounts and expenses of LGs, he explained “We trust that the foregoing advocacies will find support from this forum. After all, the strength and effectiveness of the LGUs are anchored on their financial capability and how to maximize its utility for the common good,” Aumentado said.

The seminar keynote speaker for Day 1 is Interior and Local Government Secretary Ronaldo Puno while Senator Alfredo Lim and Dr. Emilio Macias II, chairs of the Local Government committees of the Senate and the Lower House respectively, will deliver statements. Macias is the congressman of the 2nd District of Oriental Negros. The lineup of resource speakers includes Dr. Paul Bernd Spahn, professor of public finance of the Johann Wolfgang Goethe University in Germany, Speaker Jose de Venecia, Dr. E. Koswara Kertapradja, professor and chair of the Program Study for Post Graduate Study on Governmental and Public Management Sciences of the Satyagama University in Jakarta, Indonesia, Dr. Damrong Wattana of the Chulalongkorn University in Bangkok, Thailand and DILG Assistant Sec. Austere Panadero of the Philippines. With Aumentado in the panel on Day 2 will be Dr. Melwida Guevara, president and chief executive officer (CEO) of Synergiea Foundation, Inc., Professor Benjamin Diokno of the School of Economics of the University of the Philippines , Executive Director Helena Habulan of the Municipal Development Fund Office of the Department of Finance, Representatives from the Philippine offices of the World Bank and the Asian Development Bank; Mayor Jerry Treñas who heads the League of Cities of the Philippines; Mayor Ramon Guico Jr. who heads the League of Municipalities; President James Marty Lim of the Liga ng mga Barangay and Mayors Mary Jane Ortega of San Fernando City in La Union and Maria Lourdes Fernando of Marikina City.

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