After the 9th LPP General Assembly last August 2000, LPP continuously followed up with the Department of Budget and Management (DBM) the status of the Internal Revenue Allotment (IRA) releases to LGUs.   To date, at least P 14.107 Billion represents the total OUTSTANDING BALANCE  due to LGUs from the National Government (NG), broken down as follows:

• P 4.045 B  - Outstanding balance of National Government to LGUs' IRA  for 1998, i.e. 5% of IRA withheld in 1999 by President Estrada contrary to Supreme Court decision (Pimentel vs. Aguirre)

• P 7.500 B   - Unreleased Portion of the Unprogrammed IRA CY 2000 slashed by Congress and promised to be released by President Estrada and DBM Sec. Diokno but still being withheld and unreleased to date by DBM to LGUs.

• P 2.500 B   - Unreleased portion of the LGUs' IRA for CY 2000 which is 50% of the P 5 Billion LGSEF or  Local Government Service Equalization Fund, a programmed fund but still to be released to LGUs as promised by the Oversight Committee and Malacanang but  the latter is still being withheld by DBM.

• P  0.062 B  - Unreleased portion to LGUs as part of their P 5 Billion LGSEF for CY 1999 - a programmed fund from the LGUs' IRA.

P 14.107 B - TOTAL NG OUTSTANDING BALANCE TO LGUs

                      (UNRELEASED TO LGUs TO DATE)*

National Government:

• The unreleased portion or share of LGUs from the national wealth, e.g. VAT, Ecozones, tobacco  excise  taxes, etc.
  
• other DBM deductions from the national internal revenue collections prior to the computation of the LGUs' 40% IRA share since 1992 to 2001, averaging about   P  2.0 Billion   a year!
  
• Unreleased portion of the LGUs' IRA share representing the withholding of the 20% Development Fund, i.e. E.O. 189 for CY 2000, i.e. to date around 10% balance according to DBM or roughly about P 650 Million due mostly to barangays which have not submitted their (AIPs) annual investment plans to DBM.
  
• Portions of the IRA due to GFIs, i.e. GSIS, SSS, Pag-Ibig and PhilHealth, although these amounts were not deducted  from  the LGUs by DBM according to the latter (subject to verification).  That is, E.O. 190 was not implemented by DBM due to our strong opposition.  LPP Pres. Gov. Lina did not sign the MOA between DBM, BIR and concerned GFIs, nor were they able to issue the Implementing Guidelines for the said E.O.;
  
• Still unreleased IRA share of some LGUs (barangays) for the month of December 2000;  and
  
• Others - funding commitments of National Government Agencies (NGAs)  to LGUs covered by MOAs or through Grants or Financial Assistance for certain projects.
  

IRA STATUS:

Based on representations made by LPP with DBM, hereunder are the status of the pending funds for LGUs:

• On the P 4.045 B, i.e. 5% IRA withheld in 1999

- According to DBM, said amount should be covered by  (1) an Executive Issuance directing DBM to release said amount to LGUs as an initiative of the Executive branch, and (2) an annual appropriation as part of the General Appropriations Act or GAA.

- Since the GAB for CY 2001 does not include any amount for this purpose, DBM verbally informed us that  this might probably take effect in the GAA for CY 2002.

- We wrote Senate President Aquilino Pimentel if they can still possibly include this in the GAA for CY 2001, which is now pending in the Senate, in lieu of the proposed P 5 Billion LGSEF for CY 2001, through Senate Secretary Lutz Barbo (our former LPP Consultant), who has assured the LPP of his full support and vigilance on the IRA.

• On the P 7.5 B Unprogrammed IRA for CY 2000

- There is still no assurance given by DBM that said amount will ever be released to LGUs due to the huge P 130 Billion deficit for CY 2000 (from an initial P60 B projected deficit) , despite their earlier pronouncement that they will release the same during the first quarter last year if we cancelled the planned 4-day work stoppage.

- There is still a case filed by NGOs and pending with the Supreme Court questioning the legality  of this P 10 Billion unprogrammed IRA in the GAA 2000.  It is being proposed that we await its decision and/or intervene to facilitate the issuance of the Supreme Court's ruling on the matter.

• On the P 2.500 Billion Unreleased Portion of the LGSEF CY 2000

- Last LPP General Assembly meeting in August, we agreed that we will leave it to the OCD to decide whether the balance of P 2.5 Billion will be released based on a codal formula or on the modified scheme being proposed by ULAP.

- During the last informal meeting of the Oversight Committee on Devolution  or OCD held during the last Quarter last year,  DBM was indeed inclined to release it based on the codal formula as stipulated in the 1991 LGCode, i.e. for all provinces, cities, municipalities and barangays as a result of the Supreme Court decision (Pimentel vs. Aguirre case).   DBM Sec. Diokno assured the OCD that he will issue a Memorandum to this effect.  To date, said Memorandum has not been issued and there are no actual plans to release the P 2.5 Billion balance due to the huge deficit last year, i.e. despite the fact that said amount is a programmed fund under the GAA 2000.

- Cong. Vic Sumulong, however, said that once DBM issues such a Memorandum to that effect, he will immediately bring this matter to the Supreme Court questioning it vis-à-vis the earlier OCD Resolution or Agreement approved by the President to  apportion the amount based on the "modified" codal scheme initially proposed by ULAP and the OCD members.

• On the P 0.062 B, i.e. Unreleased balance of the LGSEF CY 1999

- According to DBM, said amount may still be released subject to availability of funds.  LPP is supposed to get from this fund about P 34 Million (or 54.4%) representing P 1 Million each per Province as Financial Assistance to the 34 provinces (which were not able to receive from the Local Affirmative Action Projects or LAAP for CY 1999.    We are continuously following this up with DBM.

IRA CY 2001:

• For CY 2001, the Internal Revenue Allotment (IRA) of LGUs amounted to  P 131.917 Billion, a  15%  increase  from  the  IRA   level   in   CY 2000 of P 111.778 Billion, which has been treated as an "automatic appropriation".  The House of Representatives did not reduce the said amount, rather only the P 130 Million intended for the Palarong Pambansa.
  
• The Leagues formed a Budget Watch group to monitor the Senate deliberations on the Budget since Sen. John Osmena had repeatedly said (through print media) that he will slash the IRA and question the provision on "automatic appropriation".  Based on the papers, the Senate is poised to slash the budget to P 30-40 Billion (on top of the House-initiated P10B cut) due to the projected huge deficits.
  
• LPP will continue to monitor the Senate Budget  and Bi-Cameral Conference Committee deliberations to safeguard the IRA as well as "special provisions" on "prior concurrence" and "prior approval" in NGAs' budget as well.

LGSEF CY 2001: 

The  Oversight Committee on Devolution (OCD) submitted to the Philippine Senate  its Resolution endorsing to Congress the inclusion of a Local Government Service Equalization Fund or LGSEF in the General Appropriations Act for CY 2001 which will not be sourced from the IRA of LGUs, but rather from a certain percentage of the NGAs' MOOE and capital outlay. 

• The OCD came out with a study on the amount that can be "pooled" from 3-5% of the MOOE and Capital Outlay of National Government Agencies or NGAs, which are being supported anyway by the LGUs at the local level, e.g. utilities, office rental, honorarium and allowances, travel, construction,  etc.
  
• The Office of the Senate President  is seriously considering its inclusion in the GAA 2001 and has, therefore, requested the LPP and other Leagues to  furnish them some data to support their favorable position on the matter.  That is, some statistics on how much have the Provinces provided funding assistance to all National Government Agencies located in their areas of jurisdiction for CY 2000.  
  
• On  the  average,  they  estimated that about P 10 Million each Province and Highly-Urbanized City or P 780 Million (i.e. 15.6%) can be allotted from the P 5 Billion LGSEF to all 78 Provinces;
  
• Up for consideration of the LPP is the proposal on whether we request the Senate that in lieu of this P 5B LGSEF, to instead include the P 4.045 Billion in the GAA 2001 representing the 5% IRA withheld in 1999 to be given the LGUs based on a codal formula and the balance of the P 5 Billion as LGSEF.

OTHER MATTERS:

• LPP received letters from the following (FOR INFORMATION).

1. DILG-Philippine National Police (PNP) Police Director Reynaldo Acop to Sec. Gen. Gov. Josie dela Cruz

Acting favorably to our LPP Resolution No. 2, s. 2000 requesting the Director-General of the PNP to coordinate with or inform the Provincial Governors about any impending removal, transfer or reassignment of PNP Provincial Directors to "ensure public safety and order at all times".  (Made reference to Sec. 51 of RA 6975).  Should their (PNP) Regional Directors fail on this matter, they want to be informed about the matter for them to take appropriate action(s).   FOR INFORMATION

2. Department of Finance (DOF) Undersecretary Lily K. Gruba

LPP has forwarded all Sanggunian Resolutions referred to the League by LGUs requesting DOF to reconsider the income bracket/ scheme prescribed under DOF Department Order No. 24-97, dated March 26, 1997, to remain as the basis for the reclassification of LGUs for the current year for reasons stated therein.  FOR INFORMATION.

LPP President's Update Report:  as of Jan. 15, 2001