Concerns raised by local government units (LGU) to implement the soon-to-be devolved functions of the national government (NG) prompted President Ferdinand R. Marcos Jr. to order the conduct of a new study to determine possible amendments to Executive Order (EO) 138.
The Department of Budget and Management (DBM) said the outcome of the review can lead to the implementation of the issuance next year or the further deferment of its execution.
In a press briefing in Malacañang last Tuesday, Budget Secretary Amenah F. Pangandaman said the study aims to determine the readiness of the LGUs in enforcing the provisions of EO 138.
EO 138 was issued by President Duterte in 2021 to implement the Mandanas Ruling of the Supreme Court, which states that LGUs should get 40 percent of all government tax collections, and not just internal revenue, three years prior.
“The President gave us the instruction to further study the responsibilities, projects and programs that can be done by LGUs and those will be left to the national government,” Pangandaman said in Filipino.
The National Economic and Development Authority (NEDA) was tasked to head the group, which will conduct the study.
“There are a lot of studies already done by different academic institutions like PIDS [Philippine Institute for Development Studies] and even our development partners. Maybe we can just look at them again and then quickly, probably after just two months we can come out with study and show it to the President already and determine if there is a need to amend EO 138,” Pangandaman said.
Implementation matrix
She said the implementation of EO 138 will likely make use of a matrix instead of a “standard formula.”
Based on its initial assessment, DBM said around 450 LGUs, which belong to fourth and fifth class municipalities nationwide with low income, will unlikely be capable of implementing national projects.
Meanwhile, higher income LGU are expected to have minimal or no issues in implementing the functions previously handled by NGs since they have more funding and manpower.
To help the disadvantaged LGUs implement EO 138, the government has allocated a growth equity fund (GEF), which will be used for their capacity building exercises, which are provided by the Department of the Interior and Local Government.
Pangandaman said the government allocated P1.2 billion for the GEF last year, while P1 billion was allocated for the said purpose.
Upon the implementation of EO 138, DBM said an initial P185 billion will be transferred from the control of the NG to the LGUs through their internal revenue allotment (IRA).
Despite the said change, Pangandaman is confident it will have no impact on the fiscal situation of the NG.
“The DOF [Department of Finance] has been incurring a lot of revenues right now, so yeah we will not be affected by it,” the DBM chief said.
