Docstoc

Policy_Framework

Document Sample
Policy_Framework Powered By Docstoc
					                                     Policy Unit

                Technical Report on the
            Policy Framework for Increased
            Financing for Health and Family
               Planning Services in LGUs
                                   (Draft Final Report)

                              Deliverable No. 12
                                  September 30, 2004




This report was made possible through support provided by the U.S. Agency for
International Development, under the terms of Contract No. 492-C-00-03-00024-00. The
opinions expressed herein are those of the author(s) and do not necessarily reflect the
views of the U.S. Agency for International Development.
    POLICY FRAMEWORK FOR INCREASED FINANCING FOR HEALTH AND
                FAMILY PLANNING SERVICES IN LGUs:
                      EXECUTIVE SUMMARY

                            Rosario G. Manasan and Eden C. Villanueva


1.         Introduction

The lack of financial resources for health and family planning services has always been a
critical concern in the delivery of local family planning programs. This need has been
intensified by recent developments in the fiscal situation of the national government. The
fiscal deficit has expanded rapidly with the onset of the Asian financial crisis in 1998.
Despite the turnaround in the economy, the fiscal situation continued to deteriorate from
1998-2003.

As a response to the fiscal problem, the central government has persistently cut back the
IRA during this period. In 1998, the national government withheld 5% of the IRA.1 In
1999, the national government delayed the release of the IRA appropriation by virtue of a
DILG circular. In 2000, 2001 and 2004, the mandated IRA share was not appropriated in
full. Prospectively, there is talk of either a 25% reduction in the IRA or an IRA freeze in
2005-2006 with the looming fiscal crisis.

The greater unpredictability in the IRA has likewise wrought havoc on LGU planning
and budgeting. In 2002, LGUs in the aggregate appears to have “underspent” relative to
their total income, apparently a natural response to the uncertainty in national
government transfers. In addition, the decline in the aggregate IRA in 1998-2003 has
resulted in the stagnation of LGU spending on the health sector. This is true whether one
measures LGU spending relative to GNP or in real per capita terms.

Thus, there is a need to help LGUs develop strategies and systems to enable them to
increase their financial resources and to allocate more funds to health and family
planning services within the framework of the Local Government Code (LGC).

The objective of this study is three-fold: (1) to review and assess the revenue and
expenditure trends for all LGUs in the aggregate, (2) to establish a baseline for revenue
and expenditure pattern of some 135 LGUs that are programmed to participate in the
LEAD project, and (3) to develop a policy and action framework at the local level that
will promote the expansion of LGU resources for health and family planning services.




1
    This amount was restored much later due to a Supreme Court ruling to this effect.


                                                       i
2.        Trend and Composition of LGU Expenditures and Revenues, 1991-2002

2.1.      LGU Income

On the one hand, the LGUs have become increasingly dependent on the IRA. Thus, the
contribution of the IRA to total LGU income in the aggregate surged from 36% in 1985-
1991 to 63% in the 1992-2002. This trend is more dramatic in the provinces. However, a
decline in the national government transfers could be observed in 1998-2002.

On the other hand, the share of LGU own-source revenue to total general government
revenue rose only minimally from an average of 5% in the pre-Code period to an average
of 7% in the post-Code period. In comparison, the share of LGU expenditures to total
general government expenditures net of debt service doubled from 11% in the pre-Code
period to 21% in the post-Code period.

Tax revenues is the major source of own-source revenue for all LGUs in the aggregate,
accounting for 66.3% of their total own-source revenue in the pre-Code period to 75.3%
in the post-Code period. While revenues from the real property tax are more important
than those from other taxes for all provinces in the aggregate in the post-Code period, the
opposite is true in the case of municipalities and cities. Moreover, the increase in the
share of other taxes in total own-source revenue of cities and municipalities is remarkable
in the same period.

LEAD municipalities are generally dependent on the IRA. In fact, on the average, the
share of IRA to total revenues of these municipalities is higher than the national average
(82%). In the aggregate, the LEAD LGUs in Tawi-Tawi are the most dependent on the
IRA having an IRA share of 96% on the average.

2.2.      LGU Expenditure

Total LGU expenditures rose from an average of 1.6%of GNP in the pre-Code period to
3.6% of GNP in the post-Code period. It is noteworthy that LGU expenditures at all
levels of local government (with the exception of the cities) declined relative to GNP in
1998 and 1999 following the onset of the Asian financial crisis. It bounced back in 2000
but contracted again in 2001 (3.75% of GNP) and 2002 (3.42% of GNP) due to adverse
impact of fiscal restraints on LGU spending. In fact, in nominal levels, aggregate LGU
expenditures in 2002 declined by almost 1% (thus a posting a growth of –5.0% in real
terms).

       Consequently, aggregate LGU spending on the social services sector registered a
       general upward trend in 1991-2001 when measured relative to GNP and in real per
       capita terms. However, some stagnation (especially with respect to health
       expenditures) is evident in 1998-2001 when either of these measures is used. What is
       more, a hefty decrease in the aggregate LGU spending on the social services sector,
       including the sub-sectors, is posted in 2002 using either of these measures. These


                                               ii
     movements are common across all levels of local government and appear to be
     related to the fiscal difficulties faced by LGUs during this period.2 Furthermore, the
     unpredictability of LGU revenues, in particular the release of IRA from the previous
     year, might have caused the LGUs to be more circumspect with their spending the
     following year. Thus, in 2002, LGUs in the aggregate appears to have “underspent”
     relative to their total income.

In the aggregate, LGU spending on personal services (PS) grew at an average of 0.7% of
GNP in the pre-Code period to an average of 1.8% of GNP in the post-Code period.
Moreover, though the Local Government Code imposes a ceiling on the PS spending of
LGUs (45%-55% of total regular income depending on the LGU’s income class),
aggregate LGU spending on PS was on the average 60% of total LGU regular income in
the previous year in the post-Code period. The situation is more problematic in the case
of municipalities which posted an aggregate PS ratio of 64.1% on the average during the
same period.

On the other hand, the share of capital outlays (CO) in the aggregate LGU expenditures
expanded from an average of 16.4% in the pre-code period to 8.6% in the post-Code
period. This came at the expense of maintenance and other operating expenditures whose
share contracted from 37.1% to 34.2%/ This development is largely driven by the
dramatic growth in capital outlays of the cities.

This paper has established the expenditure profile of LEAD LGUs but generalization
could not be made due to marked variation in their spending particularly on health
services.

3.      Menu of Policy Options for LGU Finance

The policy framework for increased LGU budgetary support for health and family
planning services includes measures that have the potential for (1) increasing LGU own-
source revenue in general, (2) expanding cost recovery schemes for health and FP
services and retaining income generated in the health sector, (3) increasing the budget
allocation of the health sector, and (4) increasing health allocation through leveraging
mechanisms including performance based incentive schemes.

If improvements in overall human development outcomes (and health outcomes in
particular) are to be attained, it is essential that resources are located, allocated and used.
In this sense, resource generation, mobilization and utilization is one of the key
challenges in local development.

Undeniably, the efficient revenue generation/ mobilization and allocation at the local
level is stymied by poor incentives arising from structural problems in the way central-
local relations have been defined (e.g., mis-match in revenue and expenditure assignment

2
  While the IRA share of LGUs declined relative to GNP in 1998 and then again in 2001, own-source LGU
revenue has been on a downtrend since 1998.


                                                 iii
across levels of government, short term of office of local elected officials). Nonetheless,
experience almost everywhere in the world suggests that even when incentives facing
local governments are wrong there is usually some scope for local initiative. Some LGUs
do better than others even under the most perverse situations (Bird and Smart 2001).
Thus, numerous examples of LGU “good practices” are available all over the country.
This study draws extensively from this list in putting forward the menu of policy actions
that is aimed at promoting the increasing LGUs resources for health and family planning
services.

3.1.   Traditional sources of LGU revenues

In general, local tax administration is weighed down by: (1) complex tax structure and
administration procedures, (2) poor tax registration systems and procedures which results
in delinquent payments and accumulation of arrears, (3) infrequent exercise of LGU audit
and enforcement authority erodes the credibility of the system and results in low
compliance; (4) limited availability of taxpayer services which increases taxpayer
compliance costs, and (5) low professional qualification of staff (Taliercio 2003). The
key interventions made by LGUs to address these problems are outlined in Annex Table
1.

3.2.   Non-traditional sources of LGU revenues

Management of economic enterprise. The management of LGU economic enterprises in
many cities and municipalities is weak. Thus, most of these economic enterprises lose
money and become cost centers rather than revenue centers. Current accounting practice
does not engender a clear appreciation of the true cost of the local economic enterprise.
For instance, market management cost are sometimes charged under the office of the
mayor, collection cost budgeted under the Treasurer’s Office and loan repayment treated
as another special account (Pardo, LGSP presentation Oct. 12, 2004). Also, economic
enterprise is oftentimes used as the vehicle for charging casual employees who are
utilized elsewhere in the LGU system so as to circumvent the 45%-55% limitations on PS
expenditures of LGUs. Consequently, the incentives for cost recovery are poor.

Key to addressing this problem is the accurate determination of cost of operations, proper
price and rate setting using principles of cost recovery, drafting of ordinance to increase
fees and charges, elimination of leakages, rationalization of operating cost, good records
management to improve collection of fees, and, perhaps most important, retention of
income.

Charging of health services. Some provinces have started to rationalize their hospital
fees. Some municipalities have also explored charging for some of the services provided
in their RHUs. For instance, Malalag, Davao del Sur put in place a socialized payment
scheme for health services. On the other hand, Sebaste, Antique transformed its rural
health unit a community clinic by raising resources for health from various sectors: CDF,
barangays, the private sector through a joint venture, and from donors. To enhance the




                                            iv
sustainability of funding of the community clinic the Sanggunian passed resolution
creating trust fund for the clinic.

Prospectively, the Philhealth appears to be a source of additional funding for health and
family planning services (particularly, through the capitation mechanism) that LGUs
should learn to tap.

Access to loans, credit, bonds, private sector participation (PSPs). Some of the
outstanding issues hampering LGU access to these non-traditional sources of finance
include: political succession risks, lack of technical knowledge on bond flotation on the
part of LGUs, lack of private financial sector confidence in LGUs, regulatory constraints
(restrictions on depository accounts, bidding of specialized professional services),
administrative constraints like absence of clear accounting and recording system for bond
proceeds and disbursements for projects funded by bonds, need for unified LGU
financial reporting system, lack of LGU capacity to prepare project feasibility studies and
to negotiate contract terms (i.e., fees/ tariffs, performance standards and appropriate risk
sharing arrangements) prompting them to rely on unsolicited proposals which typically
result in terms that are not beneficial to them. However, a number of LGUs provide
examples of “good practice” in issuance of bonds and use of PSPs (see Annex Table 1).

3.3.      Public Expenditure Management

    The major problems in the LGU expenditure management are high spending on
    personnel services and poor planning and budgeting. For instance, the poor incentive
    structure for planning and budgeting is driven by (1) lack of clear mandate supporting
    the linkage between the Local Government Development Plan, the Annual
    Investment Plan (AIP) and the budget, (2) short political tenure of local elected
    officials, and (3) mismatch between revenue means and expenditure needs of LGUs.
    In addition, fiscal gap has given rise to lack of real fiscal autonomy, weak local
    accountability and political economy issues in AIP formulation.


       Unless LGUs are able to significantly improve their own-source revenue effort and/
       or to tap non-traditional sources of financing, they will remain dependent on their
       Local Development Fund to finance their development plans. Their ability to do this
       is hampered by the poor incentives that also perversely affect planning and budgeting,
       weak tax administration, large allocations for personal services and MOOE, and
       constraints in LGU credit/ capital financing framework.




                                               v
                                               ANNEX TABLE 1

                      Policy and Action Framework for Improving LGU Finance


1.         Local taxes
       •   Update Local Tax Code
       •   Computerization
       •   Improve tax payer services – make it easier for taxpayers to pay, comfortable tax offices
       •   Recognition of top taxpayers

1.1.       Real property tax
       •   Conduct general revision of assessment
       •   Reduce forms/ redesign forms to reduce cost
       •   Computerization of records
       •   Linking up with Register of Deeds
       •   Strengthen enforcement (auctions, publication of delinquent properties)
       •   Engage with stakeholders (e.g., barangay officials) to help in registration and collection

1.2.       Local business tax
       •   Tax mapping – operation suyod, GIS-aided approach
       •   Use of presumptive income levels
       •   Use of information from other agencies
       •   One-stop shops, flow chart of how to pay taxes

2.         Economic enterprise management
       •   Application of suitable rate setting model/s
       •   Income retention to provide incentives to improve collection efficiency

3.         Promotion of cost recovery in health and FP services
       •   application of suitable rate setting model/s
       •   increasing of fees and crafting of local ordinance
       •   installation of appropriate institutional arrangements for income retention within the health sector,
           (e.g., Sanggunian ordinance to effect this and/ or the establishment of a trust fund for this purpose
           and/ or designating RHU/ hospital as economic enterprise)
       •   addressing equity concerns in the event that fees for health and FP services provided by LGUs are
           increased
       •   experience with community based health insurance schemes

4.         Non-traditional sources of financing
       •   access to non-traditional sources of financing like bank credit, issuance of bonds, BOT, joint
           venture

5.         Public expenditure management
       •   Government reorganization
       •   Retrenchment
       •   Performance based budgeting
       •   Re-inventing Local Health Boards (ala Re-inventing Local School Board) – to encourage
           constituency for health with once a year reporting of performance to stakeholders, commit ideas to
           budget




                                                        vi
                              TABLE OF CONTENTS

Introduction                                                           1

Trend And Composition Of LGU Revenues And Expenditures, 1991-2002      2

       Background                                                      2
       Expenditure Assignment and LGU Spending Distribution            3
       Trend and Composition of LGU Expenditures, 1991-2002            5
       Revenue Assignment and Composition of LGU Income                16

Expenditure And Revenue Profile Of Lead LGUs                           22

       Expenditure Profile of LEAD LGUs                                23
       Revenue Profile of LEAD LGUs                                    31

Policy And Action Framework For Increased LGU Spending On Health       36

       Traditional Sources of LGU Revenue: Resource Generation         36
       Non-traditional Sources of LGU Revenue: Resource Mobilization   47

               Management of LGU Economic Enterprises                  47
               Charging for Health Services                            47

       Access to Non-traditional Sources of LGU Finance                53

       LGU Expenditure Management                                      57

               High personal services expenditures                     57
               Weak local planning                                     58
               Unresponsive local budgeting                            64
                                   List of Tables

Table 1    LGU Expenditure Relative to GNP and to General Government           5
           Expenditure

Table 2    Percent Distribution of NG and LGU Expenditures, By Type of         6
           Government

Table 3    Distribution of LGU Expenditures Across Levels of Local             7
           Government by Function

Table 4    Distribution of Cost of Devolved Functions Across Levels Of Local   8
           Government by Function, 1992

Table 5    Ratio to GNP of Local Government Expenditures, 1985-2002            10

Table 6    Sectoral Distribution of Local Government Expenditure (in %)        11

Table 7    Per Capita Local Government Expenditures, in 1985 prices            13

Table 8    Ratio to GNP of Local Government by Object                          14

Table 9    Percent Distribution of Local Government Expenditures by Object     15
           of Expenditure (in percent)

Table 10   Tax Assignment in Cities, Provinces, and Municipalities             17

Table 11   Share of LGUs in General Government Revenue and General             18
           Government Expenditure Net of Debt Service, 1985-2002

Table 12   Distribution of LGU Own-Source Revenue Across Levels Of Local       19
           Government by Type of Revenue (%)

Table 13   IRA as a Proportion of LGU Income Net of Borrowings                 19

Table 14   Distribution of LGU Revenue by Source (%)                           21

Table 15   Revenue Effort of All Local Governments, (Ration of GNP in          22
           Percent)

Table 16   Policy and Action Framework for Improving LGU Finance               37

Table 17   Collection Rate of Current Year for Basic RPT, 1983-1999            38
                                     List of Boxes

Box 1    What can be done to improve RPT collection effort even under difficult conditions:   40
         Nueva Viscaya

Box 2    Real Property Tax Computerization and Administration Technology: Muntinlupa’s        41
         Replication Efforts

Box 3    Use of GIS in Mapping of Real Property                                               41

Box 4    Revenue Enhancement of Measures in Iligan                                            42

Box 5    Fiscal Management Reform in San Fernando, Pampanga                                   43

Box 6    Improving Tax Administration in Quezon City                                          46

Box 7    Charging User Fees: Olongapo’s Solid Waste Management Program                        48

Box 8    Socilaized Health Payment Scheme for Health Services in Malalag, Davao del Sur       49

Box 9    Makati City’s Yellow Card: An Integrated and Holistic Approach to Socialized         50
         Health Care

Box 10   Transforming a Rural Health Center into a Community Clinic: Sebaste, Antique         51

Box 11   PhilHealth Capitation Fund as an Additional Source of Revenue: Bindoy, Negros        52
         Oriental

Box 12   Creative Recruitment Approaches of the Municipality of Sampaloc, Quezon              53

Box 13   Mandaluyong City: The First to Avail the BOT Scheme (Building a public market        55
         through a BOT program)

Box 14   Improving Water and Electric Services Through Privatization: Bohol’s Case            56

Box 15   Administrative Streamlining in Cabanatuan City                                       58

Box 16   Innovations on Technology and Governance in Naga City                                63

Box 17   Knowing What the People Really Want: The Case of Bulacan Province                    65

Box 18   Re-inventing the Local School Board                                                  66

Box 19   Medicine Procurement Program of Municipality of Goa, Camarines Sur                   68
                          List of Annex Tables


Annex Table 1   General Fund Expenditure of LEAD LGUs, 2002
                (in million pesos)

Annex Table 2   Budget Share of Aggregate Social Services and Health Sector in
                LEAD LGUs, 2002 (in percent)

Annex Table 3   Composition of Health Sector Expenditure in LEAD LGUs, 2002
                (in percent)

Annex Table 4   Per Capita Expenditures of LEAD LGUs, 2002 (in pesos)

Annex Table 5   General Fund Income of LEAD LGUs, 2002 (in million pesos)

Annex Table 6   Composition of General Fund Income of LEAD LGUs, 2002
                (in percent)

Annex Table 7   Composition of General Fund Own Resource Revenue of LEAD
                LGUs, 2002 (in percent)
    POLICY FRAMEWORK FOR INCREASED FINANCING FOR HEALTH AND
                FAMILY PLANNING SERVICES IN LGUs:


       1.      INTRODUCTION

The lack of financial resources for health and family planning services has always been a
critical concern in the delivery of local family planning programs. This need has been
intensified by recent developments in the fiscal situation of the national government.

The national government fiscal deficit has expanded rapidly with the onset of the Asian
financial crisis in 1998. Despite the turnaround in the economy, the fiscal situation
continued to deteriorate from 1998-2003. As a response to the fiscal problem, the central
government has persistently cut back the IRA during this period. In 1998, the national
government withheld 5% of the IRA.3 In 1999, the national government delayed the
release of the IRA appropriation by virtue of a DILG circular requiring the submission of
the Annual Investment Plan to the Department of Budget and Management prior to the
release of 20% of the LGUs’ IRA share. In 2000, 2001 and 2004, the mandated IRA
share was not appropriated in full. Prospectively, there is talk of either a 25% reduction
in the IRA or an IRA freeze in 2005-2006 as a means of reducing the fiscal deficit of the
national government.

Because of these developments, the IRA share of LGUs has not only been decimated, the
greater unpredictability in the IRA has likewise wrought havoc on LGU planning and
budgeting. For instance, in 2002 LGUs in the aggregate appears to have “underspent”
relative to their total income, apparently a natural response to the uncertainty in national
government transfers.

The decline in the aggregate IRA in 1998-2003 has resulted in the stagnation of LGU
spending on the health sector. This is true whether one measures LGU spending relative
to GNP or in real per capita terms.

Thus, there is a need to help LGUs develop strategies and systems to enable them to
increase their financial resources and to allocate more funds to health and family
planning services within the framework of the Local Government Code (LGC).

The objective of this study is three-fold: (1) to review and assess the revenue and
expenditure trends for all LGUs in the aggregate, (2) to establish a baseline for the
revenue and expenditure pattern of some 135 LGUs that are programmed to participate in
the LEAD project, and (3) to develop a policy and action framework at the local level
that will promote the expansion of LGU resources for health and family planning
services.

Section 2 of this report describes the changing trend and composition of LGU revenues
and expenditures and relates this with the provisions of the Code on tax and expenditure
3
    This amount was restored much later due to a Supreme Court ruling to this effect.
assignment. On the other hand, Section 3 provides baseline information on the revenue
and expenditure pattern of some 135 LGUs that are being targeted to participate in the
LEAD project. The LEAD municipalities covered in this report consist of 2
municipalities from Metro Manila,4 4 municipalities from Benguet,5 16 municipalities
from Pangasinan,6 14 municipalities in Sorsogon,7 16 municipalities from Capiz,8 9
municipalities from Iloilo,9 7 municipalities from Davao del Norte,10 20 municipalities
from Maguindanao11 and 10 municipalities from Tawi-Tawi.12 In addition, the LEAD
cities discussed in this report are the cities of Makati, Mandaluyong, Marikina,
Paranaque, Pasig, Valenzuela, Quezon, Pasay, Baguio, Urdaneta, Angeles, Iloilo, Roxas,
Cebu, Zamboanga, Davao, General Santos, Panabo, Samal, and Tagum.

Lastly, Section 4 reviews the outstanding issues in LGU finance and public expenditure
management. By compiling some of the local initiatives that exemplify how some LGUs
have coped with the problems and constraints on LGU finance and budgeting, this paper
puts together a menu of policy measures and actions that LGUs can choose if they want
to expand resources for health and family planning services.

2. TREND AND COMPOSITION OF LGU REVENUES AND EXPENDI-TURES,
   1991-2002

2.1.    Background

The Local Government Code (Republic Act 7160) of 1991 and the Organic Act for
Muslim Mindanao (Republic Act 6734) of 198913 jointly define central-local relations in
the Philippines. On the one hand, the Organic Act for the Muslim Mindanao granted the
regional government powers that were previously held by the central government. It
provides for the ARMM’s expanded share and automatic retention of national internal
revenue taxes collected in the region, significant regional discretion in development
planning, and the regional governments’ primacy in the delivery of basic services and the
utilization and management of natural resources.
4
  The LEAD municipalities in Metro Manila are Navotas and Pateros.
5
  The LEAD municipalities in Benguet are: Buguias, Itogon, La Trinidad and Tuba.
6
  The LEAD municipalities in Pangasinan are: Asingan, Balungao, Binalonan, Laoac, Manaoag, Natividad,
Pozzurubio, Rosales, San Manuel, San Nicolas, San Quintin, Santa Maria, Sison, Tayug, Umingan and
Villasis.
7
   The LEAD municipalities in Sorsogon are: Barcelona, Bulan, Bulusan, Casiguran, Castilla, Donsol,
Gubat, Irosin, Juban, Magallanes, Matnog, Pilar, Prieto Diaz and Santa Magdalena.
8
   The LEAD municipalities in Capiz are: Cuartero, Dao, Dumalag, Dumarao, Ivisan, Jamindan, Ma-ayon,
Mambusao, Panay, Panitan, Pilar, Pontevedra, President Roxas, Sapian, Sigma and Tapaz.
9
  The LEAD municipalities in Iloilo are: Ajuy, Balasan, Batad, Carles, Concepcion, Estancia, Lemery, San
Dionisio, and Sara.
10
    The LEAD municipalities in Davao del Norte are: Asuncion, Carmen, Dujali, Kapalong, New Corella,
Santo Tomas, and Talaingod.
11
    The LEAD municipalities in Maguindanao are: Ampatuan, Barira, Buldon, Buluan, Datu Paglas, Datu
Piang, Dinaig (Datu Sinsuat), Gen. S.K. Pendatun, Kabuntalan, Maganoy (Shariff Aguak,), Mamasapano,
Matanog, Pagalungan, Parang, South Upi, Sultan Kudarat, Sultan Barongis, Talayan, Talitay and Upi.
12
    The LEAD municipalities in Tawi-Tawi are: Balimbing, Bongao, Cagayan de Tawi-Tawi, Languyan,
Sapa-Sapa, Simunul, Sitangkai, South Ubian, Tandubas, and Turtle Islands.
13
   This law was subsequently amended in 2001.


                                                   2
On the other hand, the Local Government Code in 1991 (LGC or Code) is a landmark
legislation that gave rise to a major shift in local governance. It consolidated and
amended the Local Government Code of 1983, the Local Tax Code (Presidential Decree
231), and the Real Property Tax Code (Presidential Decree 464). The Code includes far-
reaching provisions affecting the assignment of functions across different levels of
government, the revenue sharing between the central and the local governments, the
resource generation/utilization authorities of LGUs and the participation of civil society
in various aspects of local governance. In toto, these provisions are aimed at providing
the framework in support of increased local autonomy.

2.2.   Expenditure Assignment and LGU Spending Distribution

The Organic Act of the ARMM shifts to the regional government all powers, functions
and responsibilities heretofore being exercised by the central government except with
respect to (1) foreign affairs, (2) national defense, (3) postal service, (4) fiscal and
monetary policy, (5) administration of justice, (6) quarantine, (7) citizenship,
naturalization and immigration, (8) general auditing, civil service and elections, (9)
foreign trade, (10) maritime, land and air transportation and communications that affect
areas outside the ARMM, and (11) issuance of patents, trademarks, tradenames and
copyrights. Consequently, the regional government is primarily responsible for the
implementation of programs and projects on: agriculture; agrarian reform, education;
environment and natural resources; health; tourism, trade and industry; social welfare;
industrial peace, protection of workers welfare and promotion of employment; promotion
of cooperatives; provision of assistance to local government units; and development and
regulation of cooperatives. Although the Organic Act allows the regional government of
ARMM to devolve some of their functions to local government units in their jurisdiction,
the regional government has not done so. Thus, LGUs in the ARMM did not receive any
of the functions that were devolved to local governments outside the ARMM during the
implementation of the Local Government Code.

Prior to the implementation of the Code, the functions assigned to LGUs were limited to;
the levy and collection of local taxes; the issuance and enforcement of regulations
governing the operation of business activities in their jurisdictions; and the administration
of certain services and facilities like garbage collection, public cemeteries, public markets
and slaughterhouses. The central government carried the primary responsibility for
agricultural planning and extension, construction and maintenance of local roads and
public buildings and operation of high schools, hospitals/health services. In contrast, the
Code ordains the transfer from national government agencies to LGUs the principal
responsibility for the provision of basic services and facilities in the following areas: land
use planning, agricultural extension and research, community-based forestry, solid waste
disposal system, environmental management, pollution control, primary health care,
hospital care, social welfare services, provincial/ municipal/ city buildings and structures,
public parks, municipal services and enterprises (like public markets and
slaughterhouses), and local infrastructure facilities (like municipal/ city and provincial
roads and bridges, school buildings, health facilities, housing, communal irrigation,



                                              3
communal irrigation,      water supply,      drainage, sewerage, flood control, and
                                    14
intermunicipal telecommunications). In general, provinces are assigned functions that
involve the inter-municipal provision of services like operation and maintenance of
district and provincial hospitals whose catchment area covers more than one
municipality. On the other hand, municipalities are generally made responsible for the
delivery of frontline basic services like primary health care, construction, repair and
maintenance of public elementary schools.

The devolution program transferred over 70,000 personnel from selected national
government agencies to LGUs. Corresponding to the shift in personnel and facilities,15
the budgets of most of these agencies were then cut by 20% - 60% initially. The national
government agencies that were most heavily affected by devolution in these terms were
the Department of Agriculture (DA), Department of Health (DOH), the Department of
Social Welfare and Development (DSWD) and the Department of Budget and
Management.

It should be stressed that under Executive Order 50716 many health programs (like
immunization, control of communicable diseases, provision of drugs and medicines to
devolved facilities and operation of hospitals in the NCR) continue to be funded by the
central government under the budget of the Department of Health (DOH). This implies
that the central government budget for these activities was not devolved in the sense of
being “disallowed” in the budget of the DOH. Similarly, the central government
continues up to this day to allocate monies for the schoolbuilding program (now called
the Basic Education Facilities Fund) despite the fact that construction of schoolbuildings
is devolved to LGUs.

Also, Section 17 (c) allows central government agencies to continue to implement
devolved public works and infrastructure projects and other facilities, programs and
services provided these are funded by the national government under the annual General
Appropriations Act, other special laws, pertinent executive orders, and those wholly or
partially funded from foreign sources.” In line with this, Executive Order 53 mandates
national government agencies (NGAs) to retain management control over all foreign-
assisted projects and/or nationally funded projects even if the same involve devolved
activities. At the same time, the Code and its Implementing Rules and Regulations failed
to define the mechanism/s through which the central government can direct assistance to
LGUs under Section 17 (f) which allows the national government or the next higher level
of local government unit to “provide or augment the basic services and facilities assigned
to a lower level of local government unit when such services or facilities are not made
available or, if made available, are inadequate to meet the requirements of its
inhabitants”.

14
   Local Government Code, Section 17 (b).
15
   Facilities devolved include hospitals, rural health units, barangay health stations, women’s/ children’s
centers, demonstration farms and nurseries and the like.
16
   Executive 507 defined the actual implementation of the devolution program mandated under the Local
Government Code and which guided DBM as to which programs and activities will be “excluded” or
“disallowed” from the budgets of devolved central government agencies post-devolution.


                                                    4
2.3.   Trend and Composition of LGU Expenditures, 1991-2002

 Central-local expenditure
                                  Table 1. LGU Expenditure Relative to GNP and to
distribution.     Consistent              General Government Expenditure
with      the    devolution
program,      total    LGU                   Ratio of LGU      Ratio of LGU Expd to
expenditure rose from                        Expenditure           General Gov't.
P23.7 billion (or 1.9% of                     to GNP (%)        Expenditure Net of
GNP) in 1991 to P56.4                                             Debt Service (%)
billion (or 3.3% of GNP in
1994 and to P144.5 billion       1985             1.5                   11.4
(or 3.4% of GNP) in 2002.        1989             1.5                   10.6
Thus, total LGU spending         1991             1.9                   12.6
doubled relative to GNP          1993             2.7                   20.0
and relative to total            1995             3.5                   21.8
general         government       1997             3.8                   21.4
expenditure,      increasing     2002             3.4                   25.2
from an average of 1.6%
                               Average
of GNP in 1985-1991 to
                              1985-1991           1.6                   11.0
3.6% of GNP in 1992-
                              1992-2002           3.6                   22.6
2002. Similarly, the share
of LGUs in total general
government expenditure net of debt service rose from an average of 11.0% in the pre-
Code period to an average of 22.6% in the post-Code period (Table 1).

Meanwhile, Table 2 documents the changing distribution of government spending on
various sectors across different levels of government over time. It confirms that many
devolved functions continue to be shared by the LGUs with the central government in a
significant way. In particular, the share of LGUs in total general government spending
net of debt service registered substantial increases in the areas of health (from 10% in
1991 to 53% in 2002), housing and community development (from 33% to 79%), water
resource development and flood control (from 13% to 89%), agriculture (from 3% to
18%), power and energy (from 4% to 100%), environment and natural resource
management (from 0% to 14%), and education (from 2% to 6%).

In contrast, the share of LGUs in total general government spending on transportation and
communication did not changed much (from 16% in 1991 to 20% in 2002) despite the
devolution to LGUs of the responsibility for construction and maintenance of all local
infrastructure facilities and the provision of local telecommunication services. While this
development appears to be counter-intuitive at first, it is in fact quite what should be
expected on closer scrutiny given the fact that the DPWH never quite stopped being
involved with the delivery with of local infrastructure even as pork barrel projects of
members Congress continued to be a major source of financing of local infrastructure.
On the other hand, it is remarkable that the share of share of LGUs in total general
government spending on social welfare and labor and employment sector even declined



                                            5
 (from 11% in 1991 to 10% in 2002) despite the transfer of about 60% of pre-devolution
 DSWD personnel to LGUs.

Table 2. Percent Distribution of NG and LGU Expenditures, by Type of Government


Sectors                                        1991              1995               2002
                                          TOTAL NG LGU      TOTAL NG LGU       TOTAL NG LGU

GRAND TOTAL                                100   91    9     100   82    18     100   81    19

 Total Economic Services                   100   89    12    100   82    19     100   77    23

  Agrarian Reform                          100   100    0    100   100    0     100   100 0
  Agriculture                              100    97    3    100    86   14     100    82 18
  Natural Resources                        100   100    0    100    95    5     100    86 14
  Industry                                 100   100    0    100   100    0     100   100 0
  Trade                                    100   100    0    100   100    0     100   100 0
  Tourism                                  100   100    0    100   100    0     100   100 0
  Power and Energy                         100    96    4    100    93    7     100    0 100
  Water Resource Devt/ Flood Control       100   87    13    100   83    18     100    11 89
  Transportation and Communication         100   84    16    100    80   20     100    80 20
  Other Economic Services                  100   47    53    100   35    65     100    9  91

 Total Social Services                     100   93    7     100   82    18     100   84    16

  Education                                100   98     3    100   93     7     100   94     6
  Health                                   100   90    10    100   52    49     100   47    53
  Soc. Welfare/ Labor/ Other Soc. Serv.    100   89    11    100   88    12     100   90    10
  Housing/ Community Development           100   67    33    100   46    54     100   21    79

 General Public Service                    100   74    26    100   65    35     100   60    40

  Public Administration                    100   61    39    100   50    50     100   40    60
  Peace and Order                          100   99     1    100   98     2     100   99     1

 Others                                    100   75    25    100   0     100    100   32    68

 Defense                                   100   100   0     100   100    0     100   100   0

 Debt Service                              100   100   0     100   98     2     100   98    2

 Total Net of Debt Service                 100   87    13    100   78    22     100   75    25


 Distribution of LGU spending across levels of local governments. In 1991, prior to the
 implementation of the Local Government Code, municipalities contribute 40.1%, cities
 30.9% and provinces 29.0% of total local government expenditure (Table 3). On the
 other hand, under the devolution program, provinces absorbed 45.6%, municipalities



                                                 6
47.4%, cities 7.0% of the total cost of functions devolved to non-barangay LGUs (Table
4).

      Table 3. Distribution of LGU Expenditures Across Levels of Local Government by Function

                 Sectors                         1991                          2002
                                         LOCAL Prov. Mun. Cities       LOCAL Prov. Mun. Cities

GRAND TOTAL                               100       29   40    31       100      24    37       40

 Total Economic Services                  100       35   34    31       100      27    34       40

  Agriculture                             100       47   8     45       100      32    50       18
  Natural Resources                                                     100      14    4        82
  Power and Energy                        100       16   16    68       100       2    86       12
  Water Resource Devt./ Flood Control     100       37   49    14       100       8    69       22
  Transportation and Communication        100       40   31    29       100      27    25       48
  Other Economic Services                 100       15   52    33       100      27    40       32

 Total Social Services                    100       34   24    42       100      28    29       42

  Education                               100       13   42    45       100      18    21       61
  Health                                  100       20   17    64       100      43    32       25
  Soc. Welfare/ Labor/ Oth. Soc. Serv.    100       19   32    49       100      17    50       33
  Housing/ Community Development          100       69   13    18       100       8    23       70

 General Public Service                   100       22   51    27       100      18    45       37

  Public Administration                   100       23   51    26       100      19    45       37
  Peace and Order                         100        2   26    73       100       4    27       69

 Others                                   100       30   45    25       100      32    29       39

 Debt Service                             100       10   15    75       100      16    13       71

Total net of debt service                 100       29   40    31       100      24    37       39


However, while the share of cities in total expenditure of all LGUs in the aggregate rose
to 39.9% in 2002, that of municipalities declined to 36.6% and that of provinces dipped
to 23.5%.      This dramatic expansion in the share of cities and the corresponding
contraction in the share of provinces and municipalities in total LGU expenditure in the
post-Code period is rather unexpected given the relative importance of the municipal and
provincial levels in terms of both pre-Code spending levels and the cost of devolved
functions. It is perhaps best explained by the distribution of revenue across levels of




                                                7
local government in the post-Code period which tended to favor cities over provinces and
municipalities. Moreover, this trend appears to have gained in intensity over time.17

              Table 4. Distribution of Cost of Devolved Functions Across Levels
                            of Local Government by Function, 1992

 Percent distribution                                       Provinces       Munis     Cities     All
   across levels of local government                                                            LGUs


 General Public Services                                        7.1          87.7      5.2       100


 Economic Services                                              37.9         57.4      4.8       100
 Agriculture                                                    33.4         61.6       5        100
 Environment and Natural Resources                              97.6          0.8      1.6       100


 Social Services                                                51.7         44.2      4.2       100
 Health                                                         60.2         37.2      2.6       100
 Social Welfare and Employment                                   4.8         82.3      12.9      100


 TOTAL                                                          47.5         48.1      4.3       100


 Percent distribution
     across functions


 General Public Services                                        0.5           5.6      3.7       3.1


 Economic Services                                              15.9         23.8       22       19.9
 Agriculture                                                     13          23.7      21.5      18.5
 Environment and Natural Resources                              2.9           0        0.5        1.4


 Social Services                                                83.7         70.6      74.3       77
 Health                                                         82.5         50.4      38.9      65.1
 Social Welfare and Employment                                   1.2         20.3      35.4      11.9


 TOTAL                                                          100          100       100       100



The share of provinces in total LGU spending on the social services sector declined from
33.6% in 1991 to 28.3% in 2002 despite the absorption of a large number of personnel in
the health sub-sector by provinces and the corresponding dramatic increase in the share

17
   Thus, the share of cities in total expenditure of all LGUs in the aggregate expanded from 37.8% in 1995
to 39.9% in 2002 while the share of municipalities contracted from 37.6% to 36.6% and that of provinces
from 24.6% to 23.5%.



                                                    8
of provinces in total LGU spending on the said sub-sector as the share of provinces in
total LGU spending on social welfare and housing/ community development sub-sectors
slipped in the post-Code period.

In contrast, the share of the municipalities the social services sector rose from 24.1% in
1991 to 29.3% in 2002 due to the higher share of municipalities in total LGU spending on
the health, social welfare and housing/ community development sub-sectors. On the other
hand, the share of the cities in total LGU expenditure on the social service sector was
fairly constant at around 42% in 1991-2002. While the share of cities in total LGU
spending in education and housing/community development sub-sectors did rise, there
was a drop in its share in total LGU spending on health and social welfare sub-sector.

Distribution of LGU spending by function. With more resources at their disposal, total
LGU expenditures rose from an average of 1.6% of GNP in 1985-1991 to 3.6% of GNP
in 1993-2002 (Table 5). The increase in total LGU expenditure was particularly rapid in
1993-1995 but started to taper off in 1996. It is noteworthy that LGU expenditure at all
levels of local government (with the exception of cities) declined relative to GNP in 1998
and 1999 following the onset of the Asian financial crisis. It bounced back in 2000 but
contracted once again in 2001 and 2002 due to the adverse impact of fiscal restraints at
the national level on LGU spending.

   LGU spending on all sectors posted increases when expressed relative to GNP. Thus,
   LGU spending on the social services sector grew from 0.3% of GNP in 1991 to 0.8%
   of GNP in 2002. Meanwhile, LGU allocation on the general public services sector
   increased from 0.8% to 1.5%. However, LGU spending on the economic services
   sector expanded only minimally, from 0.7% to 0.8%.

   The mandated transfer to LGUs of functions previously discharged by national
   government agencies also caused a major shift in the composition of LGU budgets.
   Amongst the major sectors, the social services sector posted the fastest rate of growth
   in real terms in 1993-2002, increasing by 11.9% yearly on the average during the
   period compared to the overall growth in total LGU spending of 10.5%. In contrast,
   the general public services sector and the economic services sector grew,
   respectively, by 9.4% and 8.9% yearly on the average. Consequently, the share of the
   social services sector to total LGU expenditure expanded from 20.5% in 1985-1991
   to 26.1% in 1993-2002 while that of the general public services sector and the
   economic services sector contracted, respectively, from 42.8% to 40.6% and from
   32.9% to 24.9% (Table 6).


   The transportation/ communication sub-sector bear the brunt of the contraction in the
   budget share of the economic services sector. With the devolution of agricultural
   extension and environment/ natural resource management, the expenditure share of
   these sub-sectors rose somewhat between 1991 and 2002. In contrast, the share of the
   transportation communication sub-sector in total LGU expenditure dipped from
   27.9% in 1991 to 10.7% in 2002 (Table 6). Although aggregate LGU spending on


                                            9
 transportation/ communication was fairly stable at 0.5% of GNP in the post-Code
 period, this situation conceals variations across the different levels of local
 government. The expenditures on transportation/ communication sub-sector of
 provincial and municipal government exhibit some contraction in the post-Code
 period (when measured relative not only to total LGU spending but also to GNP).
 However, the opposite is true in the case of cities.18


     Table 5. Ratio to GNP of Local Government Expenditures, 1985-2002 (in percent)
                                                 Average
 A. ALL LGU's                             1985-1991 1993-2002      1991 1995 1997 2002

              GRAND TOTAL                           1.61          3.56        1.89   3.53   3.67   3.42

Total Economic Services                             0.53          0.89        0.68   0.98   0.92   0.76

 Agrarian Reform                                    0.00          0.00        0.00   0.00   0.00   0.00
 Agriculture                                        0.02          0.11        0.02   0.11   0.11   0.10
 Natural Resources                                  0.00          0.02        0.00   0.01   0.02   0.03
 Industry                                           0.00          0.00        0.00   0.00   0.00   0.00
 Trade                                              0.00          0.00        0.00   0.00   0.00   0.00
 Tourism                                            0.00          0.00        0.00   0.00   0.00   0.00
 Power and Energy                                   0.02          0.02        0.02   0.02   0.02   0.01
 Water Res. Devt/ Flood Control                     0.01          0.01        0.01   0.01   0.01   0.01
 Transportation and Communication                   0.40          0.48        0.53   0.57   0.51   0.37
 Other Economic Services                            0.09          0.25        0.10   0.26   0.25   0.25

Total Social Services                               0.33          0.93        0.29   0.94   0.96   0.78

 Education                                          0.12          0.26        0.07   0.25   0.27   0.18
 Health                                             0.08          0.42        0.08   0.40   0.45   0.38
 Soc.Welfare/ Labor/Oth. Soc. Serv.                 0.04          0.08        0.05   0.08   0.08   0.07
 Housing/ Community Development                     0.09          0.17        0.09   0.20   0.16   0.14

General Public Service                              0.69          1.44        0.84   1.36   1.46   1.53

 Public Administration                              0.65          1.43        0.83   1.34   1.45   1.52
 Peace and Order                                    0.04          0.01        0.01   0.02   0.01   0.01



 18
   These developments appear to be link to the mismatch in the distribution of resources and
 expenditure responsibilities across levels of local governments. At the same time, these movements
 are a cause of concern considering the robust and strong association between economic growth and
 infrastructure spending. Given that the Code assigns the primary responsibility for the construction
 and maintenance of local infrastructure to local governments, this trend also points to the increasing
 disparity in economic development across levels of local government. It likewise underscores the
 importance of creating a suitable regulatory framework for encouraging private sector participation in
 infrastructure (through BOT and joint ventures) at the local level as well as the need for an appropriate
 grants program for LGU capital investments.




                                                  10
Others                                          0.05           0.22     0.07    0.18    0.24   0.26

Debt Service                                    0.01           0.08     0.01    0.08    0.08   0.09


     Table 6. Sectoral Distribution of Local Government Expenditures (in percent)

                                               Average

ALL LGU's                             1985-1991 1993-2002 1991 1995 1997 2002

            GRAND TOTAL                  100             100          100      100     100     100

Total Economic Services                 32.9             24.9         35.8     27.6    26.0    22.2

 Agrarian Reform                         0.0              0.0          0.0      0.0     0.0     0.0
 Agriculture                             1.3              3.1          1.1      3.0     3.0     2.9
 Natural Resources                       0.0              0.6          0.0      0.4     0.5     0.9
 Industry                                0.0              0.0          0.0      0.0     0.0     0.0
 Trade                                   0.0              0.0          0.0      0.0     0.0     0.0
 Tourism                                 0.0              0.0          0.0      0.0     0.0     0.0
 Power and Energy                        1.1              0.5          1.2      0.6     0.5     0.2
 Water Res. Devt/ Flood Control          0.6              0.3          0.5      0.3     0.3     0.2
 Transportation and Communication       24.6             13.5         27.9     16.1    14.6    10.7
 Other Economic Services                 5.3              7.1          5.1      7.3     7.1     7.2

Total Social Services                   20.5             26.1         15.4     26.5    26.8    22.8

 Education                               7.5              7.3         3.6       7.2     8.1     5.4
 Health                                  4.9             11.9         4.2      11.4    12.2    11.1
 Soc.Welfare/ Labor/Oth. Soc. Serv.      2.7              2.3         2.8       2.1     2.3     2.2
 Housing/ Community Development          5.3              4.7         4.8       5.8     4.4     4.1

General Public Service                  42.8             40.6         44.5     38.4    39.2    44.7

 Public Administration                  40.3             40.2         44.0     37.8    38.8    44.3
 Peace and Order                         2.5              0.4          0.6      0.5     0.4     0.4

Others                                   3.0             6.2          3.5      5.1     5.4     7.7

Debt Service                             0.9             2.2          0.8      2.4     2.6     2.7


 On the other hand, the increase in LGU spending on social services between 1991 and
 2002 went to health, education, housing/ community development and social welfare,
 in that order. Thus, aggregate LGU expenditure on health nearly quintupled from
 0.08% of GNP in 1991 to 0.38% of GNP in 2002 while LGU spending on education
 rose almost three-fold from 0.07% of GNP to 0.18% of GNP (Table 5). In contrast,


                                               11
     total LGU expenditure on housing/ community development and social welfare
     services in 2002 were just about twice as large as their 1991 levels when expressed
     relative to GNP.

     The hefty increases in LGU spending on health and social welfare were largely due to
     the fact that the LGUs had very little discretion but to absorbed the cost of inherited
     health and social welfare personnel which accounted for more than half of the total
     cost of all devolved personnel. In contrast, higher LGU expenditures on education
     and housing/ community in the post-Code period largely reflect the higher priority
     that local officials assign to these sectors in the more decentralized regime since
     LGUs were not locked into previously set (i.e., pre-devolution) central government
     expenditure levels in these sectors precisely because LGUs did not have to absorb
     devolved personnel.

     Aggregate LGU spending on the social services sector registered a general upward
     trend in 1991-1997 when measured relative to GNP and in real per capita terms.
     However, some stagnation (especially with respect to health and education
     expenditures) is evident in 1998-2001 when either of these measures is used (Table 5
     and Table 7). What is more, a hefty decrease in the aggregate LGU spending on the
     social services sector, including the health and education sub-sectors, is posted in
     2002 using either of these measures. These movements are common across all levels
     of local government and appear to be related to the fiscal difficulties faced by LGUs
     during this period.19 Furthermore, the unpredictability of LGU revenues, in particular
     the release of IRA in 1998-2001, might have caused the LGUs to be more
     circumspect with their spending behavior. This may be a cause of concern
     considering that provinces and municipalities are primarily responsible for the
     delivery of basic health services. It highlights the importance for designing a grant
     program aimed at ensuring that LGUs are able to provide health and education
     services that are consistent with minimum standard levels of access and quality.

     Distribution of LGU expenditure by object of expenditure. In the aggregate, LGU
     spending on personal services (PS) grew from an average of 0.7% of GNP in 1985-
     1991 to an average of 1.8% of GNP in 1993-2002 (Table 8). Because it has grown at
     the same pace as total LGU expenditures, its share in total LGU spending has
     remained fairly stable at 47% in the pre-Code period as well as the post-Code period,
     making it the most important expenditure item according to economic category
     (Table 9).

     The salary structure applicable to mandatory LGU positions is set by the
     Compensation and Position Classification Act (CPCA) of 1989. The CPCA in
     tandem with the Codal provisions on mandatory positions tend to restrict LGUs’
     ability to re-align their outlays for personal services in consonance with their specific

19
  While the IRA share of LGUs declined relative to GNP in 1998 and then again in 2001, own-source LGU
revenue has been on a downtrend since 1998.


                                                 12
   needs and circumstances. In some cases, these restrictions impose a heavy fiscal
   burden on LGUs (particularly in the case of provinces and municipalities), and thus,
   effectively putting a squeeze on ability of these LGUs’ to fund maintenance and
   capital outlays. In other cases, they make it difficult for low income class LGUs to
   retain personnel, particularly in the health sector.


             Table 7. Per Capita Local Government Expenditures, in 1985 prices

               ALL LGU's                 1991    1995     1997   1999     2001   2002

             GRAND TOTAL                 218     426      488    474      507     469

Total Economic Services                   78     118      127    119      125     104

 Agriculture                              2          13   14      15       15     14
 Natural Resources                        0          2    2       3        3      4
 Power and Energy                         3          2    3       3        3      1
 Water Resource Devt. & Flood Contr.      1          1    1       1        1      1
 Transportation and Communication         59         68   71      66       65     50
 Other Economic Services                  13         31   34      32       38     34

Total Social Services                     34     113      131    125      135     107

 Education                                8          31   39      35       38     25
 Health                                   9          49   59      58       58     52
 Soc. Welfare, Labor, Other Soc. Serv.    6          9    11      11       12     10
 Housing/ Community Development           11         25   21      21       26     19

General Public Service                    97     164      191    189      206     210

 Public Administration                    96     161      189    188      204     208
 Peace and Order                          1       2        1      2        2       2

Others                                    8          22    26     31       30     36

Debt Service                              2          10    13     10       11     13


   Although the Local Government Code imposes a ceiling on PS spending of LGUs
   (45%-55% of total regular income depending on LGU’s income class), many
   exemptions are allowed in reckoning compliance to this mandate. Thus, aggregate
   LGU spending on personal services was, on the average, 55.9% of total LGU regular
   income in the previous year in 1993-2002 (Table 9). Moreover, the situation is
   particularly problematic in the case of municipalities which posted an aggregate PS
   ratio of 64.1% on the average during the same period.




                                                13
 Furthermore, personal services expenditure as recorded in the financial statements of
 LGUs tends to underestimate the amounts that LGUs actually spend on compensation
 of personnel because of the practice of charging the salaries and wages of contractual
 employees hired under so-called “job orders” or “service contracts” against MOOE or
 CO (for development projects). Some LGUs report that this practice is no longer
 allowed under new government accounting system (NGAS) but other LGUs report
 that this practice is still in effect. For instance, a number of the LGUs report that
 15%-20% of their MOOE is actually used to pay for contractual personnel. Still other
 LGUs charge some of their “excess” personal services against the accounts of public
 enterprises like public markets.


               Table 8. Ratio to GNP of Local Government by Object

                                    Average
    A. ALL LGU's             1985-1991   1993-2002       1991 1995 1997 1999 2002

    GRAND TOTAL                  1.6          3.8         1.9    3.5   3.8    3.7   3.4
         PS                      0.7          1.8         0.8    1.6   1.8    1.7   1.7
       MOOE                      0.6          1.3         0.6    1.2   1.2    1.3   1.1
        CO                       0.3          0.7         0.4    0.8   0.7    0.7   0.6

                                    Average
 B. ALL PROVINCES            1985-1991   1993-2002       1991 1995 1997 1999 2002

    GRAND TOTAL                  0.5          0.9         0.5    0.9   0.9    0.8   0.8
         PS                      0.2          0.4         0.2    0.4   0.4    0.4   0.4
       MOOE                      0.2          0.3         0.2    0.3   0.3    0.3   0.3
        CO                       0.1          0.1         0.1    0.1   0.2    0.1   0.1

                                    Average
C. ALL MUNICIPALITIES        1985-1991   1993-2002       1991 1995 1997 1999 2002

    GRAND TOTAL                  0.6          1.4         0.8    1.3   1.4    1.3   1.2
         PS                      0.3          0.8         0.4    0.7   0.8    0.8   0.7
       MOOE                      0.2          0.4         0.2    0.4   0.4    0.4   0.4
        CO                       0.1          0.2         0.2    0.2   0.2    0.1   0.1

                                    Average
    D. ALL CITIES            1985-1991   1993-2002       1991 1995 1997 1999 2002

    GRAND TOTAL                  0.5          1.5         0.6    1.3   1.5    1.5   1.4
         PS                      0.3          0.6         0.3    0.5   0.6    0.6   0.6
       MOOE                      0.2          0.5         0.2    0.4   0.5    0.6   0.5
        CO                       0.1          0.4         0.1    0.4   0.4    0.4   0.3




                                        14
      On the other hand, the share of capital outlays (CO) in aggregate LGU expenditures
     expanded from an average of 16.4% in 1985-1991 to an average of 18.6% in 1993-
     2002. This came at the expense of maintenance and other operating expenditures
     whose share contracted from 37.1% to 34.2%. This development is largely driven by
     the dramatic growth in the capital outlays of cities.

 Table 9: Percent Distribution of Local Government Expenditures by Object of Expenditure
                                         (in percent)

                                      Average
A. ALL LGU's                    1985-1991 1993-2002   1991    1995    1997   1999   2002

GRAND TOTAL                       100        100      100     100     100    100    100
 PS                                47        47       45       45    47      48     49
 MOOE                              37        34       33       33      33    34     34
 CO                               16         19       22      21       20    18     17

Ratio of PS to Reg. Income in
Previous Year                      64        56       66       55      62     58     50

                                      Average
B. ALL PROVINCES                1985-1991 1993-2002   1991    1995    1997   1999   2002

GRAND TOTAL                       100        100      100     100     100    100    100
 PS                                44        49       42       48     49     51     51
 MOOE                              37        35       35       36     34     34     34
 CO                               19         17       23      16      17     15     15

Ratio of PS to Reg. Income in
Previous Year                      76        57        76      58      68     59     48

                                      Average
C. ALL MUNICIPALITIES           1985-1991 1993-2002   1991    1995    1997   1999   2002

GRAND TOTAL                       100        100      100     100     100    100    100
 PS                                46        56       46       53     56     58     57
 MOOE                              39        31       33       31     31     31     32
 CO                               15         13       21      16      14     11     11

Ratio of PS to Reg. Income in
Previous Year                      64        64       68       62      72     69     62

                                      Average
D. ALL CITIES                   1985-1991 1993-2002   1991    1995    1997   1999   2002

GRAND TOTAL                       100        100      100     100     100    100    100
 PS                                49        38       46       36     38     38     41



                                             15
 MOOE                               35         37         30       34       35     38     37
 CO                                 16         25         24       30       27     24     23

Ratio of PS to Reg. Income in
Previous Year                       57         47         57       46       51     47     42


        However, there is a squeeze not only on MOOE but also on capital outlays in the case
        of municipalities and provinces in the post-Code period. Thus, the share of MOOE in
        total LGU spending contracted from 39.2% in 1985-1991 to 31.2% in 1993-2002 in
        the case of municipalities and from 36.9% to 34.6% in the case of provinces.
        Similarly, the share of capital outlays in total LGU spending declined from 14.9% to
        13.1% in the case of municipalities and from 18.9% to 16.7% in the case of
        provinces.

        Nonetheless, because the LGU expenditure pie has grown bigger relative to GNP,
        aggregate LGU spending on capital outlays increased from an average of 0.3% of
        GNP in the pre-Code period to an average of 0.7% of GNP in the post-Code period
        while aggregate LGU MOOE rose from 0.6% of GNP to 1.3% of GNP (Table 8).

 2.4.      Revenue Assignment and Composition of LGU Income

 Under RA 6733, the regional government of the ARMM was authorized to levy all types
 of taxes with the exception of the income tax and customs duties. In practice, however,
 the regional government of the ARMM does not touch any of the taxes that the central
 government levies. Instead, it has chosen to impose a supplementary rate (i.e., a
 surcharge) on taxes that are typically levied by provincial governments under the Local
 Government Code like the real property tax, the sand and gravel tax, the amusement tax,
 the professional tax, and the franchise tax. In this sense, the amended Organic Act of the
 ARMM (Republic Act 9054) simply formalizes the symmetrical treatment of the ARMM
 and the LGUs with regards to the limitations on their taxing powers.

 On the other hand, under the Local Government Code, most of the revenue productive
 taxes are reserved for the central government alone and are off-limits to local government
 units. These include the income tax (both individual and corporate), customs duties, the
 value added tax, and excise taxes on alcoholic beverages, and tobacco products and
 petroleum products.

 The Local Government Code gives LGUs wide latitude on the amount of fees and other
 user charges they may levy which, in principle, should enable them to relate the revenues
 they collect with the benefits that their constituents derive from the LGUs’ expenditure
 responsibilities. However, while the Code expanded the tax base of LGUs to include
 products, activities and sectors – such as banks and other financial institutions, business
 of printing and publishing – that used to be outside of the reach of local taxation, the size
 of the base of local taxes has not really changed much. Most of the 11 different taxes that
 LGUs are allowed to levy under the Code continue to have narrow bases and limited
 yield prospects (Table 10).


                                              16
The Code also seriously
                                                                      Table 10
limits their power to set                   Tax Assignment in Cities, Provinces, and Municipalities
local tax rates. First, the               Subject                Cities        Prov.   Muni’s       Brgy.
Code fixes the tax rate of On Real Property Transfers             b             b
some of the taxes that are On Business of Printing and
                               Publication                        b             b
assigned to LGUs (e.g.,
                               On Franchise                       b             b
the SEF component of On Sand, Gravel and other
the real property tax). Quarry Resources                          b             b         a/         a/
Second, although LGUs On Amusement Places                         b             b         a/
are given some discretion      On Professionals                   b             b
in setting the rates of the On Delivery Vans and Trucks           b             b
other local taxes, the         On Real Property                   b             b         a/         a/

Code sets limits (i.e.,        On Idle Lands                      b             b
floors and ceilings) on        On Business                        b                      b           b
the tax rates that they        On Community Tax                   b                      b           a/
                               a/ Shares in proceeds of levy of province.
may impose. On the one
hand, the maximum allowable tax rates appear to be low. For instance, all provinces
have already set their basic real property tax rate at the maximum allowable level even
prior to the Code’s implementation. On the other hand, although the Code increased the
maximum allowable tax rates for most of the local taxes, it effectively reduced the
maximum allowable effective tax rate for the real property tax. This came about because
the new maximum assessment levels (which are applied to the fair market value of real
property before the nominal tax rate is applied) are no higher and often significantly
lower than the fixed assessment levels mandated in the pre-Code period even as the
maximum allowable nominal real property tax rate is maintained at the pre-Code level.
This results in an effective reduction in the assessment levels of residential land, all types
of buildings and all types of machinery, leading to a potentially substantial reduction in
real property tax revenues. Third, the Code mandates that tax rates can only be adjusted
once in every 5 years and by no more than 10%. This provision is particularly restrictive
in the case of taxes (like the professional tax and the tax on delivery vans and trucks)
whose rates are specified in nominal peso terms. Clearly, the resulting adjustments will
not allow LGUs to maintain the real value of their revenues.

Thus, LGUs have limited power to control the amount of revenues they receive at the
margin so as to be able to fund the services they prefer.20 In this sense, local
governments do not have “to face the full marginal tax price of the spending decisions for
which they are responsible” (Bird 1999).

Given this perspective, it is not surprising that the share of LGU own-source revenue to
total general government revenue rose only minimally from an average of 5% in the pre-


20
  While revenue sharing with the central government (through the IRA) has the potential to provide LGUs
with adequate resources to finance their expenditure responsibilities, this scheme does not provide fiscal
autonomy because subnational governments do not have the power to affect the amount of shared revenues
they receive.


                                                   17
Code period to an average of 7% in the post-Code period.21 In comparison, the share of
LGU expenditures to total general government expenditures net of debt service doubled
from 11% in the pre-Code period to 21% in the post-Code period (Table 11).

This development underscores the mis-
                                                        Table 11. Share of LGUs in General Government
alignment between the assignment of                     Revenue and General Government Expenditure
revenue powers and expenditure                                   Net of Debt Service, 1985-2002
responsibilities to local governments in
the aggregate under the Local                                           LGU share in             LGU share in
Government Code. Moreover, this                                         General Gov't.             General
mismatch is evident particularly                                      Expenditure Net of          Government
pronounced in the case of provinces.                                   Debt Service (%)          Revenue (%)

                                                        1985                  11.42                   5.93
The taxing powers of provincial                         1991                  12.61                   4.55
governments are inferior to those of                    1995                  21.83                   5.89
city and municipal governments.                         2001                  25.72                   7.24
Provinces are not only allowed to levy                  2002                  25.23                   8.11
taxes at rates lower than those
applicable to cities and municipalities,              Average
they are also assigned taxes that have               1985-1991                11.00                   4.86
                                                     1992-2002                22.68                   6.77
lower yields.

While provinces are allowed to levy 9 out of 11 types of taxes that are assigned to LGUs
in general under the Local Government Code (Table 10), they are not permitted to touch
the local business tax,22 one of two LGU taxes that are revenue productive. Thus,
outside of the real property tax (RPT), the taxes that are assigned to provinces do not
yield much revenue.

At the same time, the basic real property tax rate that provinces are allowed to levy at the
maximum (1%) is lower than that of cities (2%).23 Moreover, because of the difference
in the level of economic development, the assessed value of real property (on which the
RPT is applied) is relatively lower per unit of measure in provinces than in cities. Also,
the share of provinces in the proceeds of the RPT (35%) is smaller relative to those of
cities (70%) and municipalities (40%).

Indeed, the assignment of revenues under the Local Government Code effectively shifted
the distribution of own-source revenue from provinces in favor of cities and
municipalities.    Thus, the share of provinces in total LGU own-source revenue
contracted from an average of 20% in 1985-1991 to 13% in 1992-2002 (Table 12). This
kind of movement is evident for tax as well as non-tax sources of own-source revenues.
And, a comparison of the share of provinces in total LGU revenues (13.0%) with their

21
   It cannot be denied that many LGUs have not fully utilized their revenue raising authorities, a fact that
may be attributed, in part, to the dis-incentive effect of the IRA distribution formula on local tax effort.
22
   The local business tax is basically a turnover tax that is levied on the gross receipts of businesses/ traders.
23
   Similarly, cities are allowed to fix tax rates at levels that exceed by not more than 50% the maximum
rates allowed for provinces or municipalities except in the case of professional and amusement taxes.


                                                       18
share in total cost of devolved functions (47.5%) underscores even more just how
inadequate the revenues assigned to provinces are relative to their expenditure
responsibilities.24


 Table 12. Distribution of LGU Own-Source Revenue Across Levels of Local Government by
                                   Type of Revenue (%)

                    LG Total Own Source Revenue                        LG Total Tax Revenue
                  Total Provinces    Munis Cities              Total    Provinces    Munis Cities

       1991        100         18.4         38.9        42.7    100         13.3         40.7      46
       1995        100         14.8         31.7        53.5    100         13.1         29.5     57.4
       2001        100         11.9         23.3        64.8    100         10.2         20.2     69.6
       2002        100         11.5         23.4        65.1    100         10.4         19.8     69.8

      Average
     1985-1991     100         19.9         37.1         43     100         15.2          38      46.8
     1992-2002     100          13          28.1        58.9    100         11.1         25.4     63.5




The mis-match between revenue and
                                              Table 13. IRA as a Proportion of LGU income
expenditure assignment is, in principle,                    Net of Borrowings
compensated for by the mandated increase               All LGUs Provinces       Munis Cties
in the share of LGUs in national taxes
(called the Internal Revenue Allotment or     1991        40.5        44.6       41.8  35.7
      25                                      1995        64.2        77.1       70.7  48.3
IRA). As a result, LGUs have become
                                              2001        66.1        82.5       77.6  46.2
increasingly dependent on the IRA. Thus,      2002        68.1        84.6       78.9  48.1
the contribution of the IRA to total LGU
income net of borrowings surged from Average
37% in the pre-Code period to 65% in the 1985-1991 36.7               38.8       38.3  33.2
post-Code period for all LGUs combined      1992-2002     65.0        80.5       73.3  47.0
            26
(Table 13). This trend is most dramatic in the case of provinces. In particular, the IRA
share in total income of provinces expanded from 39% in the pre-Code period to 81% in
the post-Code period. It is notable, however, that the IRA has become a more
unpredictable source of LGU revenue since 1998 with the greater fiscal constraints faced
by the national government.

24
   Provinces absorbed 47.5% of the total cost of functions devolved to non-barangay LGUs, municipalities
48.1% and cities 4.3%.
25
   The Code provides that the share of LGUs in national taxes should be equal to 40% of the actual
collections the Bureau of Internal Revenue (BIR) in the third year prior to the current year. Under the
previous legislation the IRA was set a maximum of 20% of BIR collections.
26
   LGUs in the ARMM are entitled not only to their IRA share as provided by the Local Government Code
but also to their share in internal revenue collections in the ARMM as mandated by the organic act of
autonomous region. Consequently, the aggregate intergovernmental transfer accruing to ARMM LGUs is
more than 20 times that of the regional government itself.



                                                   19
Distribution of LGU own-source revenues by type. For all LGUs in the aggregate, tax
revenues is the major source of own-source revenue, accounting for 66.3% of their total
own-source revenue in 1985-1991 and 75.3% in 1992-2002 (Table 14). While revenues
from the real property tax are more important than those from other taxes for all
provinces in the aggregate in the post-Code period, the opposite is true in the case of
municipalities and cities. Moreover, the increase in the share of other taxes in total own-
source revenue of cities and municipalities is remarkable in the post-Code period.

However, real property tax-to-GNP for all LGUs in the aggregate exhibits some
stagnation in the second half of the 1990s (Table 15). This trend is more pronounced in
the case of provinces and municipalities and may be linked to technical as well as
political difficulties in the administration of the RPT.

When measured relative to GNP, total own-source revenue of provinces registered a
contraction in the post-Code period, from an average of 0.16% of GNP in 1985-1991 to
0.15% in 1992-2002 (Table 15). This is primarily traceable to a decline in their non-tax
revenue (i.e., operating and other miscellaneous income). The decline in non-tax effort
of provinces is surprising at first glance given the greater autonomy that LGUs, in
general, enjoy in the setting fees and user charges in the post-Code period. However,
closer scrutiny suggests that, unlike cities and municipalities, provinces do operate many
public enterprises.

In contrast, total own-source revenue effort of cities and municipalities rose from an
average of 0.35% and 0.30% of GNP, respectively, in 1985-1991 to 0.69% and 0.33% of
GNP, respectively, in 1992-2001 (Table 15). In cities, all sources of own-source
revenues increased in the post-Code period but the improvement in local tax effort (both
RPT and other taxes) was dramatic. On the other hand, the expansion in the own-source
revenue effort of municipalities was largely driven by increases in other tax revenuess.
These differences in the revenue performance of provinces, cities and municipalities
maybe explained by differences in their tax bases as well as differences in their taxing
powers. Being more urbanized and having economies that are more market-based, the
tax base of cities tends to be more buoyant when compared to those of municipalities and
provinces.




                                            20
                         Table 14. Distribution of LGU Revenue By Source (%)
                                                  Average
ALL LGUS                                         1985-1991    1992-2002    1991 1995 1999 2002


TOTAL OWN-SOURCE REVENUE                              100        100       100       100    100    100


I. TAX REVENUES                                       66.3       75.3      66.3      75.1   75.9   77.6
     Real Property Tax                                40.4       38.2      40.8      38.8   38.6   36.5
     Other Taxes                                      25.8       37.1      25.5      36.3   37.3   41.1


II. Operating & Miscellaneous Revenues                31.2       24.1      31.4      24.7   23.8   22.3


III. Capital                                          2.5        0.7           2.3   0.3    0.3    0.1
                                                  Average
PROVINCE                                         1985-1991    1992-2002    1991 1995 1999 2002

TOTAL OWN-SOURCE REVENUE                              100        100       100       100    100    100


I. TAX REVENUES                                       50.7       64.6      48.0      66.7   69.6   70.0
     Real Property Tax                                40.8       48.4      38.3      44.2   48.3   47.3
     Other Taxes                                      9.9        16.2          9.7   22.5   21.3   22.7
II. Operating & Miscellaneous Revenues                42.1       31.8      50.4      32.6   29.5   29.2
III. Capital                                          7.2        3.5           1.7   0.7    0.9    0.7
                                                  Average
MUNICIPALITIES                                   1985-1991    1992-2002    1991 1995 1999 2002


TOTAL OWN-SOURCE REVENUE                              100        100       100       100    100    100


I. TAX REVENUES                                       68.0       67.9      69.2      69.8   65.1   65.6
     Real Property Tax                                39.6       30.5      41.3      32.1   29.1   30.3
     Other Taxes                                      28.4       37.4      27.9      37.7   36.0   35.3
II. Operating & Miscellaneous Revenues                31.6       31.7      30.1      29.6   34.3   34.3
III. Capital                                          0.4        0.4           0.7   0.5    0.6    0.1
                                                  Average
CITIES                                           1985-1991    1992-2002    1991 1995 1999 2002


TOTAL OWN-SOURCE REVENUE                              100        100       100       100    100    100


I. TAX REVENUES                                       72.1       81.1      71.5      80.4   81.7   83.1
     Real Property Tax                                41.0       39.5      41.3      41.2   40.5   36.8
     Other Taxes                                      31.0       41.6      30.1      39.2   41.2   46.3
II. Operating & Miscellaneous Revenues                25.9       18.7      24.5      19.5   18.2   16.9
III. Capital                                          2.1        0.1           4.1   0.0    0.0    0.0




                                                 21
         Table 15. Revenue Effort of All Local Governments, (Ratio to GNP in Percent)
                                                       Average
ALL LGUS                                        1985-1991   1992-2002    1991 1995 1999 2002

TOTAL OWN-SOURCE REVENUE                         0.81      1.17      0.84   1.15   1.20   1.19

I. TAX REVENUES                                 0.53        0.88     0.56   0.87   0.91   0.92
      Real Property Tax                         0.33        0.45     0.34   0.45   0.46   0.43
      Other Taxes                               0.21        0.44     0.21   0.42   0.45   0.49
II. Operating & Miscellaneous Revenues          0.25        0.28     0.26   0.28   0.29   0.27
III. Capital                                    0.02        0.01     0.02   0.00   0.00   0.00
                                              1985-91    1992-2002
PROVINCES                                     Average     Average     1991 1995 1999 2002

TOTAL OWN-SOURCE REVENUE                         0.16      0.15      0.15   0.17   0.15   0.14

I. TAX REVENUES                                 0.08        0.10     0.07   0.11   0.11   0.10
      Real Property Tax                         0.07        0.07     0.06   0.08   0.07   0.06
      Other Taxes                               0.02        0.02     0.01   0.04   0.03   0.03
II. Operating & Miscellaneous Revenues          0.07        0.05     0.08   0.06   0.05   0.04
III. Capital                                    0.01        0.01     0.00   0.00   0.00   0.00
                                              1985-91    1992-2002
MUNICIPALITIES                                average     Average     1991 1995 1999 2002

TOTAL OWN-SOURCE REVENUE                         0.30      0.33      0.33   0.37   0.31   0.28

I. TAX REVENUES                                 0.20        0.22     0.23   0.26   0.20   0.18
      Real Property Tax                         0.12        0.10     0.13   0.12   0.09   0.08
      Other Taxes                               0.08        0.12     0.09   0.14   0.11   0.10
II. Operating & Miscellaneous Revenues          0.09        0.10     0.10   0.11   0.11   0.10
III. Capital                                    0.00        0.00     0.00   0.00   0.00   0.00
                                              1985-91    1992-2002
CITIES                                        average     Average     1991 1995 1999 2002

TOTAL OWN-SOURCE REVENUE                         0.35      0.69      0.36   0.62   0.74   0.77

I. TAX REVENUES                                  0.25      0.56      0.26   0.50   0.61   0.64
      Real Property Tax                          0.14      0.27      0.15   0.25   0.30   0.28
      Other Taxes                                0.11      0.29      0.11   0.24   0.31   0.36
II. Operating & Miscellaneous Revenues           0.09      0.13      0.09   0.12   0.13   0.13
III. Capital                                     0.01      0.00      0.01   0.00   0.00   0.00



3. EXPENDITURE AND REVENUE PROFILE OF LEAD LGUs

After providing a backgrounder that tracks the movement in LGU revenues and
expenditures in 1991-2002 and offering some insights on what drives these movements in
the previous section, this section presents baseline information on the expenditure and


                                            22
revenue pattern in 2002 (2001 if data for 2002 is not available). It provides information
not only on the per capita health spending of these LGUs but also on the share of the
health sector in their budgets. This section likewise provides data on the breakdown of
LEAD LGUs’ revenues by source.

   3.1.       Expenditure Profile of LEAD LGUs

   Metro Manila LEAD Municipalities. There are 2 LEAD first income class
   municipalities in Metro Manila, the municipalities of Navotas and Pateros. While
   Navotas had a total General Fund (GF) expenditure of P281 million in 2001, Pateros
   had a total GF spending of P56 million for the same year (Annex Table 1).

   Moreover, aggregate social services, which include health, education, social welfare
   and development, and housing and community development, in Navotas amounted to
   P68 million while Pateros spent P22 million for its social services. However, per
   capita spending on social services of Navotas was only P297 whereas Pateros had
   P395, both higher than the national average of P147 (Annex Table 4).

   Meanwhile, total health expenditures of Navotas in 2001 was P25.7 million which is
   9% of its total GF expenditure and lower than the national average of 10% (Annex
   Table 2). On the other hand, Pateros health spending was P10 million which is 18%
   of its total GF spending and higher than the national average. Navotas per capita
   spending in health was P111 while Pateros was P173, both higher than the national
   average of P89 (Annex Table 4).

   On the other hand, almost all of the health expenditures of the LEAD municipalities
   in Metro Manila is spent on basic health services, higher than the national average of
   93% (Annex Table 3). In particular, 99.5% of the health budget of Navotas went to
   basic health services. Its per capita spending in basic health amounted to P111,
   higher than the national average of P84. All of the health budget of Pateros went to
   basic health. Thus, it had a basic health per capita spending of P173, above the
   national average as well.

   Benguet LEAD Municipalities. LEAD LGUs from Benguet consist of 2 first income
   class municipalities, 1 second income class municipality and 1 fourth income class
   municipality whose total GF expenditures in 2002 ranged from P33 million (Buguias)
   to P88 million (La Trinidad). Out of the 4 LEAD municipalities, 3 have total GF
   expenditures below P60 million (Annex Table 1).

   Aggregate social services of the LEAD municipalities in Benguet in 2002 ranged
   between P3.5 million to P11.7 million. On the average, these municipalities allocate
   P14.3% of their total GF expenditures for social services, lower than the national
   average of 16.1%. Only the Municipality of Tuba has share of social services which is
   above the national average (Annex Table 2).




                                           23
On the average, per capita spending on social services of these municipalities was
equal to P164, higher than the national average of P147. Once more, the Municipality
of Tuba had per capita spending on social services below the national average
(Annex Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Benguet in 2002
ranged from P3.5 million to P6.8 million. On the average, these municipalities
allocate 10.3% of their total GF expenditures for the health sector, higher than the
national average of 9.8%. All of the Benguet LEAD municipalities have shares of
health sector higher than the national average except for La Trinidad which only
allocate 6% of its total GF spending for health (Annex Table 2).

On the average, per capita health spending of these municipalities was equal to P118,
higher than the national average of P90 (Annex Table 4). Only La Trinidad had per
capita health spending, at P78, below the national average. On the other hand, all of
the 4 LEAD municipalities spent health expenditures entirely on basic health services,
compared to the national average of 93%.

Pangasinan LEAD Municipalities. LEAD will work with 16 municipalities in
Pangasinan consisting of 7 third income class municipalities, 7 fourth income class
municipalities and 2 fifth income class municipalities whose total GF expenditures in
2002 ranged from P20.9 million (Santa Maria) to P76.5 million (Villasis). Out of the
16 LEAD municipalities, 14 municipalities have total GF expenditures below P45
million (Annex Table 1).

Aggregate social services of the LEAD municipalities in Pangasinan in 2002 ranged
between P2.2 million (Santa Maria) to P14.6 million (Umingan). On the average,
these municipalities allocate P16.7% of their total GF expenditures for social
services, slightly higher than the national average of 16.1%. As a matter of fact, only
6 out of the 19 municipalities have shares of social services higher than the national
average (Annex Table 2).

On the average, per capita spending on social services of Pangasinan LEAD
municipalities was almost equal to the national average of P147. However, 4 of these
municipalities have social services per capita spending higher than P230 (Annex
Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Pangasinan in
2002 ranged from P1.6 million (Santa Maria) to P4.7 million (Umingan). On the
average, these municipalities allocate 8.6% of their total GF expenditures for the
health sector, lower than the national average of 9.8%. Thus, only 3 municipalities
have shares of health sector higher than the national average.

On the average, per capita health spending of these municipalities was equal to P76,
below the national average of P90 (Annex Table 4). At the same time, only 3
municipalities have per capita health spending higher than the national average.



                                        24
On the other hand, 94.7% of total health expenditures of the LEAD municipalities in
Pangasinan is spent on basic health services, slightly higher than the national average
of 93% (Annex Table 3). There were 11 municipalities which spent their health
budget solely on basic health. However, on the average, per capita spending in basic
health of these municipalities was P72, lower than the national average of P84.
Nonetheless, there are still 3 out of these 16 LEAD municipalities which had basic
health per capita spending higher than the national average (Annex Table 4).

Sorsogon LEAD Municipalities. LEAD municipalities in Sorsogon consist of 1 first
income class municipality, 3 third income class municipalities, 6 fourth income class
municipalities and 4 fifth income class municipalities whose total GF expenditure in
2002 ranged between P16 million (Santa Magdalena) and P56.2 million (Bulan)
(Annex Table 1).

Aggregate social services of the LEAD municipalities in Sorsogon in 2002 ranged
from P2.2 million to P8.6 million. On the average, these municipalities allocate 20%
of their total GF expenditure for social services, higher than the national average of
16.1%. Also, 2 of these LGUs have shares of social services higher than 30% (Annex
Table 2).

On the average, per capita spending on social services of these municipalities was
almost equal to the national average of P147. However, 5 of these municipalities had
per capita spending on social services above the national average (Annex Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Sorsogon in
2002 ranged from P1.8 million to P5.3 million. On the average, these municipalities
allocate 12.3% of their total GF expenditures on the health sector, higher than the
national average of 9.8% (Annex Table 2). Data shows that there are 12
municipalities in this province whose health sector shares were higher than the
national average.

On the average, per capita health spending of these municipalities was equal to P92,
higher than the national average of P90 (Annex Table 4). However, there are 4
municipalities whose per capita health spending were below the national average.
One of which even had less than P60 per capita health budget.

Furthermore, almost all of the Sorsogon LEAD municipalities spent health
expenditures entirely on basic health services, at 99.83% on the average, higher than
the national average of 93% (Annex Table 3). Per capita spending in basic health of
these municipalities on the average was P92, higher than the national average of P84.
Seven municipalities even had their basic health per capita spending over P100.

Capiz LEAD Municipalities. LEAD LGUs from Capiz consist of 3 third income class
municipalities and 13 fourth income class municipalities whose total GF expenditure
in 2002 ranged between P21 million (Dumalag) and P39 million (Tapaz). Total GF



                                        25
expenditures in 11 of these municipalities are between P20 million and P30 million
while those of the remaining 5 exceed P30 million (Annex Table 1).

Aggregate social services of the LEAD municipalities in Capiz in 2002 ranged from
P2.5 million to P8.3 million. On the average, these municipalities allocate 18.41% of
their total GF expenditures for social services, higher than the national average of
16.1%. Nevertheless, 7 of these LGUs have shares of social services below the
national average (Annex Table 2).

On the average, per capita spending on social services of these municipalities was
equal to P151, higher than the national average of P147. However, 10 out of the 15
LEAD municipalities had per capita spending on social services below the national
average (Annex Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Capiz in 2002
ranged from P1.9 million (Sigma) to P4.7 million (Tapaz). On the average, these
municipalities allocate 10.9% of their total GF expenditures for the health sector,
higher than the national average of 9.8%. However, the share of the health sector in 5
out of the 16 LEAD municipalities in Capiz was below the national average (Annex
Table 2).

On the average, per capita health spending of these municipalities was equal to P89,
lower than the national average of P90 (Annex Table 4). However, 6 out of the 16
LEAD municipalities had per capita health spending below the national average.

On the other hand, 92.8% of total health expenditures of the LEAD municipalities in
Capiz is spent on basic health services, almost equal to the national average of 93%.
In fact, 10 out of the 16 LEAD municipalities spent their health budget solely on
basic health. Yet, per capita spending in basic health of these municipalities on the
average was P83, lower than the national average of P84. Nonetheless, 7 out of these
15 municipalities had basic health per capita spending higher than the national
average (Annex Table 3).

Iloilo LEAD Municipalities. LEAD municipalities in Iloilo consist of 1 third income
class municipality, 1 fifth income class municipality and 7 fourth income class
municipalities whose total GF expenditure in 2002 ranged between P21.5 million
(San Dionisio) and P40 million (Carles). Total GF expenditures in 7 of these
municipalities lies between P17 million and P30 million while those of the remaining
2 exceed P30 million (Annex Table 1).

Aggregate social services of the LEAD municipalities in Iloilo in 2002 ranged from
P2 million to P8 million. On the average, these municipalities allocate 14.1% of their
total GF expenditure for social services, 2 percentage points lower than the national
average. There are only 2 out of the 9 LEAD LGUs whose social services shares are
higher the national average (Annex Table 2).




                                       26
On the average, per capita spending on social services of these municipalities was
equal to P106, lower than the national average of P143. In fact, all of the 7 LEAD
municipalities in the province had per capita spending on social services below the
national average (Annex Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Iloilo in 2002
ranged from P1.4 million (Lemery) to P3.5 million (Sara). On the average, these
municipalities allocate 8.7% of their total GF expenditures on the health sector, lower
than the national average of 9.8% (Annex Table 2). Nonetheless, the share of the
health sector in 3 out of the 9 LEAD municipalities in the province is higher than the
national average.

On the average, per capita health spending of these municipalities was equal to P66,
compared to the national average of P85 (Annex Table 4). In fact, all of the 9 LEAD
municipalities per capita health spending are below the national average. On the other
hand, all of the 9 LEAD municipalities spent health expenditures entirely on basic
health services, compared to the national average of 93% (Annex Table 3).

Davao del Norte LEAD Municipalities. LEAD municipalities in Davao del Norte
consist of 2 municipalities each belonging to the first, second and fourth income
classes and 1 municipality belonging to the third income class. Their total GF
expenditure in 2002 ranged between P21 million (Dujali) and P82 million
(Kapalong). Total GF expenditures in 4 of these municipalities cluster around P40-
P55 million while 2 municipalities are very close to P80 million and 1 municipality
with only P21 million (Annex Table 1).

Aggregate social services of the LEAD municipalities in Davao del Norte in 2002
ranged from P2 million to P15 million. On the average, these municipalities allocate
12.8% of their total GF expenditure for social services, lower than the national
average of 16.1% (Annex Table 2). However, there is one municipality, i.e.,
Kapalong, with share of social services higher the national average.

On the average, per capita spending on social services of these municipalities was
equal to P133, lower than the national average of P147. Nonetheless, there are 2 out
of the 7 LEAD municipalities which had per capita spending on social services above
the national average (Annex Table 4).

Meanwhile, total health expenditures of the LEAD municipalities in Davao del Norte
in 2002 ranged from P1.5 million to P8.4 million. On the average, these
municipalities allocate 7.7% of their total GF expenditures on the health sector, lower
than the national average of 9.8% (Annex Table 2). Nonetheless, the share of the
health sector in 2 out of the 9 LEAD municipalities in the province is higher the
national average.




                                        27
On the average, per capita health spending of these municipalities was equal to P80,
compared to the national average of P90 (Annex Table 4). However, 3 out of these 7
LEAD municipalities had per capita health spending above the national average

On the other hand, only 86% of total health expenditures of these LEAD
municipalities are spent on basic health services, compared to the national average of
93% (Annex Table 3). At the same time, per capita spending in basic health of these
municipalities on the average was P68, lower than the national average of P84. In
fact, only 1 of these municipalities had basic health per capita spending higher than
the national average (Annex Table 4).

Maguindanao LEAD Municipalities. LEAD will work with 20 municipalities in
Maguindanao, whose total GF expenditure in 2001 ranged between P12.8 million
(Mamasapano) and P65 million (Sultan Kudarat). Total GF expenditures in 14 of
these municipalities cluster around 10-35 million while the rest lie between P35-P65
million (Annex Table 1).

There are only 5 LEAD municipalities in Maguindanao which allocated budget for
aggregate social services 2001. Thus, on the average, municipalities in this province
allocate only 2.1% of their total GF expenditure for social services, 14 percentage
points lower than the national average. However, there is one municipality, Sultan
Kudarat, with share of social services higher the national average by 2 percentage
points (Annex Table 2).

On the average, per capita spending on social services of these municipalities was
equal to P14, much lower than the national average of P147. At the same time, only
Sultan Kudarat had a per capita spending in social services higher than the national
average. (Annex Table 4).

Accordingly, 17 out of 20 LEAD municipalities in Maguindanao did not allocate any
single centavo for the health sector in 2001. Of the 3 municipalities that did, one
allocated P390 thousand (Sultan sa Barongis), another one had P26 thousand (Upi),
and the remaining one allotted P25 thousand (Gen. S. K. Pendatun). On the average,
these municipalities allocate merely 0.1% of their total GF expenditures on the health
sector (Annex Table 2).

On the average, per capita health spending of these municipalities was equal to P1,
way below the national average of P90 (Annex Table 4). On the other hand, 100% of
total health expenditures of these LEAD municipalities are spent on basic health
services , higher than the national average of 93% (Annex Table 3).

Tawi-Tawi LEAD Municipalities. LEAD will work with 10 municipalities in Tawi-
Tawi, whose total GF expenditure in 2001 ranged between P12 million (Sapa-Sapa)
and P31 million (Bongao). Total GF expenditures in 5 of these municipalities are
lower than P20 million while those of 4 municipalities lie between P20-P31 million
(Annex Table 1).



                                       28
There are only 5 LEAD municipalities in Tawi-Tawi which allocated budget for
aggregate social services 2001. Thus, on the average, municipalities in this province
allocate merely 3.1% of their total GF expenditure for social services, 13 percentage
points lower than the national average. However, there is one municipality, the Turtle
Islands, with share of social services higher the national average by 4 percentage
points (Annex Table 2).

On the average, per capita spending on social services of these municipalities was
equal to P18, a lot lower than the national average of P147. At the same time, only
Turtle Islands had a per capita spending in social services higher than the national
average. In fact it had allotted P662 per population for the delivery of social services
(Annex Table 4).

Accordingly, seven of the LEAD municipalities in Tawi-tawi did not allocate a single
centavo for the health sector in 2001. Of the 3 municipalities that did, one allocated
P50 thousand (Balimbing), another one had P195 thousand (South Ubian), and the
remaining one allotted P2.5 million (Turtle Islands). On the average, these
municipalities allocated 1.4% of their total GF expenditures on the health sector,
lower than the national average of 9.8% (Annex Table 2).

On the average, per capita health spending of these municipalities was equal to P8,
compared to the national average of P90 (Annex Table 4). While Turtle Islands had
per capita health spending of P625, South Ubian had P7 and Bongao had only P2. On
the other hand, 100% of total health expenditures of these LEAD municipalities are
spent on basic health services , higher than the national average of 93% (Annex
Table 3).

LEAD Cities. LEAD cities consist of 15 cities belonging to the first income class, 1
city each belonging to the second, fourth and fifth income classes and 2 cities
belonging in the third income class. The first income class cities consist of eight cities
in Metro Manila (Makati, Mandaluyong, Marikina, Paranaque, Pasig, Valenzuela,
Quezon and Pasay); 1 city each in CAR (Baguio), Central Luzon (Angeles), Western
Visayas (Iloilo), Central Visayas (Cebu), Western Mindanao (Zamboanga); and 2
cities in Southern Mindanao (Davao and General Santos). The second income class
city is in Western Visayas (Roxas) while the fourth and fifth income class cities are in
Southern Mindanao (Panabo belonging in fourth income class and Samal in fifth
income class). One city each in Ilocos Region (Urdaneta) and in Southern Mindanao
(Tagum) belong in the third income class. Total GF expenditures of these cities in
2002 ranged between P163 million (Panabo City) and P4.7 billion (Makati City)
[Annex Table 1].

Aggregate social services of the LEAD cities in 2002 ranged from P9 million
(Panabo) to P1.2 billion (Quezon City). On the average, all cities allocated 18.9% of
their total GF expenditure to social services (Annex Table 2). There are 10 LEAD
cities whose shares of social services were above the national average. In fact, 5



                                         29
LEAD cities belonging in first income class and 1 city in second income class even
allotted more than 30% of their total GF budget for social services. Consequently, the
remaining half of the LEAD cities allotted part of their total GF expenditures below
the national average.

On the average, per capita spending on social services of all cities was equal to P348
(Annex Table 4). While a fifth income class city, Samal City, and a second income
class city, Roxas City, had social services per capita spending higher than the national
average, there were 6 LEAD cities belonging in the first income class which had per
capita spending below it. Another two cities belonging in the third income class and 1
city in the fourth income class had social services per capita spending below the
national average as well.

Meanwhile, total health expenditures of the LEAD cities in 2002 ranged from P7.4
million (Panabo) to P272 billion (Makati). On the average, all cities allocated 7.3%
of their total GF expenditures on health sector (Annex Table 2). There are 7 cities
whose shares of health sector to total GF budget were below the national average. In
particular, 5 of these cities belong in the first income class (Makati, Marikina,
Quezon, Zamboanga and Davao) and 1 city each from the third and fourth income
classes (Urdaneta and Panabo, respectively). Furthermore, these cities, with the
exception of Makati City, had per capita health spending below the national average
of P134 (Annex Table 4).

There are 7 out of the 20 LEAD cities that spent their health budget entirely on basic
health services, compared to only 68.9% national average (Annex Table 3). These
are the cities of Marikina, Baguio, Zamboanga, Roxas, Urdaneta, Tagum and Panabo.
On the other hand, 8 LEAD cities allotted part of their health budget for basic health
below the national average. All of these cities belong in the first income class.

On the average, cities had basic health per capita spending of P92 (Annex Table 4).
On the one hand, 3 LEAD cities belonging in the first income class and 1 each
belonging in third and fourth income classes had basic health per capita spending
below the national average. On the other hand, Samal, a fifth income class city, had
more than twice as much as the national average. The other 4 cities which had more
than twice the national average belong in the first income and second income classes.

While on the average cities allocated a quarter of their health budget for hospitals, 7
first income class LEAD cities allotted more than this (Annex Table 3). In fact, 4 of
these cities even spent more than half of their health budgets for hospitals (Makati,
Mandaluyong, Pasay and Cebu). On the other hand, there were 8 cities, 3 of which
belong in the first income class, which did not allocate even a single cent for
hospitals.




                                        30
3.2.   Revenue Profile of LEAD LGUs

Metro Manila LEAD Municipalities. Total GF income of Navotas in 2002 amounted to
P231 million, much higher than the total income of Pateros which was only P61 million
(Annex Table 5). However, on a per capita basis, the two LEAD municipalities had
almost the same revenue. In fact, Pateros’ per capita revenue was higher by P50 than
Navotas.

On the average, IRA accounts for 53% of the income of LEAD municipalities in Metro
Manila, lower than the national average of 82% (Annex Table 6). With these two
municipalities, dependence on IRA is not as high compared to other municipalities in the
country. In fact, own-source revenue of Navotas accounts for almost half of its income
while Pateros’ own-source revenue is almost 40% of its total revenue, both higher than
the national average of 18%.

Non-tax revenue accounts for less than twenty percent of the own-source revenue of
Navotas. Its most important source of own-source revenue is the collection of local taxes.
In fact, real property taxes account for 39% of its own-source revenue. Likewise, local
business tax and licenses are equally important contributing another 39% (Annex Table
7).

In the case of Pateros, local business tax accounts for 28% of its own-source revenue,
followed by income from economic enterprise and user charges which contribute 21%.
Real property tax is also important having a share in the own-source revenue of 20%.

Benguet LEAD Municipalities. Total GF income of Benguet LEAD LGUs in 2002 ranged
between P32 million (Buguias) and P86 million (La Trinidad) (Annex Table 5). On the
average, per capita revenue of these municipalities is P1,151, higher than the national
average of P1,039. Only Buguias had per capita revenue lower than the national average.

On the average, IRA accounts for 71% of the total revenues of these municipalities, lower
than the national average of 82% (Annex Table 6). Among these municipalities, Buguias
is highly dependent on the IRA (with an IRA share of 92.5%) while La Trinidad is the
least dependent on the IRA (with an IRA share of 49%).

Own-source revenue accounts for 28% of the total LGU income of the LEAD
municipalities in Benguet, higher than the national average of 18%. However, 3 out of
these 4 municipalities have own-source revenue shares below the national average. While
business tax and licenses are the important source of own-source revenue of Buguias and
La Trinidad (with shares of 35% and 39%, respectively) and real property tax for Itogon
(with share of 39%), fees had the biggest share in the own-source revenue of Tuba (with
share of 21%) (Annex Table 7).

Pangasinan LEAD Municipalities. Total GF income of the LEAD LGUs in Pangasinan in
2002 ranged between P23 million (Laoac) and P50 million (Umingan) (Annex Table 5).



                                           31
On the average, per capita LGU income of these municipalities is P887, lower than the
national average of P1,039. Only 3 municipalities had per capita revenue greater than the
national average.

On the average, the IRA accounts for 80% of the total GF income of Pangasinan LEAD
municipalities, lower than the national average of 82% (Annex Table 6). Of these
municipalities, Natividad is highly dependent in the IRA (with an IRA share of 93%)
while Tayug is the least dependent (with an IRA share of 72%).

Own source revenue accounts for 20% of total LGU income of these municipalities,
higher than the national average of 18%. Local business tax and licenses are the most
important source of own-source revenues for these municipalities (contributing 30% of
their total own-source revenue), followed by income from business/ user charges (Annex
Table 7). There are 9 municipalities whose major source of own-source revenue are user
charges and rentals, 6 municipalities whose major source are business tax and licenses
and the remaining 2 municipalities whose major source are fees. On the average, real
property taxes only contribute 11% of the own-source revenue of these municipalities.

Sorsogon LEAD Municipalities. Total GF income of the LEAD LGUs in Sorsogon in
2002 ranged between P17 million (Bulusan) and P63 million (Bulan) (Annex Table 5).
Total GF revenues in 11 of these municipalities cluster around P15-P40 million while
those of the remaining 3 exceed P40 million. On the average, per capita LGU income of
these municipalities is P845, lower than the national average of P1,039. Only 3
municipalities had per capita revenue greater than the national average.

On the average, the IRA accounts for 90% of the total GF income of Sorsogon LEAD
municipalities, higher than the national average of 82% (Annex Table 6). Of these
municipalities, Bulusan is highly dependent in the IRA, with an IRA share of 96%. In
addition, there are 8 LEAD municipalities in this province with IRA accounting for more
than 90% of their incomes. On the other hand, Barcelona is the least dependent in the
IRA, with an IRA share equal to the national average.

Own-source revenue accounts for only 10% of total GF revenues of these municipalities,
lower than the national average of 18%. Non-tax revenues contribute more than 65% of
the own-source revenues of these LGUs (Annex Table 7). Thus, business income and
user charges are the most important source of their own-source revenues (with share of
25%), followed by fees (with 20% share). In fact, there are 9 municipalities whose major
source of own-source revenue are business income and user charges. Local business taxes
contribute 17% of the own-source revenue while real property taxes only contribute 8%.

Capiz LEAD Municipalities. Total GF income of the LEAD LGUs in Capiz in 2002
ranged between P25 million (Cuartero) and P49 million (Tapaz). Total GF revenues in
11 of these municipalities cluster around P20-P35 million while those of the remaining 4
exceed P35 million (Annex Table 5). On the average, per capita LGU income of these
municipalities is P922, lower than the national average of P1,039. Yet, there are 5
municipalities who had per capita revenue higher than the national average.



                                           32
On the average, the IRA accounts for 93% of the income of LEAD municipalities in
Capiz in 2002, higher than the national average of 82% (Annex Table 6). Of these
municipalities, Pontevedra is the least dependent on the IRA (with an IRA share of 88%)
while Jamindan is the most dependent on the IRA (with IRA shares of 97%). In fact, 14
Capiz municipalities had IRA shares of more than 90%

Own-source revenue accounts for 7% of total LGU income of LEAD municipalities in
Capiz, lower than the national average of 18%. User charges and business rentals are the
most important source of own-source revenues for these municipalities (accounting for
29% of their total own source revenue), followed by fees (16%) [Annex Table 7]. While
on the average, real property tax accounts for only 14% of the total own-source revenues
of these LGUs, there are 2 municipalities (i.e., Panay and Pilar) whose most important
source of own-source revenue are real property taxes.

Iloilo LEAD Municipalities. Total GF income of the LEAD LGUs in Iloilo in 2002
ranged between P19 million (Batad) and P40 million (Sara). Total GF revenues in 5 of
these municipalities cluster around P25-P35 million (Annex Table 5). On the average,
per capita LGU income of these municipalities is P877, lower than the national average
of P1,039. Only the Municipality of Batad had per capita revenue higher than the national
average.

On the average, the IRA accounts for 89% of the income of LEAD municipalities in
Iloilo in 2002, higher than the national average of 82% (Annex Table 6). Of these
municipalities, Estancia is the least dependent on the IRA (with an IRA share of 77%)
while Batad is the most dependent on the IRA (with an IRA share of 96%).

On the other hand, own-source revenue accounts for 11% of total LGU income in these
municipalities, lower than the national average of 18%. Business income/ user charges
are the most important source of own-source revenues for these municipalities (with an
own-source revenue share of 28%), followed by the local business tax (19%) and the real
property tax (12%) [Annex Table 7]. There are 4 in these LEAD LGUs whose shares of
business income and user charges to total own-source revenue are more than a quarter.

Davao del Norte LEAD Municipalities. Total GF income of the LEAD LGUs in Davao
del Norte in 2002 ranged between P21 million (Dujali) and P86 million (Kapalong).
Total GF income in 4 of these municipalities cluster around P40-P55 million (Annex
Table 5). On the average, per capita LGU income of these municipalities is P1,010,
lower than the national average of P1,039. However, there are 3 municipalities whose per
capita revenues are higher than the national average.
.
On the average, the IRA accounts for 86% of the income of LEAD municipalities in
Davao del Norte in 2002, higher than the national average of 82% (Annex Table 6). Of
these municipalities, Santo Tomas is the least dependent on the IRA (with an IRA share
of 76%) while Talaingod is the most dependent on the IRA (with an IRA share of 98%).
In addition, 6 of these LGUs had IRA shares higher than the national average.



                                           33
On the other hand, own-source revenue accounts for 14% of total LGU income in these
municipalities (lower than the national average of 18%). The local business tax is the
most important source of own-source revenues for these municipalities (with an own-
source revenue share of 29%), followed by business rental and user charges (17%) and
fees (16%) [Annex Table 7].

Maguindanao LEAD Municipalities. Total GF income of the LEAD LGUs in
Maguindanao in 2001 ranged between P12 million (Talitay) and P78 million (Parang).
Total GF revenues in 11 of these municipalities cluster around P10-P30 million while
those of the remaining 8 exceed P30 million (Annex Table 5). On the average, per capita
LGU income of these municipalities is P712, lower than the 2001 national average of
P893. There are only 5 municipalities who had per capita revenue higher than the
national average.

On the average, the IRA accounts for 88% of the income of LEAD municipalities in
Maguindanao, higher than the national average of 82% (Annex Table 6). Of these
municipalities, Datu Paglas is the least dependent on the IRA (with an IRA share of 45%)
while Matanog is the most dependent on the IRA (with IRA share of 99.93%). In fact, 11
Maguindanao municipalities had IRA shares of more than 95%. Also, out of these
municipalities, it was only Parang that had borrowings which amounted to P29 million
(this contributed the 38% of its income). The municipality of Pagalungan, on the other
hand, received grants and aids which amounted to P4.2 million (this accounts for 7% of
its income).

Own-source revenue accounts for 6% of total LGU income of LEAD municipalities in
Maguindanao, lower than the national average of 18%. Real property taxes are the
biggest source of own-source revenues for these municipalities (accounting for 52% of
their total own source revenue), followed by business rentals and user charges (14%) and
local business taxes (10%) [Annex Table 7]. Moreoever, there are 4 municipalities (i.e.,
Barira, Datu Paglas, Matanog and Talitay) which have not collected any business tax in
their locality.

Tawi-Tawi LEAD Municipalities. Total GF income of the LEAD LGUs in Tawi-Tawi in
2002 ranged between P11 million (Turtle Islands) and P61 million (Sitangkai). Total GF
revenues in 5 of these municipalities cluster around P20-P40 million (Annex Table 5).
On the average, per capita LGU income of these municipalities is P959, lower than the
national average of P1,039. However, there are 4 municipalities who had per capita
revenue higher than the national average.

On the average, the IRA accounts for 96% of the income of LEAD municipalities in
Tawi-Tawi in 2002, higher than the national average of 82% (Annex Table 6). Of these
municipalities, Bongao is the least dependent on the IRA (with an IRA share of 90%)
while Balimbing and Tandubas are the most dependent on the IRA (with IRA shares of
99.8%).




                                          34
On the other hand, own-source revenue accounts for 3% of total LGU income in these
municipalities, lower than the national average of 18%. The local business tax is the
most important source of own-source revenues for these municipalities (with an own-
source revenue share of 17%), followed by business rental and user charges (15%)
[Annex Table 7]. Real property taxes only accounts for 5% of the own –source revenues
of these municipalities. As a matter of fact, 2 municipalities, Sapa-Sapa and South Ubian,
did not collect any real property tax in 2002.

LEAD Cities. Total GF income of the LEAD Cities in 2002 ranged between P206 million
(Samal City) and P5.3 billion (Quezon City) [Annex Table 5]. On the average, per
capita revenue of cities was P2,133. Of these LEAD cities, 12 had per capita revenue
lower than the national average. Among these 12 cities, 2 are in Metro Manila (Marikina
and Valenzuela) while the rest are in the other regions. Samal City, though belonging in
the fifth income class, had per capita revenue of P2,417, higher than the national average.
.
On the average, the IRA accounts for 53% of the total GF revenues of cities in 2002
(Annex Table 6). Of these 20 LEAD cities, Makati City is the least dependent on the
IRA (with an IRA share less than 10%) while Samal is the most dependent on the IRA
(with an IRA share of 92%). Moreover, all Metro Manila LEAD cities have IRA shares
less than the national average. In fact, 4 of the Metro Manila cities have IRA shares
ranging from 25%-35% while 2 Metro Manila cities have IRA shares below 20%. Other
cities which had IRA shares below the national average are Baguio (39%), Cebu (39%)
and Iloilo(52%).

On the other hand, own-source revenue accounts for 47% of total LGU income of cities.
Tax collection, with a share of 79%, contributed the big bulk of own-source revenue of
cites. In particular, local business tax contributed 44% of own-source revenue while real
property tax contributed 24% [Annex Table7]. Almost all of the LEAD cities have local
business tax as their most important source of own-source revenue except for Urdaneta
City, where fees (35%) and business rentals and user charges (30%) were the biggest
contributor, and for Samal City, where the most important source of own-source revenue
are business income and user charges (with a share of 31%).




                                            35
4.     POLICY AND ACTION FRAMEWORK FOR INCREASED LGU
       SPENDING ON HEALTH

If improvements in overall human development outcomes (and health outcomes in
particular) are to be attained, it is essential that resources are located, allocated and used.
In this sense, resource generation, mobilization and utilization is one of the key
challenges in local development.

Undeniably, the efficient revenue generation/ mobilization and allocation at the local
level is stymied by poor incentives arising from structural problems in the way central-
local relations have been defined (e.g., mis-match in revenue and expenditure assignment
across levels of government, short term of office of local elected officials). Nonetheless,
experience almost everywhere in the world suggests that even when incentives facing
local governments are wrong there is some scope for local initiative and some LGUs do
better than others even under the most perverse situations (Bird and Smart 2001). Thus,
numerous examples of LGU “good practices” are available all over the country. This
study draws extensively from this list in putting forward the menu of policy actions that
is aimed at promoting the increasing LGUs resources for health and family planning
services.

The list of proposed policy actions for increased LGU budgetary support for health and
family planning services includes measures that have the potential for (1) increasing LGU
own-source revenue in general, (2) expanding cost recovery schemes for health and FP
services and retaining income thus generated in the health sector, (3) increasing the
budget allocation of the health sector, and (4) increasing health allocation through
leveraging mechanisms including performance based incentive schemes. This menu of
options is presented in some detail in Table 16.

4.1.   Traditional Sources of LGU Revenue: Resource Generation

The power of LGUs to raise revenues is inherent in their being a political subdivision of
the government and in their corporate character. As such, they are charged not only with
governmental functions, such as those related to taxation, regulation and service delivery,
but also with proprietary functions, i.e., to enter into contracts, to own and manage
economic enterprise, and the like.

The literature on fiscal federalism suggests that the mis-match between revenue and
expenditure assignment may engender poor incentives for local revenue effort (something
that appears to be supported by quantitative analysis in earlier studies). On the one hand,
some LGUs have no incentive to utilize their revenue raising authorities fully precisely
because more resources have been transferred to them relative to their needs. On the
other hand, other LGUs likewise tend not to maximize the use of their revenue powers
because they can always point to the central government as the culprit for not allowing
finance to follow function. At the same time, this situation also tends to weaken local
accountability as local communities tend not to complain about the inadequacy of local
services because they do not pay much in terms of local taxes anyway.



                                              36
                Table 16. Policy and Action Framework for Improving LGU Finance


1.         Local taxes
       •   Update Local Tax Code
       •   Computerization
       •   Improve tax payer services – make it easier for taxpayers to pay, comfortable tax offices
       •   Recognition of top taxpayers

5.1.       Real property tax
       •   Conduct general revision of assessment
       •   Reduce forms/ redesign forms to reduce cost
       •   Computerization of records
       •   Linking up with Register of Deeds
       •   Strengthen enforcement (auctions, publication of delinquent properties)
       •   Engage with stakeholders (e.g., barangay officials) to help in registration and collection

5.2.       Local business tax
       •   Tax mapping – operation suyod, GIS-aided approach
       •   Use of presumptive income levels
       •   Use of information from other agencies
       •   One-stop shops, flow chart of how to pay taxes

6.         Economic enterprise management
       •   Application of suitable rate setting model/s
       •   Income retention to provide incentives to improve collection efficiency

7.         Promotion of cost recovery in health and FP services
       •   application of suitable rate setting model/s
       •   increasing of fees and crafting of local ordinance
       •   installation of appropriate institutional arrangements for income retention within the health sector,
           (e.g., Sanggunian ordinance to effect this and/ or the establishment of a trust fund for this purpose
           and/ or designating RHU/ hospital as economic enterprise)
       •   addressing equity concerns in the event that fees for health and FP services provided by LGUs are
           increased
       •   experience with community based health insurance schemes

8.         Non-traditional sources of financing
       •   access to non-traditional sources of financing like bank credit, issuance of bonds, BOT, joint
           venture

9.         Public expenditure management
       •   Government reorganization
       •   Retrenchment
       •   Performance based budgeting
       •   Re-inventing Local Health Boards (ala Re-inventing Local School Board) – to encourage
           constituency for health with once a year reporting of performance to stakeholders, commit ideas to
           budget

This tendency may explain the widespread perception that many LGUs have not fully
utilized their revenue raising powers because of resistance on the part of either the local
chief executive or the local Sanggunian (or both) to increase local tax rates for fear of a


                                                       37
backlash from their constituents during elections. Related to this, only a few LGUs have
revised their local tax codes since 1992 despite the fact that the rate of some local taxes is
not indexed to inflation. Very often efforts to update/ amend local tax ordinances have
been thwarted by the Sanggunian. For instance, the City Treasurer of Iligan City
submitted a draft amendment of its Revenue Code (that seeks to increase the local
business tax rate and to levy previously untapped taxes and fees) to its Sanggunian in
2002. As of April 2004, the proposal is yet to be approved.

Moreover, many provinces and cities undertook a general revision of the schedule of
market values of real property only once since 1991, thus, resulting in declining
collections in real terms.27 Oftentimes, the Sanggunian refuses to provide the budget
support that is needed for the conduct of the general revision of assessment (GRA).
Moreover, the Sanggunian-approved schedule of real property values is generally
reported to be lower than the BIR zonal value (which is used as the basis of the centrally-
imposed capital gains tax). Celestino et al. (1998) noted that this practice tend to give
rise to petty graft as the low schedule of values is sometimes taken advantage of by some
local assessment personnel who pretend to assist taxpayers in obtaining “lower”
assessments for their property for a fee.

At the same time, very few LGUs have imposed the idle land tax.28 Also, no LGU have
so far imposed a benefit levy that they could, in principle, charge to recover the cost of
infrastructure investments directly from beneficiaries.

To make matters worse,            Table 17. Collection Rate of Current Year for Basic RPT,
tax administration is weak                                 1983-1999
in many LGUs.          Thus,                         All LGUs      Provinces        Cities
many LGUs are not able to
                                     1989               58.0          55.6           61.0
maximize the revenue                 1991               58.9          54.1           65.1
potential of the taxes that          1994               60.7          54.0           66.3
they do impose. Table 17             1997               57.4          50.0           62.0
vividly illustrates this             1999               54.1          52.4           54.9
point. It shows that the             2000               54.6          44.7           57.1
collection efficiency of
provinces and cities with           Average
respect to the RPT has              1989-1991           58.2          54.4           63.1
declined somewhat from              1992-2000           55.4          49.0           59.7
58% in the pre-Code
period to 55% in the post-Code period. While the collection efficiency of cities with
respect to the RPT is consistently higher than that of provinces, a deterioration in the
collection efficiency is evident at both levels of local government.

In general, local tax administration is weighed down by: (1) complex tax structure and
administration procedures, (2) poor tax registration systems and procedures which results

27
   The Code mandates that LGUs to conduct a general revision of market values once every three years
with the first one taking effect in 1993.
28
   In contrast, the provinces of Cavite, Negros Oriental impose a tax on idle lands.


                                                38
in delinquent payments and accumulation of arrears, (3) infrequent exercise of LGU audit
and enforcement authority erodes the credibility of the system and results in low
compliance; (4) limited availability of taxpayer services which increases taxpayer
compliance costs, and (5) low professional qualification of staff (Taliercio 2003).

One, the ability of cities and municipalities to administer the taxes that are under their
authority is hampered by the tax structure specified under the Local Government Code as
this increases both administrative and compliance costs. For instance, the Code specifies
a highly complex structure for the local business tax, one that prescribes a different
graduated rate schedule for each of a large number of different types of activities, sectors,
and/ or transactions.

Also, many LGUs balk at revising their schedule of assessments because of the high costs
that is associated with this exercise. The existing rules and regulations governing the
conduct of the GRA necessitate the revision of numerous assessment forms and tax
records (some of which are redundant). This makes the process “form-and-labor”
intensive, and therefore, very expensive such that in some places the cost of
administering the RPT is even greater than the revenues that are generated (Celestino et
al 1998). The province of Nueva Vizcaya, however, has shown that the number of forms
could be reduced from 7 to 4 without sacrificing the integrity of records management
(Box 1). Celestino et al. (1998) also point out that there is an increasing pressure for
automation because the existing rule requiring Assessment Offices to maintain all
assessment records since the initial assessment of the real property. In this regard, the
experience of some LGUs (notably, Mandaluyong, Iligan, Marikina, and Caloocan)
suggests that an alternative way of lowering the cost of the GRA is by computerizing
RPT assessment and collection records (Box 2).

Two, tax registration systems and procedures in many LGUs are inadequate. Taliercio
(2003) attribute this to lack of regular maintenance/ validation of RPT and business
registries, lack of computerized registries, and low quality record keeping. One
manifestation of this problem is the considerable fluctuation in the number of registered
business establishments from year to year. Tax mapping both of business establishments
and real properties, done with the help of the GIS (e.g., Cabanatuan and Naga as
described in Box 3; Iligan as described in Box 4) or manually (e.g., San Fernando,
Pampanga as described in Box 5), is found to have greatly improved local revenue
performance in this regard.




                                             39
Box 1. What can be done to improve RPT collection effort even under difficult conditions: Nueva
Viscaya

 The experience of Nueva Vizcaya highlights how seemingly simple yet effective strategies can go a long way in
 improving RPT performance. Eighty percent of the province is mountainous and many of its barangays are not
 only poor economically but also difficult to reach. Prior to reform, the cost of administering the RPT is even
 greater than the revenues it generates. It costs P1.39 to collect every P1 of revenue. There is a high incidence
 of tax delinquency and tax resistance especially amongst occupants of Integrated Social Forestry (ISF) and
 Community-Based Forest Management (CBFM) areas. Moreover, valuation of real property for tax purposes is
 unduly low.

 With assistance from the Governance and Local Democracy (GOLD) Project, the province adopted a number of
 processes and strategies to address their problems with the RPT.
   • Engage with the stakeholders/ beneficiaries of the RPT system (like barangay officials, heads of the
       Integrated Social Forestry and Community-Based Social Management areas, and members of the Local
       School Board) to get them involved in tax administration in terms of identification of occupants,
       assistance in the distribution of assessment notices, assistance in field collection, and raising tax
       consciousness amongst students and parents
   • adoption of “door-to-door” service for taxpayers in remote barangays whereby property assessments
       from the filing of the tax declaration, appraisal and collection is done in the field on the spot by roving
       assessment teams composed of the
   • delegation to Municipal Assessors the authority of the Provincial Assessor to approve/ sign transactions
   • greater coordination between the assessor and the treasurer in the collection of the RPT
   • redesign of assessment forms and tax records to eliminate redundancies and reduce the cost of general
       revision of schedule of market values
   • updating of the schedule of fair market values to reflect increase in prices
   • computerization of RPT records

 As a result of these interventions,
  • number of forms used was reduced from 7 to 4
  • structure of office was improved and manpower requirement was cut from 28 to 18
  • tax delinquency is reduced as occupants/ beneficiaries of ISF/ CBFM programs began paying their RPT
        dues
  • RPT collection efficiency went up from 42% to 54%
  • cost of administering the RPT was cut such that it now only takes P0.87 to collect every P1 of revenue




                                                       40
Box 2. Real Property Tax Computerization and Administration Technology: Muntinlupa’s
Replication Efforts

The thrust of the Muntinlupa City’s RPTA is twofold: to harness the power of technology for better service
delivery and to provide technical assistance to other local government units who intend to do the same.
The city government has already computerized its real property tax base successfully. Assessment tools
like tax maps and cadastral surveys have been used to develop a masterlist of all real properties within the
locality. It contains a description and location of each property, the market and taxable value, the amount
of taxes that were paid and the list of delinquent payers. Monthly tax reports were generated and collection
bills are sent promptly to concerned citizens.

The system which covers both the RPTA operations of the City Assessor’s Office and the Property Billing
and Collection of the City Treasurer’s Office is recommended by the BLGF as a model system worth
replicating by other local units. It is not only cheap but it also works.

Transaction time has been reduced dramatically from 30-45 minutes to barely 3-10 minutes, done in a
friendly and personalized manner thus, establishing good linkage with taxpayers. A computer is always
available with an easy manual to follow for instructions. Likewise, a flyleaf is provided by the Assessor’s
Office outlining the correct sequence to transactions to complete payments.

As a result, collection for 1999 grew by 15% despite the absence of a revaluation in values or increase in
tax rates. The city’s RPT base grew from P2.6 billion in 1988 to P19.5 billion in 2000.

As of 2000, the system has been replicated in 21 municipalities since 1997. To systematize the replication
process, the office instituted the following steps: (1) memorandum of agreement is drawn between the two
LGUs; (2) Muntinlupa City provides the training and the software is provided for free while the host LGU
provides the hardware; and (3) an on-site evaluation is done aside from follow-up visits and consultations
provided by Muntinlupa. Installation typically takes up to 6 month.
___________________
Source: Innovations and Excellence in Local Governance: Galing Pook Awards 2000



Box 3. Use of GIS in Mapping of Real Property

Naga City developed a pilot geographic information system (GIS) at the request of Mayor Roco Suplicio
and with the assistance of USAID’s GOLD project. The project started out on a pilot basis with surveys of
several central city blocks. The pilot data set was used to develop a DOS-based Fox Pro system called the
Building Information Database System, in which each building is assigned a unique property index number
so that all city information about that building—including whether the building has a permit—can be easily
accessed.

Cabanatuan city’s GIS system, based on aerial photography maps, doubled the number of registered
properties and thus improved revenues significantly. The city has also assigned each building a unique
number and undertaken a door to door campaign to register taxpayers under the leadership of Mayor Jay
Vergara.

Source: Taliercio 2003.




                                                    41
                                           Box 4. Revenue Enhancement of Measures in Iligan

To cope with the loss of its biggest taxpayer and the general weakening of the industrial tax base, Iligan City installed a number of
revenue enhancement measures.
Systematization of tax records. The local government began to systematize its tax records. This objective was greatly aided by the
Philippine Regional Municipal Development Project (PRMDP), a project funded by the Asian Development Bank and the Australian
Assistance for International Development (AusAID). Through the PRMDP, Iligan City government developed the Tax Revenue
Assessment and Collection System (TRACS). It is a system which computerizes and integrates the tax records for the local
government. Iligan’s TRACS was made the pilot system for other cities under the PRMDP.
The orientation for TRACS involved three modules: Real property assessment, collection, and business permit modules. Computerized tax
registration started in 2001. The TRACS summarizes a taxpayer’s records covering real property, business, and permits, including building permits,
clearance from the fire department, sanitation compliance, and even community tax certificate (CTC). For instance, a City Hall officer could easily
verify from a computer if an individual applying for a business permit have already obtained a CTC (unless the individual got the CTC from a
barangay unit which are not yet linked to the system). If not, the person would be asked to get a CTC first before being issued a business permit.
The TRACS also consists of assessment calculations and issuance of billing receipts.

Intensification of tax mapping. The City government conducts business mapping in most areas of the city. The objectives of this is to identify new
businesses that have been put up, know whether there has been a conversion or use of a residential area for business purposes, verify and update (if
necessary) the true value of existing businesses, and validate the line of businesses as registered. The Treasurer’s Office coordinates with the
Planning Office by linking to the geographic information system (GIS) in order to identify new business and commercial areas more easily. One
remarkable result of this was the registration of more small establishments. In 2001, the number of sari-sari stores, general merchandise, and dry
goods shops were 35, 3 and 2, respectively. In 2002, these numbers went up to 2,490, 239, and 243. The local government, through the Assessor’s
Office, also updated land classification and valuation of properties. This covers 44 barangays although some barangays would not be surveyed in
entirety. The Assessor’s Office coordinates with the Department of Environment and Natural Resources (DENR), CREBA and other agencies for
additional information.

Easier ways for tax payments. To motivate tax compliance, the City government set up a “one-stop shop” so the taxpayers would just need to be
in one complex to get all the documents they need in paying taxes, and they could make all the necessary payments in the complex. This scheme is
also applied to business registration and renewal of permits. Participating units include the departments of the City government like the offices of
the Treasurer, Assessor, Engineer, Health, Fire Department, and others. There are also representatives from local branches of national agencies like
the Department of Trade and Industry, Bureau of Internal Revenue, DENR, and the Social Security System.

Tax payment advisory or reminder is also intensified before the tax payment period or permit renewal. This is done through advertisements like on
posters, radio and television ads, a government vehicle touring the barangays making public announcements, and other schemes.

Updating of property assessment. The City Assessor’s Office (CAO) recommended new assessment levels of properties based on new land
classification and market values. The schedule of market values for properties was revised in 2002. Before this, it had skipped two revision years
and had no adjustments since 1997 due mainly to political reasons. The CAO forwarded the recommendations to the Sangguniang Panglunsod (SP)
which approved the proposal as is. However, there was strong public opposition to the ordinance because the increase would be too high given that
there had been no prior adjustments since 1997. The SP then suspended the implementation of the ordinance. Later on, in order to compromise, the
new assessment was made based on the classification rates of 1997 but adopted the new market values. The recommendation would have been
closer to the real property values but nevertheless, with the new scheme, the government managed to get some increases.

Innovative Financing Strategies

Reconstruction of the public market. The City Market was destroyed by fire in year 2000. Two hundred forty (240) stalls were needed to be re-built.
The city government tried to source out funding from government financial institutions but interest payments to be too high and would eat up the
city’s finances. The government thought that it could work with the stall owners to raise resources for the re-construction.

The city government then entered into an agreement with the stall owners so that they would initially shoulder part of the cost of the re-construction
of their respective stall. The expenses should not exceed P20,000 for each stall and all the receipts are submitted to the Treasurer’s Office. This
initial investment exempts the stall owners from tax payment and rental for five years. After five years, ownership of the stalls would be transferred
to the City Government.

Construction of the Integrated Bus-Jeepney Terminal. To maximize revenues from the terminal, a commercial center is also built inside it.
Allocation of stalls in the complex was done through a bidding process. Stalls were priced according to their locations which reflect their expected
profitability. The City government gave minimum price for each stall and the bidding starts from there. This process generated prices that are more
reflective of the stalls’ market values.

Source: Basilio, Lani. 2004.




                                                                        42
Box 5. Fiscal Management Reform in San Fernando, Pampanga

The Mount Pinatubo eruption in June 1991, the second largest volcanic eruption of the twentieth century,
has inflicted damages in the City of San Fernando which was a municipality at that time. In 1995, a
massive lahar flow due to the Typhoon Sybil submerged six of the city’s most thickly populated barangays
including a portion of the commercial distirict. The devastation caused the outflow of investments and
businesses.

To confront the problems of inadequate delivery of basic services and lack of funds to perform its devolved
functions and pay its long overdue debts, the city government ventured on a strategy that would sustain the
fiscal requirements of various programs which gave birth to the program “ Breaking Financial Barriers”. Its
main thrust was to generate more financial resources for the local government by adopting tow approaches:
1) saving on expenditures and 2) improving tax collection.

Reducing Expenditures:
       To minimize administrative overhead expenses, the city started with personal services by
       terminating the services of more than 200 casuals whose services were not needed by the
       bureaucracy. (This resulted to a P700,000 savings per month or P8.4 million a year)
       Austerity measures were imposed in the use of utilities and office supplies.
       Budgets were prepared by the departments which to be followed strictly and strong justifications
       were demanded for any change to prevent arbitrariness, inefficiency and sloppy budgeting.
       These internal housekeeping efforts sent a strong signal to the community that the city was
       serious, sincere and committed in its desire to reinvent itself. Thus, they respond positively on the
       city’s campaign to increase collection.

Creation of Special Project Operations Unit :
        A special unit under the Office of the Engineer was established to implement the infrastructure
        project of the city. The Special Project Operations Unit is headed by 1 engineer with few technical
        staff and drivers and operators of heavy equipment. In the construction of roads for instance,
        laborers from the area where the road is being constructed were being employed.
        The implementation of the infrastructure projects by the Unit had resulted to a 30% savings in the
        construction cost as compared with the cost estimates of DPWH.

Improving Tax Collection:
   1. Creation of Tax Enforcement Unit instead of relying solely on the Office of the Treasurer.
           o The unit was composed of staffs from selected departments.
           o Surveys were done to come up with a list and basic information on the establishments
               operating in the city. Tax mapping was done by all the barangays with the help of the
               residents. The master list served as reference in determining those who paid and did not
               pay taxes and if they paid the right amount. Business who paid their taxes were given
               plate number where a strip containing the year when the business firm paid its taxes was
               attached. The plate was prominently displayed by the firm in their office for easy
               monitoring.
           o A report was made by the TEU to the Treasurer of all those firms operating without
               business permits and those who have not paid their taxes. The Treasurer then issued a
               demand letter to the delinquent taxpayer requesting him to pay his obligations within ten
               days from the receipt of the letter. The PNP Investigator then filed a criminal complaint
               in city trial court against the taxpayers with delinquent accounts.




                                                    43
            Box 5. Fiscal Management Reform in San Fernando, Pampanga (con’t)

    2.     Conducting information campaigns: Pay your taxes, fees and charges for better public service.
              o The city government made a promise to its citizens that the increase in resources will be
                   used to undertake flood prevention measures, develop the infrastructure of the city which
                   were destroyed by Mt. Pinatubo’s lahar flow, construct school buildings, day care
                   centers, develop its human resource pool to supply the skills needed by industries, among
                   others.
              o A regular dialogue with the accountants of major business firms was set every month of
                   December to inform them that in preparing the declaration of gross income of their
                   respective companies, the reported amount must not be as close as possible to their actual
                   gross earnings. This also served as a good forum for the discussion of problems and
                   concerns affecting the business sector as well as the discussion of recommendations on
                   improving the business climate in the city.
              o Arrangements with banks were also made so that income from loans which were
                   generated in San Fernando were declared in the city and not in the loaning center which
                   is located in another locality.
              o For payment of annual community tax, coordination was made with was made with the
                   personnel officer of the big firms in the city. Hence, actual income received by each the
                   employee served as the basis for the computation of community tax.

    3.     Improving Systems and Procedures and Establishing a One-Stop-Shop
               o A one-stop-shop was set up in the Treasurer’s office where all the offices of the city
                   which collect taxes, fees or charges were represented so that taxpayer need not go from
                   office to office.
               o The city government embarked on a computerization program to come up with an
                   integrated system on accounting and finance; civil registry system; payroll and personnel
                   system; real property taxes; and business licenses.

    4.     Communicating with the citizenry
              o The city published a quarterly and yearly accomplishment and financial report
                 summarizing the income and expenditures and the list of the projects implemented, the
                 cost of each project, the status of implementation and the implementing agency for each
                 project.

    5. Recognizing the Taxpayers
           o There was creation of recognition rites for the “Top 5o Biggest Business Taxpayers” and
               the “Top 50 Biggest Real Property Taxpayers” where each awardee received a plaque
               from the mayor.
___________
Sources:

Guiza, Edel. “Transforming a Ravaged City into a Model in Local Revenue Generation: The Case of San Fernando,
Pampanga, Philippines”. Center for Development Management, Asian Institute of Management, July 2002.

Legaspi, Perla. “The Changing Role of the Local Governments Under a Decentralized State: Some Cases in the
Philippine Local Governance”. National College of Public Administration and Governance, University of the
Philippines, 2001.




                                                      44
Three, despite large number of delinquent taxpayers (particularly, with respect to the
RPT), not many LGUs actually implement the appropriate civil and administrative
remedies that are available (e.g., warrant of levy or auction of delinquent property). In
like manner, many LGUs do not actually impose the sanctions found in their revenue
codes (typically, closure of firms) that are applicable to firms which are delinquent in
paying the local business tax and licenses. For instance, Taliercio (2003) reported an
ocular inspection of several individual tax accounts in one LGU revealed that some firms,
including a large MNC and a large national bank, operate without licenses due to
delinquencies. In contrast, some LGUs (like Quezon City as described in Box 6) have
initially threatened and, later, actually conducted auctions of delinquent real properties as
part of their enforcement menu and achieved positive results.

On the other hand, it is not uncommon amongst LGUs to merely require firms/ business
establishments on for a sworn statement from the manager/ owner as to their gross
receipts. More often than not, there is no attempt to cross check this with relevant
information that may be available in other government agencies like the BIR. This
practice has been known to result in grave under-declaration of income and/ or taxpayer
harassment. Said “common practice” stands in sharp contrast with one of the reforms
instituted in Quezon City whereby the City Treasurer required all business establishments
with gross receipts over PhP 500,000 to submit their previous year’s financial statement
and monthly payments of VAT and non-VAT information from the BIR. For smaller
firms, Quezon City made use of presumptive income levels (Box 6). In like manner, use
of third party information has helped San Fernando, Pampanga improve its collection of
the community tax (Box 5).

Four, information on rules and procedures governing tax matters (i.e., when, where, how
much taxes to pay) are not easily accessible to taxpayers in many LGUs. Thus, Taliercio
(2003) observed that taxpayer services are be virtually non-existent in many LGUs.
However, there appears to be a trend in an increasing number of cities to install a “one-
stop shop” complete with simplified and well-documented flow chart of steps involved in
securing the local business permit and paying all local taxes (e.g., Mandaue, Lapu-Lapu).
On the other hand, other LGUs have established comfortable taxpayer lounges and
provided taxpayers with various amenities (like free coffee/ tea, television) in an attempt
to make the actual act of paying taxes at city hall more pleasant and, thus, encourage
taxpayer compliance (e.g., Quezon City as described in Box 6).

Five, very few LGUs have certified public accountants in their rolls, thereby impairing
their audit capability. This point is particularly relevant to provinces with respect to the
problems they encounter when they try to collect the franchise tax or to determine the
“situs” of the local business tax. In this regard, San Fernando, Pampanga made
arrangements with banks operating in the LGU so that income from loans which were
generated in city are booked at the local branch (Box 5).




                                             45
Box 6. Improving Tax Administration in Quezon City

Quezon City, the largest city in Metro Manila in land area and population, was faced with a serious budget
deficit in 2001. The incoming city administration of Mayor Feliciano Belmonte, Jr., who assumed office in
July 2001, inherited outstanding obligations of PhP 1.4 billion and PhP bank debt of 1.2 billion. The city
decided to take the bull by the horns and improve its revenue collections.

The mayor’s first step was to convene a search committee, headed by the UP Dean of the College of Public
Administration, to recommend candidates for treasurer. The mayor settled on Dr. Victor Endriga, who
quickly implemented a set of reforms over the next 18 months that would reverse the city’s fiscal course.
Treasurer Endriga adopted a “carrot and stick approach.”

    •        The “sticks” include: property auctions for delinquent RPT taxpayers (three auctions were
             conducted in 2002 and four are planned for 2003; these are the first post-code auctions in
             Quezon City), in spite of the fact that the city has been sued by delinquent taxpayers (the
             treasurer is not phased by the suits: “it’s part of the game”;

    •        delinquency letters sent out by staff (each staff member is required to send out at least 20/day,
             whereas very few had been sent before) to address the estimated PhP 10.7 billion owed the
             city;

    •        use of presumptive minimum gross sales/receipts levels for the business tax and for markets.

    •        requiring that all business establishments with gross receipts over PhP 500,000 submit their
             previous year’s financial statement and monthly payments of VAT and non-VAT information
             from the BIR;

    •        requiring that all real estate transfer tax payments must be accompanied by confirmation of
             payment of other taxes, including the business tax and mayor’s permit fees; and

    •        direct withholding (from 12% to 75% of gross collections) of taxes due the city from the
             city’s contractors and

The “carrots” include:

    •        an increase in the discount on early payment of the RPT from 10% to 20% for annual payers
             and from 5% to 10% for quarterly payers;
    •        improved taxpayer facilities, including modern air-conditioned lounges with automatic
             queuing systems, free coffee and tea, free local telephone calls and television; and
    •        plaques from the mayor presented in a public ceremony to the ten most “outstanding”
             taxpayers.

In addition, the city: (a) computerized its RPT and business tax registries and collection processes, while
hiring an outside firm to input all paper records into the system; (b) raised tax rates; (c) reassigned
employees within the treasurer’s office to avoid familiarization; (d) instituted new official receipts with
security features that show up under black light; (e) provides rewards (e.g., trip overseas) and punishments
for revenue examiners based on actual collections; and (f) house to house visits for delinquent taxpayers.
The reform paid off: total OSR rose from P2.3 billion in 2001 to P3.9 billion in 2002. The city closed the
year 2002 with a surplus of P0.5 billion.

_____________________________

Source: Endiga (2003) as cited in Taliercio (2003)




                                                     46
4.2.    Non-traditional Sources of LGU Revenue: Resource Mobilization

4.2.1. Management of LGU economic enterprises

The management of LGU economic enterprises in many cities and municipalities is
weak. Thus, most of these economic enterprises lose money and become cost centers
rather than revenue centers. In the aggregate, total receipts of LGU economic enterprises
amounted to P5.9 billion while their expenditures reached P7.0 billion in 2002 resulting
in a P1.1 billion deficit.

Current accounting practice does not engender a clear appreciation of the true cost of the
local economic enterprise. For instance, market management cost are sometimes charged
under the office of the mayor, collection cost budgeted under the Treasurer’s Office and
loan repayment treated as another special account (Pardo, LGSP presentation Oct. 12,
2004). Also, economic enterprise is oftentimes used as the vehicle for charging casual
employees who are utilized elsewhere in the LGU system so as to circumvent the 45%-
55% limitations on PS expenditures of LGUs. Consequently, the incentives for cost
recovery are poor.

Key to addressing this problem is the accurate determination of cost of operations, proper
price and rate setting using principles of cost recovery, drafting of ordinance to increase
fees and charges, elimination of leakages, rationalization of operating cost, good records
management to improve collection of fees, and, perhaps most important, retention of
income. Olongapo City successfully turned its solid waste management program into a
sustainable public enterprise by charging garbage fees (Box 7). To facilitate collection of
the garbage fees, it integrated said fees in the electricity bill (it is able to do this since it
also operates the power firm). In contrast, Iligan City (Box 4) raised more revenues from
the operation of its bus terminal complex than it would have done otherwise by
auctioning off the stall rights there.

4.2.2. Charging for health services

A number of provinces have also started to rationalize their hospital fees. In like manner,
some municipalities have also explored charging for some of the services provided in
their RHUs. In the case of Malalag, Davao del Sur, the municipality introduced a
graduated socialized payment scheme for health services based on the annual family
income of patients (Box 8). Recognizing that its tax base is limited and, therefore, not
sufficient to sustain the provision of free health services, the municipality initiated said
program by authorizing the collection of said fees in its revenue code. The experience of
Malalag also highlights the importance of a good public information campaign breaking
down initial resistance from the local community and in making the program a success.




                                               47
Box 7. Charging User Fees: Olongapo’s Solid Waste Management Program

The Olongapo’s Solid Waste Management Program was garbage collection and disposal program designed
to make residents responsible in their handling of solid wastes. In 1989, the integrated garbage collection
program was formally launched after a massive IEC campaign.

A central feature of the program was the collection of garbage fees. Initially, many residents objected to
the garbage fees. Despite this, however, the city government proceeded with the program. Over time, as
the residents saw how efficient the collection was and how clean the city had become, their opposition
softened.

Features of the program.

Residents are compelled to put their garbage in plastic bags. The bags made the collection neater and
faster. No garbage is collected unless it is placed in the prescribed garbage bags.

The collection schedule is strictly followed. Garbage collection was done twice weekly in residential areas
and daily in commercial zones and markets.

The city charges service fees ranging from P10-P20 per month for households and from P30-P300 per
month for business establishments. To make billing and collection easier, garbage fees are incorporated in
the electricity bill.

Sanitary inspectors from the City Health Office regularly inspected their assigned areas. Citation tickets
were issued to residents and owners of business establishments whose premises were found to be violating
sanitation ordinances.

Financing the program

The program operated on a budget of P4 million a year. It generated an income of P 6 million annually
from garbage fees, thus ensuring the sustainability of the program.

___________
Source: Kaban ng Galing, Promoting Excellence in Urban Governance, 2001




                                                    48
Box 8. Socialized Health Payment Scheme for Health Services in Malalag, Davao del Sur

Malalag is a 5th class municipality in Davao del Sur of some 40,000 people. Faced with the difficulties in
funding devolved health services, it introduced socialized payment scheme for services in 1993.

Graduated service fees for health services were determined based on households’ annual income:

    •   Those with family income below P15,000 can avail of free medical services
    •   Those with family income of P15,000 were made to pay 25% of fixed service charge;
    •   Those with family income between P15,000 and P50,000 were charged 50% of the actual service
        charge, and
    •   Those with family income above P50,000 paid the full service charge.

The payment scheme was approved by the Sanggunian Bayan and included in the Malalag Revenue Code
which was enacted in December 1993. Initially there was strong opposition to the scheme. In fact,
opponents of the administration exploited the issue and defeated the Sanggunian members in the ensuing
elections. However, the opposition was not able to remove the measure as the Malalag Revenue Code was
protected from any amendments until 1998.

Over time, the public came to accept that fact that health services were no longer free. A massive
information campaign at the purok level with the Barangay Health Workers (BHWs) broke the resistance to
the payment scheme and facilitated its acceptance.

With the scheme, the LGU was able to provide services which had been unavailable to the citizens before.
Moreover, the quality of medical care improved as the local community (in their role as customers rather
than beneficiaries) did not tolerate poor service or shabby treatment from public health personnel.

_______________

Source: Kaban ng Galing: Transforming the Local Economy, 2001


The Makati Health Program (MHP), popularly known as the “Yellow Card”, is another
good example of harnessing additional resources for the health sector from the
beneficiaries themselves (Box 9). Though the bulk of the cost of the program is
supported by the city government and Makati Medical Center, the patients share in its
cost. A classification system based on the MHP beneficiaries’ gross family income is
used to determine each member’s category for the “maximum service fee” they are
required to give for whatever health or medical services they availed of. The payment
scheme has changed the people’s perception from a mere beneficiary to a program
partner. Because they are required to pay services fees, beneficiaries become aware of
their obligations and the importance of sharing in the program’s sustainability.




                                                   49
Box 9. Makati City’s Yellow Card: An Integrated and Holistic Approach to Socialized
Health Care

The unique feature of the Makati Health Program, popularly known as “Yellow Card”, is the involvement
of the private sector, NGOs and the beneficiaries in its successful implementation. Though the cost of the
program is supported by both the city government and the Makati Medical Center, the beneficiaries are still
required to pay service fees based on their gross monthly household income. The income bracket
determines the maximum service fee each cardholder is required to give for the health and medical
services availed of.

For MHP 1 (Monthly HH income less than P2,000) cardholders, the maximum service fee they are required
to pay is:
           P1,000 for medical
           P 800 for obstetrics
           P 1,200 for surgery

For MHP II (Monthly HH income is between P2,000 to P2,999) cardholders, the maximum service fee they
are required to pay is:
           P1,100 for medical
           P 900 for obstetrics
           P 1,200 for surgery

For MHP III (Monthly HH income is between P3,000 to P10,999) cardholders, the maximum service fee
they are required to pay is:
            P1,200 for medical
            P 1,000 for obstetrics
            P 1,600 for surgery

In the year 2002, there were 47,093 MHP patients treated at the Makati Medical Center, of which
3,918 were in patients while 43,175 were out-patients. The total cost incurred amounted to
P241.52 million where the city government paid the amount of P120 million (49.7% of the total
cost), while Makati Medical shouldered the other 42% and the patients paid the remaining 8.22%
or P19.85 million. Makati’s integrated and holistic approach to socialized health care has earned
the city’s distinction of being the First Health City Model in the country in 1995. This program has
also changed the people’s perception from a mere beneficiary to a program partner. Being
required to pay services fees, the beneficiaries become aware of their obligations and the
importance of sharing in the program’s sustainability.

Source: “Quality Health Care: The Makati City Experience”, presented during the Regional Seminar and
Learning Event on Local Governance and Pro-Poor Service Delivery, 10-12 February,, 2004, ADB
Headquarters, Manila.

On the other hand, the story of Sebaste, Antique as it transformed a rural health center
into a community clinic (Box 10) provides a good story on how to raise resources for
health from various sectors. The sources of finance include: the Countryside
Development Fund (CDF); the Barangay Councils giving 10% of their Development
Fund for the clinic; the private sector through concerned associations raising funds for
purchase of medicines, supplies and medical equipment; and entering into a joint venture
with private sector for laboratory and dental services. In addition, the municipality,
through a Sanggunian Resolution, created a trust fund for the community clinic to ensure
that the resources raised are used exclusively for the community clinic.




                                                    50
Box 10. Transforming a Rural Health Center into a Community Clinic: Sebaste, Antique

Sebaste is a 6th class municipality in Antique. It is one of the more isolated and impoverished towns in the
province. The nearest government town was 4 km. away in the town of Pandan but residents preferred to
bring their sick to a secondary hospital 20 km. away better facilities in the latter. When health emergencies
happen, residents had to spend P500-P1000 for transportation alone.

Social Marketing

The mayor with the support of the MHO decided to convert the RHU into a 5-bed community clinic, to
purchase a municipal ambulance and hire additional staff. Other local government officials were initially
skeptical of the plan because of obvious financial constraints (the LGU’s IRA at the time was less than P1
million per year while its total own-source revenue was just P0.8 million per year).

Mobilizing Resources

However, after presenting her case to the barangay councils, the mayor convinced them to appropriate 10%
of their Local Development Fund to the proposed clinic. Later, she also convinced the Municipal
Sanggunian to allocate part of the LDF for the same purpose. She also raised funds from Sebaste natives
who were already based abroad.       Sebaste migrants in Austria helped raised funds for the purchase of
medicines, supplies and medical equipment, including an ambulance, for the clinic.

The municipal government then entered into a joint venture with a private business firm to set up a
pharmacy and laboratory in the community clinic. The said firm also brought in its own staff to operate
these facilities. The LGU received 10% of its income and exercised regulatory functions over its pricing.
Likewise, the LGU also entered into a partnership with a local dentist who put up the equipment and
provided the services himself while the LGU provided the building space which was funded by the
Congressman’s CDF.

Sustaining the Community Clinic

To sustain the operations of the clinic, the Sanggunian passed a resolution (in 1995) placing all income of
and donations for the clinic in a trust fund. The initial target for the fund was P3 million. Under the
conditions set by the resolution, only the interest of the fund would be used for the operations of the clinic.
As of January 1998, the trust fund had P1.1 million. Nearly half of this amount came from clinic operatios.
Thirty two percent came from the pharmacy and laboratory and 20% came from donations.

From 1994 to 1998, the LGU allocated P3.1 million to the clinic. In 1998, there is an indication that the
clinic was relying more on its internally generated funds for its operations. To address the inability of some
of patients to pay, the municipality explored the possibility of tapping the PHIC’s Indigent Program.
Results/ Impact

As of 1997, there are 2 physicians, 4 nurses, and 3 nursing attendants serving in the clinic compared to 1
physician, 1 nurse and 6 midwives prior to the clinic’s establishment. The clinic now provides not only
primary health care services but also minor surgery, dental care and laboratory services. Moreover, these
services are available around the clock rather than from 9 am to 6 pm as it used to be.
_____________
Source: Kaban ng Galing, 2001



Prospectively, the Philhealth is emerging to be a source of an important source of funding
for health and family planning services, particularly, through the capitation mechanism
that LGUs should learn to tap. One of the good practices that other LGUs can emulate is
the experience of the municipality of Bindoy, Negros Oriental in this regard (Box 11),


                                                     51
along with enrolling indigents in the Indigent Program, worked to have its RHU
accredited by PhilHealth. The capitation fund received from PhilHealth served as an
added income and was used to buy medicines, medical supplies and other supplies for
local services. The importance of the Sanggunian resolution creating the PhilHealth
capitation fund is also worth highlighting.


Box 11. PhilHealth Capitation Fund as an Additional Source of Revenue: Bindoy, Negros
Oriental

In addition to securing health insurance for the indigents, the local chief executive of Bindoy, Negros
Oriental decided to acquire PhilHealth accreditation for its rural health unit upon recognizing that the
capitation fund could be an additional source of funds for the municipality. To meet the standards of
PhilHealth for accreditation, it required Bindoy to allocate P300,000 for the upgrading of RHU’s laboratory
equipment and services. In November 2001, the LGU signed MOA with PhilHealth. In January 2002, the
Sangguniang Bayan passed resolutions committing premium subsidy amounting to P100,000 and creating
the PhilHealth capitation fund.

Since the payment of premiums under the local health insurance in the municipality is shared by the
municipal government, province, barangays and households, the municipality got higher proceeds from the
capitation fund. As of 12 April 2003, it received PhilHealth capitation fund amounting to P482,003 for its
first batch of enrolled families. A big part of this amount (almost 83%), was used to purchase medicines,
medical supplies and other supplies.

_____________
Source: “Initiating a Social Health Insurance Program in the Municipality of Bindoy”, Best Practices No. 3,
Series of 2003, Management Science for Health



On the other hand, the experience of the municipality of Sampaloc, Quezon provides an
example of how the greater participation of the local community, civil society
organizations and POs can help in mobilizing resources and membership in its local
health insurance program. Although this experience came prior to the PhilHealth, the
recruitment approaches the municipal government put in place would still be applicable
in other LGUs as they seek not only to expand membership in the PhilHealth but also to
increase the capitation fund (Box 12).




                                                    52
Box 12. Creative Recruitment Approaches of the Municipality of Sampaloc, Quezon

Sampaloc, Quezon adopted Medicare Program II where the PMCC set a minimum requirement
base of 700. To meet this requirement, the following strategies were undertaken:
        Briefing of the townspeople about the program, in particular, the benefit package.
        Both the Senior Citizen Group and the Quezon Women’s League took active part in program
        promotion and active recruitment. In fact, the Women’s League set-up a fund to lend money to its
        members for the payment of premiums.
        The Farmers’ Association of Sampaloc has adopted a scheme, “turnuhan”, to help them pay their
        premiums.
        The zone leaders were also constantly prodded to increase recruitment in their areas by having
        tally boards to monitor the recruitment campaign.
        The mayor gives barangay and municipal officials a monthly quota for the new recruits. For
        instance, each councilor is required to enroll at least 5 new members every month.

Although not a pioneer in health insurance, Sampaloc has been the only municipality that is able to
continuously expand its membership largely to creative recruitment strategies.

_______________
Source: Enhancing Participation in Local Governance: Experiences from the Philippines, 2001.



4.3.    Access To Non-Traditional Sources of LGU Finance

The passage of the Local Government Code allowed LGUs greater flexibility in tapping
various sources of credit financing which could include bank credit, bonds and private
sector participation (PSPs). Moreover, the LGU Financing Framework developed by the
Department of Finance in 1996 envisions the greater participation of the private capital
market in local government financing. This framework promotes the establishment of a
“graduation program” that will induce creditworthy LGUs to shift from Government
Finance Institutions (GFIs) to the private capital market.

Even while it provides supplementary financial resources to the LGUs, access to credit/
capital at commercial rates will also infuse the market discipline on them and boost their
propensity in intensifying their tax collection efficiency, in recovering cost from local
services, and in improving their financial management systems. On the other hand,
through various modalities of private sector participation (PSPs)29, LGUs could benefit
from (1) access to more sophisticated technology that the private sectors could have, (2)
cost-effective design, construction and/or operation of projects, (3) guaranteed cost, (4)
flexible financing, including use of private capital and (5) delegation of responsibility and
risk (Pardo, Presentation in LGSP Policy Forum, October 12, 2004).

However, there are outstanding issues that hamper LGU’s access to these non-traditional
sources of finance. For instance, some of the major issues encumbering the development
of LGU bond market are political succession risks, lack of technical knowledge on bond
flotation on the part of LGUs, lack of private financial sector confidence in LGUs,

29
   A PSP is a contractual agreement entered by an LGU with a private sector entity authorizing the latter to
finance, construct, operate and maintain a facility in exchange for giving the private sector entity the
authority to charge user fees or receive compensation from government.


                                                    53
regulatory constraints (like restrictions on depository accounts, bidding of specialized
professional services), and administrative constraints (like absence of clear accounting
and recording system for bond proceeds and disbursements for projects funded by bonds
and the need for unified LGU financial reporting system) [Pardo, Presentation in LGSP
Policy Forum, October 12, 2004].

On the other hand, the outstanding issues that hamper LGU’s access to PSPs include, but
are not limited to: lack of capacity of the LGU to prepare project feasibility studies and to
negotiate contract terms (i.e., fees/ tariffs, performance standards and appropriate risk
sharing arrangements) prompting them to rely on unsolicited proposals which typically
result in terms that are not beneficial to them; LGUs lack of creditworthiness, primarily
due to poor public sector governance structures and limited financing sources; absence of
long-term funds to shortcomings in capital market; and LGUs relying on unsolicited
proposals which typically do not result in keen competitions, thus, resulting in litigation
(Pardo, Presentation in LGSP Policy Forum, October 12, 2004).

Though LGU access to private capital remains to be limited, some gains have been
achieved in terms of LGU access to the bond market and PSP schemes. As of March
2002, a total of 9 LGU BOT projects have been documented (WB/ ADB 2003). Also, the
creation of the LGU Guarantee Corporation (LGUGC) effectively provided some impetus
to the LGU bond market. Six LGUs have successfully issued bonds worth P1.4 billion
with the help of the LGUGC. Moreover, a number of LGUs provide examples of “good
practice” in the issuance of bonds and use of PSPs. Mandaluyong, having no money to
rebuild its public market, pioneered in using the Build, Operate and Transfer scheme with
a business consortium (Box 13). Iligan City likewise utilized the BOT model in the
construction of its public market. However, instead of working with an organized
business group, Iligan City entered an agreement with the stall owners so that they would
initially shoulder part of the cost of the re-construction of their respective stall (Box 4).
On the other hand, while the privatization of the water and the power utilities of Bohol
province was met with serious popular resistance, it does provide a good study on
evaluating the various financing options available to the province for the large investment
needed to rehabilitate its water and power supply systems and the specific steps that have
to taken prior to privatization (Box 14).




                                             54
Box. 13. Mandaluyong City: The First to Avail the BOT Scheme (Building a public market through
a BOT program)

The public market was an important source of revenues for Mandaluyong. It was not only a place of trading
that time but it also served as a communication and recreation center. Hence, when the market burned
down in 1990, Mandaluyong was in a hurry to build it.

The Build, Operate and Transfer had just been passed that time, thus, had not been tried before anywhere in
the country. Having no money to finance the rebuilding of the market but with the option to BOT, the
mayor and his team drew up a plan of a brand-new market with modern commercial complex.

Seeing from the feasibility studies that the plan will succeed, the mayor talked with the private sector to get
the resources needed to finance the plan. Thus, after 6 months, bids were already being made on the
project. A business consortium, which was organized purposely for the project, won the bidding.

Two Novel Concepts Utilized:
The partnership was worked out under the BOT scheme which utilized two components.
Under the Build-Transfer Concept (BT):
        The developer built the public market and transferred it immediately to the city government.
        The city government constructed half of the number of stalls that can be built inside the market
        with the remaining half was constructed by the stallholders themselves.
        The city government collected stall fees and deposited them in the bank.
        The developer took care of the maintenance and security.
Under the Develop-Operate-Transfer Concept (DOT):
        The developer was allowed to construct a 6-storey commercial complex over a portion of the land
        in exchange for putting up the public market for the city government.
        The developer manages the commercial complex to be turned over to the city government after 40
        years.
        Rent-free use of the land for the developer.
        The city government does not collect dues from the developer for the operation of the commercial
        complex.
_______________

Source: Kaban ng Galing: Transforming the Local Economy, 2001




                                                     55
Box 14. Improving Water and Electric Services Through Privatization: Bohol’s Case

The Provincial Water System (PWS), which services 90% of Tagbilaran City and Dauis Municipality, is operated,
administered and maintained by the provincial government of Bohol. On the other hand, the Provincial Electric
System (PES) whose franchise the province obtained in 1997 from the National Electrification Commission,
services the entire city of Tagbilaran.

In 1998, the PWS and the PES were beset by a number of common problems: (a) slow response to requests for
repairs and other emergencies, (b) bureaucratic procurement processes causing poor and delayed services, (c)
systems losses that exceeded industry standards, (d) old and outdated equipment, and (e) no source of funds for
rehabilitation and future improvement. A study on the rehabilitation of the PWS and PES showed that the province
needed P212 million (in 1998 prices) to rehabilitate PES facilities and P967 million (in 1998 prices) to set up two
water treatment plants, lay main and transmission lines, and establish several reservoirs for the PWS. Since the
provincial government had no capacity to borrow such big amount, much less provide it, the provincial government
decided to explore its privatization.

A Technical Working Group, composed of technical staff from the Governor’s office, and PPDO, GOLD
consultants, and several other hired technical staff, looked in the different options to obtain resources needed for
the water and electricity sector rehabilitation. These include (1) outright sale, (2) bond issue, (3) transfer to
cooperative, (4) the water district/the Metro Cebu Water District (MCWD) model, (5) Rehabilitate-Operate-Transfer
(ROT) Arrangement, (6) Stand-Alone Entity (debt financing), (7) pure joint venture (JV), and (8) Joint Venture on
Rehabilitate-Own-Operate-Maintain (ROOM) Agreement. After assessing the different options using certain
criteria, the provincial government went for ROOM since this has fulfilled the objectives of Bohol’s privatization
strategy.

Strategies in the process of privatization:

Preparation: This was the strategic planning done by the provincial government which included the appraisals on the assets of
PWS and PES (P75.839 and P59.39 million, respectively).
Tendering: the provincial government, with the assistance of consultants, prepared the tender documents in December 1999.
Two corporations bought and submitted tender documents for the power utility only, two corporations for the water utility
only and and three for both utilities.

Selection and Negotiation: The Provincial Bids and Awards Committee (PBAC) inventoried the bids and evaluated the
technical (technical organization, rehabilitation program, Capex program, system loss reduction program, targets/milestones,
and timetables) and financial (bid amount, funding proposals and tariff proposals) proposals of all bidders. It also considered
the following criteria: overall organization, commitment, presence in RP, employees benefits, employees retirement plan and
employees stock option plan. The joint venture agreement was granted with SALCON.

Problems Encountered:

The privatization of the PWS and the PES was beset by a number of hindrances, including: (a) the absence of legal framework
for the joint venture agreements, and (b) the lack of legal and technical expertise of the provincial government in the conduct
of the project using Joint Venture or BOT schemes. Also, popular resistance to the scheme was strong that several petitioners
filed a Petition for a Class Action for Prohibition with a Prayer for the Preliminary injunction and a request for the issuance
of Temporary Restraining Order (TROs) on July 19, 2000.

To address these problems:
    (a) The provincial government consulted the National Committee on Privatization (COP) and the National Coordinating
         Council for Private Sector Participation (CCPSP) to clarify the legal basis for JV agreements. It was determined that
         the privatization transactions of LGUs do not require the approval of the COP or the Office of the President.
    (b) Financial consultants, through Governance for Local Democracy (GOLD) project, assisted the technical working
         group in the preparation of financial feasibility of the utilities under a JV system as compared to the stand-alone
         arrangement.
    (c) To ensure social acceptability, the provincial government held initial consultations and presentations with the
         Provincial Development Council (PDC), the Provincial Board, and NGOs. Issues concerning the necessity of the
         privatization, the joint venture scheme, the transparency of the bidding process, and the responsibility of the
         provincial government to provide basic services were raised. The Bohol Social Marketing Team (BoholSMART)
         strategize the information campaign on privatization which included conduct of barangay assemblies in all the
         barangays in Tagbilaran City.
____________
Source: Kaban Galing: Transforming the Local Economy, 2001.



                                                             56
4.4.   LGU Expenditure Management

Good public expenditure management is concerned with the pursuit of three key
objectives: fiscal discipline; strategic allocation of resources; and good operational
management (Schiavo-Campo and Tommasi 1999). Fiscal discipline refers to expenditure
control at the aggregate level and requires good revenue forecasts at the very least.
Strategic allocation of resources refers to resource allocation that is consistent with policy
priorities. And, good operational management calls for economy (acquiring quality
inputs at the lowest cost), efficiency (minimizing cost per unit of output) and
effectiveness (achieving the outcome for which the output is intended). As such, good
public expenditure management calls for the existence of a strong link between planning
and budgeting and for a perspective beyond the immediate future.

Section 2 shows how personal services account for a disproportionate share of LGU
budgets, thereby cutting funding support for MOOE and capital outlays. It also suggest
that local planning and budgeting is bedeviled by a poor incentive structure that is driven
by (1) the short political tenure of local elected officials, (2) the lack of clear mandate
supporting the linkage between the PDP, the AIP and the local budget, and (3) the
mismatch between revenue means and expenditure needs of LGUs, especially provinces.

4.4.1. High personal services expenditures

On the one hand, high spending in personnel services is attributed to the transfer to LGUs
of 60% of the total pre-devolution personnel in key NGAs and the proliferating size of
LGU employment as a result of many plantilla positions and hiring of numerous casual
staff. In some cases, the devolution of personnel has given rise to excess staff for the
same position. In many LGUs, casuals outnumber permanent employees, accounting
anywhere from a third to almost half of the total workforce. In the Metro Manila, only
seven LGUs employ more regular workers than casuals. (ADB/ WB 2003)

In contrast, a number of LGUs have been successful in keeping their personal services
expenditures in check. The personal leadership of the Local Chief Executive (LCE) is
shown to be fundamental to implementing a coherent strategy to reduce spending on
personal services (either by retrenching casual employees or by leaving some permanent
positions unfilled). In the case of San Fernando, Pampanga, the termination of more than
200 casual employees was initiated under the flagship program of the mayor, “Breaking
Financial Barrier” (Box 6). This has saved the LGU some P8.4 million in wages
annually. In Cabanatuan City, on the other hand, the mayor initiated the step-by-step but
rapid reform process in administrative simplification and reorganization (Box 15) where
plantilla and personnel were reduced from 1500 to about 700.




                                             57
Box 15: Administrative Streamlining in Cabanatuan City

Cabanatuan City (Nueva Ecija Province) demonstrates the significance of the political economy of administrative
streamlining: how technical success with an administrative reorganization and wage bill control program can be
transformed into a springboard for more ambitious initiatives to strengthen the resource base and public service
delivery – and political support for further institutional reforms.

In 1998, the new mayor inherited a bloated city administration (1500 employees) with few resources to finance public
services, severe security concerns due to political conflict, and the looming specter of economic recession. Realizing
that administrative streamlining and consolidation were key to all other reforms, including higher revenue collection to
finance improved service delivery, the mayor initiated a step-by-step but rapid reform process. He first defined the
motivation and objective of the proposed administrative streamlining. Next, he formed a Reorganization Committee
(including employee representatives and private sector professionals) to prepare a reorganization plan. The plan
proposed (i) a new staffing pattern and organizational structure, (ii) a compensation package for displaced staff, (iii) a
‘Life After City Hall’ Plan, and (iv) how savings from the exercise could be used to improve services. After
consultations with the Civil Service Commission (CSC) to ensure the legality of the proposed reforms, notices of lay-
off were issued to more than 700 employees. At the same time, a Placement Committee was formed. It set objective
criteria for employee recruitment and selection, conducted recruitment exams and interviews, and announced new staff
appointments.
The plan met with opposition. Displaced staff filed grievance petitions with the CSC. The appeals were dismissed.
The opposition demonstrated against the retrenchments. Undeterred, the mayor implemented the plan, and some results
were immediately apparent. Plantilla and personnel were reduced from 1500 to about 700. A simplified organization
structure was established. But the successful reorganization extended the impact of the exercise far beyond the
immediate technical confines of administrative and civil service reform. Savings were located to better finance
services. Security, health, education and infrastructure provision improved. During the mayor’s first term, the
financial and administrative leeway he wrested through the successful downsizing initiative enabled him to propose and
implement a broad range of development projects, enhance borrowing capacity (obtaining AAA status from a
commercial bank), increase own source revenues (principally through using a GIS for land and property mapping), and
improve service delivery. These efforts were vindicated through increased citizen support – the mayor won re-election
in 2001, obtaining 75 percent of the vote.

Key success factors comprise (i) accurately gauging the trade-off between alienating one interest group (city
employees) and winning over a wider set of interests (citizens, businesses, lenders, investors), (ii) reducing the political
risks through appropriate timing (the reforms were done in the mayor’s first year in office so that the second and third
years could demonstrate results), ensuring the legitimacy of the reform objective (improving service delivery, not
infusing relatives and cronies into the administration) and the reform process, transparent and participative
management of the reform (e.g. the employee association leader and other staff representatives were members of the
Reorganization and Placement Committees), public disclosure of the reforms (through an active public campaign), and
a strong public commitment to improving services (by demonstrating that taxes collected were spent on services for
taxpayers).

Despite the clear need for administrative simplification and streamlining elsewhere, most political executives are
hesitant to act, possibly due to (a) the risk of losing staff support; (b) the need to pay back constituencies’ electoral
support by hiring relations and political supporters; and/or (c) the incompatibility of running a clean administration and
recovering electoral costs incurred/generating campaign finance. Cabanatuan holds important lessons for other LGUs
(indeed for national agencies as well). Reorganization is possible within the existing legal and institutional framework
– there is no need to enact or amend any laws. Opposition was expected from employee associations and political
parties, and indeed did materialize. But the legitimacy, transparency and rule-based nature of the technically sound
program helped bring varied interests on board and was sufficient to counteract the forces arrayed against reform.
___________

Source: ADB/ WB 2003



4.4.2. Weak local planning

As indicated above, poor planning and budgeting at the local level can be traced to (1) the
short political tenure of local elected officials, (2) the absence of clear mandate
supporting the linkage between the Local Development Plan (LDP), the Annual


                                                            58
Investment Plan (AIP) and the budget, and (3) the low level of local accountability due to
the mismatch between the revenue means and expenditure needs of LGUs. Thus, local
elected officials (governors as well as members of the Sangguanian) tend to have short-
term planning horizons with concomitant adverse effect on development spending. Also,
since LGUs are dependent on monies that are not raised from within their jurisdictions/
constituencies, waste and fiscal irresponsibility tend to go unpunished by local taxpayers.

Three provisions of the Local Government Code are central to the implementation and
financing of the local development plan. These are:

       •       LGUs are required to have a comprehensive multi-sectoral development
               plan which should be initiated by its Local Development Council and
               approved by the local Sanggunian. (Section 106)
       •       Local budgets should operationalize local development plans. (Section
               305 - i)
       •       LGUs should appropriate in its annual budget no less than 20% of its
               annual IRA for development projects. (Section 287)


These provisions have been interpreted to mean that the Local Development Fund (LDF)
can only be spent on projects identified in the local development plan. Furthermore, as a
matter of practice, the term “plan” is taken to refer to the Annual Investment Plan (AIP).
Consequently, the AIP is at the core of the planning-budgeting linkage as only projects
listed in the AIP are assured of funding.

As a result of this practice, the Department of Budget and Management (in the conduct of
its budget oversight function vis-à-vis provinces and independent cities) refers
exclusively to the AIP (rather than the PDP or the PDIP) when checking on the utilization
of the Provincial Development Fund. The DBM does not check on the consistency of the
AIP with the PDP. And, neither does the DILG nor the NEDA.

“Politics” of AIP Preparation. In practice, less than 70% of LGUs have up-to-date LDPs
and Local Development Investment Plans or LDIPs (ADB 2004). Moreover, even for
LGUs which have current LDPs, the preparation of the AIP is essentially a “political”
process. It is done quite independently of the LDP and the LDIP.

 The programs and projects in the AIP, therefore, bear little resemblance to those in the
LDP and LDIP (Carino et al. 2004; GTZ 2004). Closer scrutiny of the LDPs, the LDIPs,
and the AIPs in 5 provinces shows that there is an imperfect match between the projects
listed in the LDPs/ LDIPs, on the one hand, and those that are listed in the AIPs, on the
other (Carino et al. 2004). In fact, in one of the provinces only 4% of the projects listed
in its 2002 AIP was found in its LDP. In the “best” province in this small sample, 61%
of the projects listed in its 2002 AIP were found in its PPFP.

In contrast to the formal local planning process that is suggested by a reading of the Local
Government Code, the actual investment and development planning process at the local


                                            59
level is typically mayor-centric/ governor-centric although LGUs invariably report the
token participation of various stakeholders in the local community. The governor/ mayor
typically starts the AIP preparation process by calling a meeting/s of the Local
Development Council (comprising of all the mayors/ barangay captains, selected
members of the Sanggunian and NGO representatives). Many LGUs also include other
stakeholders like heads of offices in the local government and representatives of national
government agencies operating in the LGU. In some places (e.g., some areas in Central
Visayas), the LDCs are perceived to passive observers to the planning process and simply
approve whatever plan is presented to them in a fairly automatic fashion (GTZ 2004).

The participants in these discussions are typically asked to identify the projects for
possible inclusion in the AIP. The staff of the local planning and development office
(LDPO) then collates and consolidates the list of projects. The consolidated list is
reviewed and prioritized by a smaller group (e.g., executive committee of the LDC).
Most of the time the final decision in the prioritization of the projects rests with the local
chief executive and his priorities dominate. Nonetheless, some link is established
between barangay plans, municipal plans and provincial plans despite the lack of real
popular participation.30

For all intents and purposes, the AIPs in many LGUs are put together in order to comply
with the budgetary requirement that no appropriation chargeable to the Local
Development Fund can be made if the project is not listed in the LGU’s AIP. Many
LGUs have a limited view of the AIP and they consider the LDF as the only resource
available for investment programming (GTZ 2004).31

In preparing the AIPs, LGU officials typically do not set program targets and, seldom if
ever, is there an explicit assessment of benefits versus costs. At best, some qualitative
assessment of the projects (on the basis of urgency/ need, relevance to sectoral concerns,
and alignment with the governor’s thrusts) is made.

Ad hoc-ery appears to rule investment programming process in many LGUs. This
tendency is underscored by the widespread practice in many LGUs of including lump
sum allocations for broadly defined programs (and with specific projects being identified
in the course of the budget year). Carino et al. (2004) found that the allocation for all
lumpsum items account for some 20% - 65% of the LDF of a sample of 5 provinces.



30
   In practice, many LGUs do not have active LDCs. The IRIS (2000) estimates that only 30%-50% of
LGUs have LDCs in place and notes that “those that do function have no clear organizational link to public
budgeting processes, hence it is hard to have real “bottom-up” planning as envisioned.” Formally, 25% of
the total number of members of the LDC should come from the ranks of NGOs and people’s organizations.
However, one survey found that less than a third of LGUs have development plans that benefited from
meaningful NGO/ PO inputs (GOLD 2002). Moreover, anecdotes abound on how local chief executives
have themselves created NGOs according to their own image.
31
   However, some LGUs intentionally prepare a longer list of projects for their AIPs for the purpose of
using it to solicit funding from external sources.



                                                   60
In essence, the planning horizon for these activities is even shorter than 1 year. Planning
(project identification as well as project evaluation) is crammed into the current budget
year and, thus, coincides with budget execution. This practice results in poor project
preparation and causes delays in implementation.

In some of LGUs, some of these lumpsum allocations are euphemistically described as
“counterpart funds” for municipal/ barangay projects. However, the cost sharing
arrangements are not always well defined nor are they strictly followed even if they exist.
In other LGUs, they are referred to as the pork barrel of the local chief executive. In
either case, they are used to fund roads, waterworks, other small infrastructure at the
municipal/ barangay level on the basis of intermittent request made by local communities
to governor/ mayor in the course of the budget year.

At the same time, many LGUs provide for a CDF-like allocation to the members of the
Sanggunian and/ or to each of the municipal/ city mayors in the province. At the same
time, because the mayor or the SP member wants his projects to have as many
beneficiaries as possible, he then further tends to divide his CDF into many small
projects. An SP member reported that in allocating his pork barrel, he makes sure that
each project does not cost more than P30,000. Meanwhile, SP member in another
province, simply divided his pork barrel equally amongst the all the barangays in his
district such each barangay receives P10,000.32

As a result, the LDF tends to be dissipated on tiny projects that lack strategic focus. For
instance, many LGUS implement local road projects that lack direction and that do not
contribute to the completion of an ideal road network.33 Thus, contrary to expectations
that the province will take care of projects that have an intermunicipal focus, many of
their LDF projects are in reality municipal level (even barangay level) projects.

The experience of the GOLD project (USAID) and the LGSP (CIDA) in strengthening
the local planning process suggests that key to the success of their interventions is the
promotion of other mechanisms for local accountability. For the most part, these center
on greater community participation through (1) the early engagement of local elected
officials in the plan preparation process so as to promote their commitment to the plans
that are formulated (thus, the emphasis on the drafting of an Executive Agenda), and/ or
(2) the meaningful participation of a broad-based multi-sectoral group in the exercise so
as to give local communities greater voice in the process and to promote greater
accountability on the part of local officials. In this context, the multi-sectoral planning
group includes representatives not just from the local community (LGU officials, NGOs
and the wider population) but also from national government agencies that are operating
in the local area in order to re-establish a link between the local plans and the national
plans and, more importantly, to generate external funding for local projects. While the
quality of the guidance provided in the Executive Agenda Manual with respect to the
technical aspects of planning may not be the best, the manner by which the EA process is
32
  One economist calls this practice the “divide by N” syndrome.
33
  This finding is notable considering that the bulk of infrastructure investment of LGUs are concentrated in
the transportation sub-sector.


                                                    61
able to engage local chief executives (thereby, to promote LGU officials’ ownership of
the plans) appears to have worked.
Other LGU initiatives in this area involve the adoption of citizen’s feedback mechanisms.
One good example is provided by Naga City (Box 16) which made use of the information
technology in improving, enhancing and redefining traditional notions of governance and
participation. For instance, the i-Governance program encourages the greater
participation of citizens in local decision-making process by allowing them to give their
feedback through the use of Internet and short-messaging service (SMS). What is more,
the residents have access to extensive catalog of critical information on local services
using the city website. This process is enhanced by the availability of information on the
“standard response time” for the delivery of basic services (as found in the Citizen’s
Charter). At the same time, transparency in the procurement process is promoted by
making all unit prices of awards bids publicly available not only in the internet but also in
the newspapers.

NG-LGU coordination in local planning. Poor coordination between NG and LGU
planning has resulted in a break in the planning chain with the break occurring between
the regional and the provincial levels. Thus, there is a need to reorient the RDCs so that
they become an effective venue for integrating national and local plans. In this regard, it
is important that regional offices of national government agencies reflect LGU priorities
in their planning submissions before forwarding the regional sectoral plans to their
central offices. The NEDA regional offices (as the secretariat to the RDCs) would have
to play an even more active role in coordinating the regional offices of the sector
agencies and LGU planning offices.

The Regional Development Plan (RDP) which is formulated by the Regional
Development Council is seldom, if ever, taken into consideration by the LGUs (GTZ
2004; WB/ ADB 2003). Thus, the LDPs of many are formulated quite independently of
regional and national development plans.

   Conversely, RDPs tend to ignore local developments plans ostensibly because they
   are meant to focus solely on inter-provincial projects. Many LGUs officials complain
   that national government agencies do not adequately consult with the LGUs in the
   planning and implementation of programs and projects that are located within their
   jurisdictions (GTZ 2004). Many of these projects are reported to be inconsistent with
   the perceived needs of the LGUs (i.e., local demand). The national line agencies are
   not obliged to follow the RDIP-based regional budget. Consequently, the RDPs are
   usually more reflective of the national government line agencies that have the budget
   to fund the projects contained therein (GTZ 2004).


   At the same time, the regional plans have no champions in the central level
   discussions on the MTPDP, thereby, reducing the prominence of the regional plans
   vis-à-vis the sectoral plans (WB/ ADB 2003). LGU officials note that they have little
   influence on outcomes of the deliberations on the MTPDP after regional plans are
   submitted to the central level. While the RDCs endorse projects to the national


                                             62
    government, they fail to establish a strong link between the LGU and the national
    government agencies. This inadequacy appears to be linked to the inability of the
    RDCs to secure funding for the programs and projects included in the RDP (GTZ
    2004).

Box 16. Innovations on Technology and Governance in Naga City

The City of Naga has took advantage of the use of information technology in improving, enhancing, and
redefining traditional notions of governance. The city believed that governance could be improved through
increased efficiency and local participation, thus, the following programs were introduced:




Productivity Improvement Program
To enhance the productivity of the workers in the city government, a merit and result-oriented assessment
system was instituted by rewarding and motivating employees to pursue higher levels of productivity.

Information and Communications Technology Development Program (ICT-DEV)
Efforts were initiated in streamlining internal process and improving information access through the
computerization of the city government operations, the establishment of local database and the creation of
technical assistance services to line departments.

i-Governance
Noting that the participatory mechanism through organized groups (that was previously used by the city
government) was ineffective (i.e., citizens remained uninvolved), the city opened wider avenues for
participation through the i-Governance. This program incorporated the citys’ ICT-DEV while placing new
emphasis on greater participation of individual citizens. The projects under this program are:
         NetServe is an extensive online catalog of local government services which include procedures,
         response time on service delivery and responsible personnel for each type of service; information
         about city finances (including the details of the annual city budget), city ordinances and
         resolutions, and the directory of city officials with their contact numbers and email addresses.
         TextServe is system where the citizens can send their views, comments, and complaints to the city
         using cellular phone-based short messaging service (SMS) at a cost of P2 for every message sent.
         Messages are redirected in the city’s email inbox with a response rate of one day and follow-up
         actions are immediately directed to concerned department.
         Naga City Citizens Charter is a guidebook that describes the key services of the city which could
         be used when there is no access to internet. In particular, the guidebook contains a detailed
         description of services with a step-by-step guide in using the service, the standard response time
         for its delivery, and the city hall officers and staff responsible for its operation.

Results and outcomes:
         Transparency in local governance and enhanced feedback mechanism
         Streamlining of processes and computerization of common applications has improved service
         delivery rate (reduction in service time of frontline services)
__________
Source: Rodriquez, Luz Lopez and Brian Min. I-Governance in Naga City, Philippine: Innovations in
Technology and Governance project




                                                   63
     4.4.3.      Unresponsive local budgeting


On the whole, budgeting at the local level is done largely in an incremental fashion.
First, funds for the mandatory expenditures (like personal services, debt service and LDF)
are set aside. Then, heads of offices are allowed to apply prescribed maximum rates of
increase on the existing allocation for recurring expenditure programs.34

Then, after the baseline budget is determined, most budget officers simply ask each
department to prepare proposals for new programs without providing any budget ceiling.
In situations like this, the budgets proposed by the various departments would invariably
exceed the aggregate amount of available resources. However, at the end of the day, the
budget proposals are consolidated and trimmed down according to the priorities of the
local chief executive. Thus, the budget process like the planning process is also
governor-centric/ mayor-centric.

Another concern in local budgeting is the lack of transparency in the preparation and
implementation of local budgets. Four factors contribute to making the budget process
highly non-transparent: (a) the estimation of the income targets on which the annual
budget is tied-up, (b) the recent practice of granting additional personnel benefits of
“savings”, (c) budgeting, in actual practice, is done largely in an incremental fashion after
funds are set aside for mandatory expenditures and, (d) the lack of effective community
participation in the preparation and monitoring of the local budget.

Many LGUs, however, have forged ahead with successful innovations in the local
planning and budgeting. One good example is the province of Bulacan which made use
of the survey method to ascertain the budget preferences of its constituents (Box 17).




34
  Some LGUs go through the pretense of allowing the different offices in the local government to prepare
an un-constrained budget proposal. However, regardless of the approach followed, the end result is the
same.


                                                  64
       Box 17. Knowing What the People Really Want: The Case of Bulacan
                                  Province

   The Governor of Bulacan believes that to be able to have constituent-responsive
   governance, the provincial government should know the real opinion of the people. Thus,
   it launched a scientific way of knowing what the people really want through the
   Constituent-Responsive Governance project which utilizes the survey research
   method.

   As part of the pilot-testing of this innovation, the province conducted a poll on the citizen’s
   preference for a health insurance program, solid waste disposal, real property tax billing
   statement, and a community radio. In each case, the province established that the
   scientific approach using surveys lessened the probability of mistakes in the
   implementation of the projects. It also improved local services by considering the people’s
   preferences and trying to incorporate these on its budget. Moreover, the province was
   also able to get information on “willingness to pay” for health insurance from the survey.
   The provincial government also changed the programming of its radio station to suit the
   interests and lifestyles of its constituents.

   _____________
   Source: Gawad Galing Pook: A Tribute to Innovation and Excellence in Local
   Governance, 2002.

On the other hand, Naga City (in cooperation with Synergeia) re-invented the local
school board not only by allowing it to serve as the venue for the participation of the
entire community in the planning and budgeting process for basic education in the city
but also through the application of performance based-budgeting in the allocation of the
Special Education Fund (Box 18). The budget priorities for the SEF are set relative to
targeted improvements in student performance, thereby linking budgets with
performance. The initiative also calls for the continuous monitoring of student and
teacher performance and reporting of the results to the community. Lastly, under the
program, the SEF is used to provide performance-based incentives to teachers.
Prospectively, an analogous program can be done for the Local Health Board to help
improve health and family planning outcomes at the local level.




                                                 65
Box 18. Re-inventing the Local School Board

A pro-active local school board can function beyond budgeting the SEF. It can institute: proactive
planning and budgeting, performance-based incentives for schools, division-wide achievement testing,
transparent teacher recruitment, and efficiency in spending the SEF.

How-to steps in reinventing the local school board

     1.       Identify and develop a committed coalition to work as a team.
The Mayor can bring together a group of reform minded educators to develop a shared vision for the kind
of education hey would like for their children. The team meets regularly to strategize and determine how
their vision can be accomplished.

    2.        Assess the state of basic education in the community.
Usually, communities are not involved because they do not know the extent of the problem in the education
sector. A situation analysis can be made by putting together data on education, dropout rates, reasons for
dropping out number of students per class, ratio of textbook to number of students, facilities and utilities
available in schools, average scores in reading and mathematics tests. The Superintendent/Supervisor can
help put together these data.

     3.        Hold and education summit.
Engage the entire community in improving basic education. The local school board can host an education
summit to disseminate findings from its situation analysis. The summit should ensure broad representation:
Department of Education personnel, parents, the corporate sector, local government officials, academic
institutions and NGOs.

The Governor/Mayor can present an education situationer and targets that the local government units
should strive to attain, i.e. reduction in the number of non-readers, and an increase in the reading and
mathematics test scores of the children. The participants can be organized into workshops to discuss
problems and priorities and ways to improve student performance. Participants can be asked how they
would like to spend the SEF tax revenue. The summit can end with the Governor/Mayor summarizing the
consensus of the participants.

     4.         Commit ideas to budget.
The local school board can organize summit output and relate it to the budget. This means using the
priorities set in the summit as basis for allocation the SEF budget.

    5.       Empower broad-based action.
The local school board can initiate changes, communicate strategies for reform, and lead by example. It
can transform old and closed systems into participatory processes. More transparency is needed in
procurement and an incentive system based on improvement in academic performance is needed.

    6.        Conduct regular, participative local school board meetings with a rich agenda.
Use local school board meetings to engage parents and community members and sustain their interest in
improving education. Open agenda items for their participation, include parents, feedback and suggestions.
Enrich the agenda by discussing policies, school programs and activities. Monitor progress of programs on
students, and teachers, performance.



Box 18. Re-inventing the Local School Board (con’t)

    7.       Develop a report card system.
Encourage principals to report on student performance to the community once or twice a year. How did
students do in reading and mathematics tests? What were the highs and the lows with respect to school


                                                     66
programs for the year?

    8.        Consolidate gains and produce more changes.
Local school boards can use their increased credibility and experience to improve all systems, structures
and policies that do not enhance their vision for quality education. What practices can be systematized?
Are there administrative orders or ordinances that need to be drafted to institutionalize changes? Are there
other persons and institutions that can be involved in the change process? How can parents be given more
opportunities to support the learning system? How can the young people in the community help?

What happened in Naga?

The Reinventing the Local School Board Project was able to initiate new processes and programs, which
gave the community greater voice and responsibility in the governance of education. Some of the activities
they undertook were:

    •        Regular consultations and meetings with (parents, teachers, school officials)
    •        A community-wide summit on education planning and budgeting
    •        A transparent hiring system for teachers
    •        A fund for schools to spend on developmental needs like instructional materials
    •        Additional performance-based incentives for teachers
    •        Workbooks and lesson plans in English, Math and Science (all elementary levels)
    •        Surog Adal (alliance for Learning), similar to the adopt a school program
    •        CLICK (Computer Library and Instructional Center for Kids)

What has been achieved?

The project has been able to transform the community from being passive recipients to being
active participants in improving basic education. What is better proof of this than the
improvement in the performance of the elementary schools students?

    •        17 percentage points in English
    •        15 percentage point in Math
    •        15 percentage point in Science

___________________

Source: Synergeia Brochure, 2004




Local government procurement has also posed a challenge in many LGUs. Some of the
outstanding problems in LGU procurement relate to the bidding process and the terms,
conditions and procedures for contract awarding result to: (a) inefficiency and delays, (b)
higher cost procurement or LGUs, (c) manipulation of the rules for benefiting favored
bidders, and opportunities for graft and corruption, (d) high possibility of contract default
for want of qualifications, and (e) lack of a system of accountability.

On the other hand, the Municipality of Goa (Box 19) was able to reduce the cost of the
drugs and medical supplies it buys by 20% by participating in the “direct purchase
program” of the Department of Health Regional Office.




                                                    67
Box 19. Medicine Procurement Program of Municipality of Goa, Camarines Sur

In an attempt to maximize the utilization of its meager resources, the Municipality of Goa put in
place a new Medicine Procurement Program. LGUs typically procure medicines and medical
supplies through public bidding (which is the method advocated by the Commission on Audit).
However, public bidding do not necessarily result in the acquisition of goods at the lowest
possible cost. Thus, Goa opted to participate in the bulk procurement of medicines and other
medical supplies through the Department of Health (DOH), Regional Office. This required
submission of Letter of Intent, passage of resolution by the Sangguniang Bayan allowing the
Local Chief Executive to sign the Memorandum Of Agreement (MOA) between DOH Regional
Office and the local government of Goa, and submission of duly accomplished Purchase
Request.

Program Accomplishments:

    1. Prices of medicines for 2001 were lesser by 20% from the original prices quoted by the
       bidders. Medicine procurement from the DOH proved to be lower than the lowest prices
       the bidders could offer the LGU.
    2. Some unintended benefits were also realized.
           a. Not only does the LGU saved costs on drugs and medicines, additional
               medicines were also given by the DOH Regional Office.
           b. The LGU was also spared of the requirements of the drug testing and analysis
               where 20% of the total quantity of medicines delivered by the suppliers were
               usually taken out to be tested and analysed in the Bureau of Food and Drugs
               (BFAD). With this program, 100% of medicine procurement was received by the
               LGU because these were purchased from DOH suppliers whose medicines were
               already tested by BFAD.
           c. Having the same requirements with DOH, the LGU is also assured of the
               availability of drugs and medicines.
           d. Medicine procurement of the LGU encourages greater advocacy of the Generic
               Law.




                                               68
Annexes
                             Annex Table 1. General Fund Expenditure of LEAD LGUs, 2002 (in million pesos)

                                     Total Health Services                  Total Social Services                      Grand Total
                               PS       MOOE       CO     Total       PS      MOOE        CO      Total        PS     MOOE       CO   Total

LEAD Munis of Metro Manila
 *   Navotas                  3.60      0.04     22.03   25.67      46.37     0.04     22.03     68.44       114.54   93.07   74.05   281.66
 *   Pateros                  0.74      0.13     9.18    10.04      8.02      0.15     14.72     22.88       19.07    2.04    34.98   56.09

LEAD Munis of Benguet
   Buguias                    3.20      0.27     0.03     3.50      3.20      0.27      0.03     3.50        17.76    11.50   3.79    33.05
   Itogon                     5.82      0.93     0.00     6.75      6.53      1.78      0.00     8.31        31.39    12.84   10.87   55.10
   La Trinidad                3.33      2.12     0.03     5.48      4.36      5.72      1.58     11.67       37.07    34.35   16.66   88.08
   Tuba                       5.42      1.32     0.00     6.74      6.03      1.64      0.01     7.68        27.10    8.20    5.78    41.08

LEAD Munis of Pangasinan
   Asingan                    3.06      0.53     0.04     3.64      3.70      1.86      0.07     5.63        21.46    7.56    15.87   44.89
   Balungao                   1.76      0.14     0.00     1.90      2.52      3.55      0.23     6.31        13.72    6.93    1.03    21.68
   Binalonan                  2.70      1.19     0.03     3.91      4.95      4.27      0.24     9.46        23.08    12.86   6.98    42.91
   Laoac                      1.75      0.59     0.00     2.35      2.16      1.18      0.00     3.34        14.62    7.24    0.35    22.22
   Manaoag                    2.88      0.66     0.01     3.55      3.75      0.91      0.01     4.67        25.58    5.97    6.74    38.29
   Natividad                  1.62      0.47     0.00     2.08      2.03      0.80      0.00     2.83        13.40    6.04    2.94    22.38
   Pozzurubio                 3.06      0.84     0.01     3.91      3.65      1.34      0.03     5.03        25.58    13.10   3.13    41.82
   Rosales                    2.97      0.49     0.00     3.46      3.48      1.18      0.01     4.66        22.04    10.28   3.04    35.36
   San Manuel                 3.57      0.70     0.06     4.33      4.53      1.13      0.12     5.78        30.35    5.64    8.43    44.41
   San Nicolas                2.03      0.06     0.00     2.09      2.71      0.48      0.00     3.19        21.27    15.84   0.53    37.64
   San Quintin                2.12      0.37     0.00     2.48      2.52      3.13      1.95     7.60        14.89    10.70   4.59    30.17
   Santa Maria                1.37      0.16     0.02     1.55      1.69      0.42      0.06     2.17        13.95    4.30    2.68    20.93
   Sison                      3.09      0.44     0.00     3.53      4.23      1.48      0.01     5.71        19.91    11.04   4.58    35.53
   Tayug                      2.36      2.08     0.00     4.43      2.77      2.50      0.00     5.26        19.53    8.74    6.81    35.07
   Umingan                    4.31      0.42     0.00     4.73      5.36      9.28      0.00     14.63       30.04    17.27   5.47    52.78
   Villasis                   3.44      0.66     0.02     4.12      3.92      3.80      6.72     14.44       26.22    11.30   39.00   76.51
                         Annex Table 1. General Fund Expenditure of LEAD LGUs, 2002 (in million pesos)

                                 Total Health Services                 Total Social Services                      Grand Total
                           PS       MOOE       CO     Total       PS     MOOE        CO      Total         PS    MOOE       CO   Total
LEAD Munis of Sorsogon
 * Barcelona              1.95      0.07     0.00     2.02      2.43     0.09      0.00      2.52        13.64   4.22    0.38    18.24
   Bulan                  4.43      0.45     0.00     4.88      5.63     1.92      0.00      7.55        25.33   21.18   9.68    56.20
 * Bulusan                2.44      0.44     0.00     2.88      2.85     1.00      2.56      6.41        13.36   3.07    6.62    23.04
 *   Casiguran            3.14      0.65     0.02     3.82      3.54     1.20      0.08      4.83        14.77   4.85    3.83    23.44
     Castilla             3.14      0.36     0.05     3.55      3.97     1.00      0.05      5.02        17.81   5.43    0.85    24.10
 *   Donsol               3.34      0.70     0.05     4.10      4.42     0.91      0.06      5.39        21.32   7.24    1.52    30.07
     Gubat                3.97      1.21     0.16     5.33      4.90     3.51      0.16      8.57        24.98   9.40    2.48    36.87
     Irosin               3.54      0.38     0.00     3.93      6.00     0.63      0.00      6.63        23.32   8.67    4.63    36.61
     Juban                1.72      0.48     0.00     2.20      2.46     0.75      0.00      3.21        15.61   3.26    5.28    24.15
 *   Magallanes           3.16      0.29     0.02     3.47      3.49     0.34      0.02      3.86        18.28   6.54    0.70    25.52
 *   Matnog               3.06      1.55     0.00     4.61      3.52     5.95      0.00      9.47        15.23   11.91   0.30    27.45
 *   Pilar                3.18      1.42     0.04     4.63      4.87     1.58      0.04      6.49        29.01   11.54   0.34    40.89
     Prieto Diaz          1.86      0.18     0.00     2.04      2.53     0.26      3.41      6.20        14.35   1.22    3.41    18.98
     Santa Magdalena      1.55      0.16     0.08     1.79      1.84     0.24      0.08      2.16        11.01   2.03    3.00    16.04

LEAD Munis of Iloilo
   Ajuy                   2.58      0.26     0.00     2.84      3.14     0.94      0.00      4.08        19.49   4.91    1.39    25.79
   Balasan                1.83      0.09     0.00     1.92      2.15     0.13      0.00      2.28        17.87   5.37    0.69    23.93
 * Batad                  1.05      0.02     0.00     1.07      1.71     0.04      0.00      1.75        11.97   2.69    2.55    17.21
   Carles                 2.80      0.19     0.00     2.99      3.63     3.93      0.02      7.57        24.07   13.35   2.51    39.93
 * Concepcion             2.22      0.60     0.00     2.83      3.42     1.26      0.01      4.69        16.65   6.01    2.97    25.64
   Estancia               2.40      0.46     0.00     2.86      3.62     0.83      0.00      4.45        21.63   7.30    0.00    28.93
   Lemery                 1.32      0.07     0.00     1.39      2.03     0.15      0.00      2.18        15.10   6.58    2.00    23.68
   San Dionisio           1.80      0.06     0.00     1.86      2.26     0.20      0.00      2.46        15.73   5.12    0.63    21.48
   Sara                   2.49      0.99     0.00     3.48      3.27     1.48      0.00      4.76        23.48   13.03   0.04    36.54
                                Annex Table 1. General Fund Expenditure of LEAD LGUs, 2002 (in million pesos)

                                        Total Health Services                 Total Social Services                      Grand Total
                                  PS       MOOE       CO     Total       PS     MOOE        CO      Total         PS    MOOE       CO   Total
LEAD Munis of Capiz
   Cuartero                      2.47      0.47     0.00     2.94      3.55     1.09      0.05      4.69        17.27   4.40    2.33    23.99
     Dao                         2.38      1.30     0.00     3.68      3.10     3.03      0.34      6.48        14.67   7.72    0.34    22.73
     Dumalag                     2.08      0.71     0.00     2.79      3.92     1.88      0.00      5.80        16.59   4.05    0.00    20.65
     Dumarao                     2.54      0.19     0.00     2.73      3.18     1.08      0.00      4.25        18.33   14.09   2.58    35.00
     Ivisan                      2.15      0.06     0.00     2.21      3.18     0.16      0.00      3.34        16.26   2.32    1.93    20.50
     Jamindan                    2.79      1.22     0.00     4.01      3.52     5.35      0.34      9.21        19.97   12.77   2.11    34.85
     Ma-ayon                     2.80      0.16     0.00     2.96      3.56     0.63      0.00      4.18        17.97   5.30    0.07    23.34
     Mambusao                    2.19      0.93     0.00     3.12      3.29     1.76      0.00      5.05        20.99   5.15    3.40    29.54
     Panay                       2.91      0.14     0.00     3.05      3.67     0.19      0.00      3.86        21.71   4.55    4.80    31.06
 *   Panitan                     2.91      0.21     0.00     3.12      3.79     0.37      0.00      4.16        19.69   5.74    1.83    27.25
     Pilar                       2.34      0.28     0.00     2.62      3.06     0.77      0.00      3.83        18.99   8.61    0.00    27.60
     Pontevedra                  3.07      0.14     0.00     3.21      3.67     0.18      0.00      3.85        23.38   10.80   0.00    34.18
     President Roxas             1.98      0.11     0.00     2.08      2.74     0.16      0.00      2.90        14.02   9.84    0.86    24.72
 *   Sapian                      2.55      0.17     0.00     2.71      3.34     2.77      2.47      8.58        14.48   5.89    2.48    22.85
     Sigma                       1.85      0.07     0.00     1.92      2.37     0.16      0.00      2.53        16.28   4.26    2.62    23.16
     Tapaz                       4.34      0.38     0.00     4.72      5.72     0.49      2.11      8.32        26.63   5.64    6.60    38.87

LEAD Munis of Davao del Norte
   Asuncion                      4.00      1.44     0.08     5.52      4.90     2.59      0.17     7.67         25.00   25.43   2.71    53.15
   Carmen                        2.64      0.95     0.19     3.78      3.15     2.41      0.60     6.17         21.38   19.85   14.26   55.50
   Dujali                        1.11      0.31     0.10     1.52      1.11     0.92      0.20     2.23         12.77   7.11    1.18    21.05
   Kapalong                      3.79      3.40     1.19     8.39      5.83     7.10      2.15     15.08        34.48   37.11   10.55   82.13
   New Corella                   2.59      0.40     0.00     2.98      3.04     1.58      0.02     4.64         20.81   11.20   7.44    39.45
   Santo Tomas                   3.32      1.10     0.00     4.42      3.79     4.23      0.49     8.51         30.59   26.96   22.87   80.42
   Talaingod                     1.03      0.94     0.09     2.06      1.18     2.27      0.09     3.54         14.13   14.12   13.16   41.41
                              Annex Table 1. General Fund Expenditure of LEAD LGUs, 2002 (in million pesos)

                                      Total Health Services                 Total Social Services                      Grand Total
                                PS       MOOE       CO     Total       PS     MOOE        CO      Total         PS    MOOE       CO   Total
LEAD Munis of Maguindanao
*   Ampatuan                   0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        11.29   18.17   1.02    30.48
*   Barira                     0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        5.71    10.83   0.51    17.05
*   Buldon                     0.00      0.00     0.00     0.00      0.41     0.20      0.00      0.61        10.80   15.44   0.00    26.24
*   Buluan                     0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        14.33   16.94   0.16    31.42
*   Datu Paglas                0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        7.53    10.96   0.00    18.49
*   Datu Piang                 0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        10.96   24.69   0.00    35.65
*   Dinaig (Datu Sinsuat)      0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        16.40   29.75   0.00    46.14
*   Gen. S. K. Pendatun        0.00      0.03     0.00     0.03      0.00     0.05      0.00      0.05        10.02   10.38   0.02    20.43
*   Kabuntalan                 0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        8.22    8.34    0.00    16.56
*   Maganoy (Shariff Aguak)    0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        10.57   21.14   0.02    31.74
*   Mamasapano                 0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        5.29    7.21    0.33    12.83
*   Matanog                    0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        8.37    6.89    0.30    15.56
*   Pagalungan                 0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        24.36   24.82   9.65    58.83
*   Parang                     0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        21.25   23.16   9.34    53.75
*   South Upi                  0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        11.72   8.72    0.00    20.44
*   Sultan Kudarat             0.00      0.00     0.00     0.00      0.44     6.24      4.89     11.58        13.89   32.44   18.75   65.09
*   Sultan sa Barongis         0.24      0.15     0.00     0.39      0.24     0.15      0.00      0.39        9.85    14.01   0.84    24.71
*   Talayan                    0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        10.66   13.21   0.00    23.87
*   Talitay                    0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        7.29    5.61    0.28    13.19
*   Upi                        0.00      0.03     0.00     0.03      0.00     0.05      0.00      0.05        13.13   20.27   2.51    35.90

LEAD Munis of Tawi-Tawi
* Balimbing                    0.00      0.05     0.00     0.05      0.00     0.49      0.00      0.49        8.77    8.69    4.32    21.78
*   Bongao                     0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        17.24   7.08    6.55    30.87
*   Cagayan de Tawi-Tawi       0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        9.40    3.54    3.16    16.10
*   Languyan                   0.00      0.00     0.00     0.00      0.00     2.28      0.00      2.28        11.70   11.61   3.87    27.17
*   Sapa-Sapa                  0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        6.47    4.97    1.00    12.45
*   Simunul                    0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        10.25   4.66    3.73    18.64
*   Sitangkai                  0.00      0.00     0.00     0.00      0.00     0.00      0.00      0.00        14.47   10.96   0.00    25.44
*   South Ubian                0.20      0.00     0.00     0.20      0.22     0.00      0.00      0.22        8.16    5.99    0.03    14.18
*   Tandubas                   0.00      0.00     0.00     0.00      0.00     0.50      0.00      0.50        12.68   4.27    4.15    21.10
*   Turtle Islands             0.00      2.50     0.00     2.50      0.00     2.65      0.00      2.65        5.29    6.79    1.25    13.33
                           Annex Table 1. General Fund Expenditure of LEAD LGUs, 2002 (in million pesos)

                                    Total Health Services                 Total Social Services                         Grand Total
                             PS        MOOE       CO     Total      PS      MOOE        CO      Total         PS       MOOE       CO       Total




LEAD Cities
   Makati                  176.51     95.67     0.00    272.18   400.75    108.09    0.00      508.84      1,370.59   2,483.47   886.47   4,740.53
   Mandaluyong             120.88     26.58     0.00    147.46   176.06    163.43    4.19      343.69       474.13     556.93    108.92   1,139.98
   Marikina                33.56      10.38     0.25    44.19    51.06     17.34     1.02      69.42        237.69     297.97    166.63    702.29
 * Paranaque               86.32      19.41     0.00    105.72   134.93    188.06    57.85     380.84       404.66     598.34    144.50   1,147.50
   Pasig                   112.62     38.00     13.43   164.05   138.55    98.35     16.88     253.79       428.66     658.07    465.06   1,551.79
 * Valenzuela              61.59      12.69     2.04    76.31    83.01     28.27     8.35      119.63       266.77     355.67    132.86    755.30
   Quezon City             154.76     29.93     2.18    186.86   414.68    799.42    8.40     1,222.49     1,207.74   2,419.44   411.62   4,038.80
 * Pasay                   82.49      21.30     4.17    107.96   109.74    246.68    6.50      362.91       379.86     563.62    118.49   1,061.97
   Baguio City             31.41      16.82     4.51    52.74    39.97     30.06     13.42     83.45        247.97     146.22    174.46    568.65
   Angeles City            52.27      18.80     1.36    72.44    70.13     36.88     8.37      115.38       218.94     148.15    64.61     431.71
   Iloilo City             42.56      11.53     0.08    54.16    71.86     78.32     23.49     173.67       296.97     230.19    71.85     599.00
 * Cebu City               105.65     77.03     0.23    182.90   168.29    159.48    0.23      328.00       545.83     560.32    579.47   1,685.63
 * Zamboanga City          43.04      25.44     0.28    68.76    70.95     47.20     0.77      118.91       339.72     235.34    537.77   1,112.84
   Davao                   78.20      50.77     1.26    130.23   142.25    238.95    32.89     414.09       570.48    1,198.93   160.34   1,929.74
   General Santos          61.09      13.82     5.58    80.49    88.92     26.81     25.67     141.40       293.53     162.01    171.68    627.23
   Roxas City              21.66      5.14      0.44    27.24    23.25     22.55     26.56     72.36        115.67     89.08     28.37     233.12
   Urdaneta                 6.50      0.76      0.00     7.26    25.76      3.14     1.11      30.01        95.07      84.59     35.37     215.03
   Samal                   15.89      4.48      1.13    21.50    18.96      6.57     5.46      30.99        110.67     63.81     38.00     212.48
   Tagum                   14.89      8.93      0.12    23.95    27.23     19.54     0.12      46.89        117.94     169.75    13.46     301.15
   Panabo                   6.44      0.87      0.09     7.40     7.92      1.19     0.16       9.26        41.42      74.91     46.86     163.19


   * data refers to 2001
                                     Annex Table 2. Budget Share of Aggregate Social Services and Health Sector in LEAD LGUs, 2002 (in percent)


                                                       Total Health Services                           Aggregate Social Services
                                            PS b/     MOOE b/      CO b/     Total a/          PS b/     MOOE b/      CO b/      Total a/     PS a/
National Average of Municipalities          78.08      20.25        1.67      9.80             63.28       30.22       6.50       16.08       57.99

LEAD Munis of Metro Manila                  12.14        0.47       87.39      10.57           59.56        0.21       40.24      27.04       39.56
   * Navotas                                14.02        0.16       85.81      9.11            67.75        0.06       32.19      24.30       40.67
   * Pateros                                 7.33        1.26       91.41      17.91           35.04        0.64       64.32      40.79       34.00

LEAD Munis of Benguet                       79.09       20.64       0.27       10.34           64.59       30.19        5.22      14.34       52.14
     Buguias                                91.50       7.64        0.86       10.58           91.50       7.64         0.86      10.58       53.72
     Itogon                                 86.18       13.82       0.00       12.25           78.60       21.40        0.00      15.08       56.97
     La Trinidad                            60.81       38.64       0.55       6.22            37.35       49.07       13.58      13.24       42.09
     Tuba                                   80.42       19.58       0.00       16.39           78.54       21.32        0.15      18.70       65.97

LEAD Munis of Pangasinan                    80.85       18.80       0.35        8.64           53.60       37.02        9.38      16.71       55.70
     Asingan                                84.21       14.69       1.10       8.10            65.81       33.04       1.16       12.53       47.81
     Balungao                               92.71       7.29        0.00       8.76            39.99       56.29       3.72       29.08       63.28
     Binalonan                              68.97       30.28       0.75       9.12            52.33       45.13       2.54       22.05       53.78
     Laoac                                  74.76       25.24       0.00       10.57           64.69       35.31       0.00       15.05       65.83
     Manaoag                                81.20       18.51       0.28       9.28            80.29       19.49       0.21       12.19       66.81
     Natividad                              77.66       22.34       0.00       9.30            71.82       28.18       0.00       12.65       59.85
     Pozzurubio                             78.27       21.59       0.14       9.34            72.69       26.65       0.66       12.02       61.18
     Rosales                                85.92       14.08       0.00       9.78            74.64       25.25       0.11       13.17       62.32
     San Manuel                             82.51       16.10       1.39       9.75            78.48       19.47       2.04       13.01       68.32
     San Nicolas                            97.15        2.85       0.00       5.56            84.97       15.03       0.00        8.48       56.51
     San Quintin                            85.19       14.81       0.00       8.23            33.18       41.20       25.63      25.20       49.35
     Santa Maria                            88.57       10.46       0.97       7.40            77.86       19.19        2.94      10.37       66.64
     Sison                                  87.50       12.38       0.12       9.94            73.99       25.89        0.13      16.09       56.03
     Tayug                                  53.18       46.82       0.00       12.64           52.56       47.44        0.00      15.01       55.69
     Umingan                                91.07        8.93       0.00       8.96            36.61       63.39       0.00       27.72       56.91
     Villasis                               83.50       16.08       0.41       5.39            27.14       26.31       46.55      18.87       34.26

LEAD Munis of Sorsogon                      82.19       16.96       0.84       12.26           67.00       24.76        8.24      19.50       64.24
   * Barcelona                              96.49       3.51        0.00       11.06           96.45        3.55       0.00       13.81       74.79
     Bulan                                  90.74        9.26       0.00        8.68           74.61       25.39        0.00      13.43       45.08
   * Bulusan                                84.72       15.28       0.00       12.49           44.53       15.55       39.92      27.80       57.96
   * Casiguran                              82.38       17.11       0.52       16.28           73.32       24.93       1.76       20.59       62.99
     Castilla                               88.43       10.18       1.39       14.72           79.02       20.00       0.98       20.84       73.91
   * Donsol                                 81.58       17.14       1.28       13.62           82.03       16.91       1.06       17.93       70.88
     Gubat                                  74.36       22.63       3.02       14.47           57.16       40.96        1.88      23.24       67.76
     Irosin                                 90.29        9.71       0.00       10.72           90.53        9.47        0.00      18.11       63.68
     Juban                                  78.06       21.94       0.00        9.11           76.64       23.36        0.00      13.31       64.64
   * Magallanes                             91.14       8.30        0.56       13.60           90.51       8.86        0.63       15.13       71.61
   * Matnog                                 66.37       33.63       0.00       16.81           37.16       62.84        0.00      34.49       55.50
   * Pilar                                  68.63       30.59       0.79       11.33           75.05       24.39        0.56      15.87       70.94
     Prieto Diaz                            90.95        9.05       0.00       10.76           40.84        4.17       54.99      32.64       75.61
     Santa Magdalena                        86.62       9.07        4.31       11.13           85.19       11.25       3.56       13.49       68.64

LEAD Munis of Iloilo                        87.01       12.96       0.02        8.74           73.73       26.21       0.06       14.08       68.27
     Ajuy                                   90.82        9.18       0.00       11.02           76.87       23.13       0.00       15.83       75.57
     Balasan                                95.17        4.83       0.00        8.03           94.51        5.49       0.00        9.52       74.69
   * Batad                                  97.71        2.29       0.00        6.23           97.65        2.35       0.00       10.17       69.52
     Carles                                 93.57        6.43       0.00        7.48           47.89       51.91       0.20       18.97       60.28
   * Concepcion                             78.63       21.21       0.16       11.03           73.03       26.82       0.15       18.28       64.95
     Estancia                               83.76       16.24       0.00        9.89           81.34       18.66       0.00       15.40       74.76
     Lemery                                 95.06        4.94       0.00        5.88           92.98        7.02       0.00        9.20       63.79
     San Dionisio                           96.80       3.20        0.00       8.64            91.74        8.26       0.00       11.47       73.22
     Sara                                   71.52       28.48       0.00        9.52           68.82       31.18       0.00       13.01       64.24

LEAD Munis of Capiz                         86.34       13.66       0.01       10.87           68.67       24.77        6.56      18.41       67.51
     Cuartero                               84.02       15.98       0.00       12.27           75.82       23.18       1.00       19.53       71.98
     Dao                                    64.70       35.30       0.00       16.21           47.90       46.82        5.28      28.50       64.54
     Dumalag                                74.52       25.48       0.00       13.49           67.61       32.39       0.00       28.07       80.37
     Dumarao                                92.90       7.10        0.00        7.80           74.68       25.32        0.00      12.16       52.37
     Ivisan                                 97.41        2.59       0.00       10.76           95.20        4.80        0.00      16.31       79.31
     Jamindan                               69.52       30.41       0.07       11.51           38.22       58.08       3.69       26.42       57.31
     Ma-ayon                                94.68        5.32       0.00       12.67           85.02       14.98       0.00       17.93       76.97
     Mambusao                               70.14       29.86       0.00       10.56           65.23       34.77       0.00       17.10       71.06
     Panay                                  95.31        4.69       0.00        9.83           95.01        4.99        0.00      12.42       69.90
   * Panitan                                93.15       6.85        0.00       11.45           91.07        8.93        0.00      15.26       72.24
     Pilar                                  89.50       10.50       0.00        9.49           79.82       20.18        0.00      13.89       68.81
     Pontevedra                             95.68       4.32        0.00        9.40           95.23        4.77        0.00      11.28       68.39
     President Roxas                        94.95       5.05        0.00       8.42            94.40        5.60        0.00      11.75       56.73
   * Sapian                                 93.79       6.21        0.00       11.88           38.88       32.31       28.81      37.57       63.39
     Sigma                                  96.15        3.85       0.00        8.30           93.54        6.46        0.00      10.92       70.29
     Tapaz                                  91.95        8.05       0.00       12.13           68.74        5.84       25.42      21.39       68.51

LEAD Munis of Davao del Norte               64.48       29.78        5.74       7.68           48.09       44.15        7.76      12.82       42.66
     Asuncion                               72.43       26.14        1.44      10.38           63.94       33.83        2.22      14.43       47.05
     Carmen                                 69.91       25.10        5.00       6.81           51.10       39.10        9.79      11.12       38.53
     Dujali                                 73.17       20.45       6.39       7.21            49.85       41.37        8.78      10.58       60.64
     Kapalong                               45.23       40.55       14.22      10.21           38.63       47.10       14.27      18.36       41.98
     New Corella                            86.67       13.33       0.00       7.56            65.52       34.10       0.38       11.77       52.76
     Santo Tomas                            75.15       24.85        0.00       5.50           44.55       49.73        5.72      10.58       38.04
                                                Annex Table 2. Budget Share of Aggregate Social Services and Health Sector in LEAD LGUs, 2002 (in percent)


                                                                  Total Health Services                           Aggregate Social Services
                                                       PS b/     MOOE b/      CO b/     Total a/          PS b/     MOOE b/      CO b/      Total a/     PS a/
       Talaingod                                       50.17      45.56        4.27      4.97             33.25       64.27       2.49       8.54        34.13

LEAD Munis of Maguindanao                              54.42       45.58       0.00        0.07           8.64        52.80       38.56      2.12        38.71
   * Ampatuan                                                                              0.00           0.00        100.00       0.00      0.01        37.04
   * Barira                                                                                0.00                                               0.00       33.50
   * Buldon                                                                                0.00           67.23       32.77       0.00       2.34        41.16
   * Buluan                                                                                0.00                                               0.00       45.59
   * Datu Paglas                                                                           0.00                                               0.00       40.73
   * Datu Piang                                                                            0.00                                               0.00       30.74
   * Dinaig (Datu Sinsuat)                                                                 0.00                                              0.00        35.53
   * Gen. S. K. Pendatun                                0.00       100.00      0.00        0.12           0.00        100.00      0.00       0.22        49.06
   * Kabuntalan                                                                            0.00                                               0.00       49.63
   * Maganoy (Shariff Aguak)                                                               0.00                                              0.00        33.32
   * Mamasapano                                                                            0.00                                               0.00       41.26
   * Matanog                                                                               0.00                                               0.00       53.79
   * Pagalungan                                                                            0.00                                               0.00       41.41
   * Parang                                                                                0.00                                               0.00       39.53
   * South Upi                                                                             0.00                                               0.00       57.33
   * Sultan Kudarat                                                                        0.00            3.83       53.92       42.24      17.79       21.35
   * Sultan sa Barongis                                61.50       38.50       0.00        1.58           61.50       38.50       0.00       1.58        39.88
   * Talayan                                                                               0.00                                               0.00       44.65
   * Talitay                                                                               0.00                                               0.00       55.31
   * Upi                                                0.00       100.00      0.00        0.07           0.00        100.00      0.00       0.15        36.56

LEAD Munis of Tawi-Tawi                                 7.10        92.90      0.00        1.37           3.56         96.44      0.00        3.06       51.94
   * Balimbing                                          0.00       100.00      0.00       0.23            0.00        100.00      0.00       2.26        40.25
   * Bongao                                                                                0.00                                               0.00       55.84
   * Cagayan de Tawi-Tawi                                                                 0.00                                                0.00       58.41
   * Languyan                                                                              0.00           0.00        100.00      0.00        8.40       43.05
   * Sapa-Sapa                                                                             0.00                                               0.00       52.00
   * Simunul                                                                               0.00                                               0.00       55.00
   * Sitangkai                                                                             0.00                                               0.00       56.90
   * South Ubian                                       100.00       0.00       0.00       1.38           100.00        0.00       0.00       1.54        57.58
   * Tandubas                                                                              0.00           0.00        100.00      0.00        2.37       60.07
   * Turtle Islands                                     0.00       100.00      0.00       18.76           0.00        100.00      0.00       19.88       39.66

National Average of Cities                             70.78       26.91       2.31        7.25           45.75       42.42       11.83      18.82       36.57

LEAD Cities
    Makati                                             64.85       35.15       0.00        5.74           78.76       21.24        0.00      10.73       28.91
    Mandaluyong                                        81.97       18.03       0.00       12.94           51.23       47.55       1.22       30.15       41.59
    Marikina                                           75.94       23.50       0.57        6.29           73.56       24.97        1.47       9.88       33.84
 * Paranaque                                           81.64       18.36       0.00        9.21           35.43       49.38       15.19      33.19       35.26
    Pasig                                              68.65       23.17       8.18       10.57           54.59       38.75        6.65      16.35       27.62
 * Valenzuela                                          80.71       16.63       2.67       10.10           69.39       23.63       6.98       15.84       35.32
    Quezon City                                        82.82       16.02       1.17        4.63           33.92       65.39        0.69      30.27       29.90
 * Pasay                                               76.41       19.73       3.86       10.17           30.24       67.97        1.79      34.17       35.77
    Baguio City                                        59.56       31.90       8.55        9.27           47.90       36.02       16.08      14.68       43.61
    Angeles City                                       72.16       25.96       1.88       16.78           60.78       31.96       7.25       26.73       50.71
    Iloilo City                                        78.57       21.29       0.14        9.04           41.38       45.10       13.53      28.99       49.58
 * Cebu City                                           57.76       42.11       0.12       10.85           51.31       48.62        0.07      19.46       32.38
 * Zamboanga City                                      62.60       37.00       0.40        6.18           59.66       39.69       0.65       10.69       30.53
    Davao                                              60.05       38.98       0.97        6.75           34.35       57.70        7.94      21.46       29.56
    General Santos                                     75.90       17.17       6.94       12.83           62.89       18.96       18.15      22.54       46.80
    Roxas City                                         79.51       18.88       1.61       11.68           32.13       31.16       36.71      31.04       49.62
    Urdaneta                                           89.48       10.52       0.00        3.38           85.83       10.47        3.71      13.96       44.21
    Samal                                              73.91       20.82       5.26       10.12           61.19       21.19       17.62      14.59       52.09
    Tagum                                              62.19       37.30       0.51        7.95           58.06       41.68        0.26      15.57       39.16
    Panabo                                             87.05       11.71       1.24        4.53           85.46       12.85        1.69       5.68       25.38


 * data refers to 2001
a/ Percent to total general fund expenditures
b/ Percent to total expenditure in sector
                         Annex Table 3. Composition of Health Sector Expenditure in LEAD LGUs, 2002 (in percent)


                                                          Basic Health                                        Hospitals                         Total Health Services
                                             PS b/     MOOE b/     CO b/       Total a/         PS b/    MOOE b/     CO b/   Total c/   PS a/   MOOE a/       CO a/     Total a/
National Average of Municipalities           81.85      17.25       0.90          93.32         74.45     24.69       0.86      0.17    78.08     20.25        1.67     100.00

LEAD Munis of Metro Manila                   11.83       0.47       87.70       99.65                                         0.00      12.14     0.47       87.39      100.00
   * Navotas                                 13.60       0.16       86.24       99.51                                         0.00      14.02     0.16       85.81      100.00
   * Pateros                                 7.33        1.26       91.41      100.00                                         0.00      7.33      1.26       91.41      100.00

LEAD Munis of Benguet                        79.09       20.64       0.27      100.00                                         0.00      79.09    20.64        0.27      100.00
     Buguias                                 91.50       7.64        0.86      100.00                                         0.00      91.50    7.64         0.86      100.00
     Itogon                                  86.18       13.82       0.00      100.00                                         0.00      86.18    13.82        0.00      100.00
     La Trinidad                             60.81       38.64       0.55      100.00                                         0.00      60.81    38.64        0.55      100.00
     Tuba                                    80.42       19.58       0.00      100.00                                         0.00      80.42    19.58        0.00      100.00

LEAD Munis of Pangasinan                     85.41       14.22       0.37       94.66                                         0.00      80.85    18.80        0.35      100.00
     Asingan                                 84.48       14.42       1.10       99.68                                         0.00      84.21    14.69        1.10      100.00
     Balungao                                92.71       7.29        0.00      100.00                                         0.00      92.71    7.29         0.00      100.00
     Binalonan                               72.88       26.33       0.80       94.64                                         0.00      68.97    30.28        0.75      100.00
     Laoac                                   97.72       2.28        0.00       76.50                                         0.00      74.76    25.24        0.00      100.00
     Manaoag                                 81.20       18.51       0.28      100.00                                         0.00      81.20    18.51        0.28      100.00
     Natividad                               78.05       21.95       0.00       99.50                                         0.00      77.66    22.34        0.00      100.00
     Pozzurubio                              78.27       21.59       0.14      100.00                                         0.00      78.27    21.59        0.14      100.00
     Rosales                                 85.92       14.08       0.00      100.00                                         0.00      85.92    14.08        0.00      100.00
     San Manuel                              82.51       16.10       1.39      100.00                                         0.00      82.51    16.10        1.39      100.00
     San Nicolas                             97.15       2.85        0.00      100.00                                         0.00      97.15    2.85         0.00      100.00
     San Quintin                             85.19       14.81       0.00      100.00                                         0.00      85.19    14.81        0.00      100.00
     Santa Maria                             88.57       10.46       0.97      100.00                                         0.00      88.57    10.46        0.97      100.00
     Sison                                   87.50       12.38       0.12      100.00                                         0.00      87.50    12.38        0.12      100.00
     Tayug                                   96.75       3.25        0.00       54.96                                         0.00      53.18    46.82        0.00      100.00
     Umingan                                 91.07       8.93        0.00      100.00                                         0.00      91.07    8.93         0.00      100.00
     Villasis                                83.50       16.08       0.41      100.00                                         0.00      83.50    16.08        0.41      100.00

LEAD Munis of Sorsogon                       82.33       16.82       0.85       99.83                                         0.00      82.19    16.96        0.84      100.00
   * Barcelona                               96.49       3.51        0.00      100.00                                         0.00      96.49    3.51         0.00      100.00
     Bulan                                   90.74       9.26        0.00      100.00                                         0.00      90.74    9.26         0.00      100.00
   * Bulusan                                 84.72       15.28       0.00      100.00                                         0.00      84.72    15.28        0.00      100.00
   * Casiguran                               82.38       17.11       0.52      100.00                                         0.00      82.38    17.11        0.52      100.00
     Castilla                                88.43       10.18       1.39      100.00                                         0.00      88.43    10.18        1.39      100.00
   * Donsol                                  81.58       17.14       1.28      100.00                                         0.00      81.58    17.14        1.28      100.00
     Gubat                                   74.81       22.15       3.04       99.39                                         0.00      74.36    22.63        3.02      100.00
     Irosin                                  90.29       9.71        0.00      100.00                                         0.00      90.29    9.71         0.00      100.00
     Juban                                   78.06       21.94       0.00      100.00                                         0.00      78.06    21.94        0.00      100.00
   * Magallanes                              91.14       8.30        0.56      100.00                                         0.00      91.14    8.30         0.56      100.00
   * Matnog                                  66.37       33.63       0.00      100.00                                         0.00      66.37    33.63        0.00      100.00
   * Pilar                                   68.63       30.59       0.79      100.00                                         0.00      68.63    30.59        0.79      100.00
     Prieto Diaz                             90.95       9.05        0.00      100.00                                         0.00      90.95    9.05         0.00      100.00
     Santa Magdalena                         89.21       6.35        4.44       97.09                                         0.00      86.62    9.07         4.31      100.00

LEAD Munis of Iloilo                         87.01       12.96       0.02      100.00                                         0.00      87.01    12.96        0.02      100.00
     Ajuy                                    90.82       9.18        0.00      100.00                                         0.00      90.82    9.18         0.00      100.00
     Balasan                                 95.17       4.83        0.00      100.00                                         0.00      95.17    4.83         0.00      100.00
   * Batad                                   97.71       2.29        0.00      100.00                                         0.00      97.71    2.29         0.00      100.00
     Carles                                  93.57       6.43        0.00      100.00                                         0.00      93.57    6.43         0.00      100.00
   * Concepcion                              78.63       21.21       0.16      100.00                                         0.00      78.63    21.21        0.16      100.00
     Estancia                                83.76       16.24       0.00      100.00                                         0.00      83.76    16.24        0.00      100.00
     Lemery                                  95.06       4.94        0.00      100.00                                         0.00      95.06    4.94         0.00      100.00
     San Dionisio                            96.80       3.20        0.00      100.00                                         0.00      96.80    3.20         0.00      100.00
     Sara                                    71.52       28.48       0.00      100.00                                         0.00      71.52    28.48        0.00      100.00

LEAD Munis of Capiz                          93.01       6.99        0.00       92.83                                         0.00      86.34    13.66        0.01      100.00
     Cuartero                                97.24       2.76        0.00       86.41                                         0.00      84.02    15.98        0.00      100.00
     Dao                                     95.49       4.51        0.00       67.76                                         0.00      64.70    35.30        0.00      100.00
     Dumalag                                 74.52       25.48       0.00      100.00                                         0.00      74.52    25.48        0.00      100.00
     Dumarao                                 93.03       6.97        0.00       99.85                                         0.00      92.90    7.10         0.00      100.00
     Ivisan                                  97.41       2.59        0.00      100.00                                         0.00      97.41    2.59         0.00      100.00
     Jamindan                                92.92       7.08        0.00       74.81                                         0.00      69.52    30.41        0.07      100.00
     Ma-ayon                                 94.68       5.32        0.00      100.00                                         0.00      94.68    5.32         0.00      100.00
     Mambusao                                95.45       4.55        0.00       73.48                                         0.00      70.14    29.86        0.00      100.00
     Panay                                   95.31       4.69        0.00      100.00                                         0.00      95.31    4.69         0.00      100.00
   * Panitan                                 93.15       6.85        0.00      100.00                                         0.00      93.15    6.85         0.00      100.00
     Pilar                                   89.50       10.50       0.00      100.00                                         0.00      89.50    10.50        0.00      100.00
     Pontevedra                              95.68       4.32        0.00      100.00                                         0.00      95.68    4.32         0.00      100.00
     President Roxas                         94.95       5.05        0.00      100.00                                         0.00      94.95    5.05         0.00      100.00
   * Sapian                                  93.79       6.21        0.00      100.00                                         0.00      93.79    6.21         0.00      100.00
     Sigma                                   96.15       3.85        0.00      100.00                                         0.00      96.15    3.85         0.00      100.00
     Tapaz                                   92.02       7.98        0.00       99.93                                         0.00      91.95    8.05         0.00      100.00
                             Annex Table 3. Composition of Health Sector Expenditure in LEAD LGUs, 2002 (in percent)


                                                                 Basic Health                                   Hospitals                          Total Health Services
                                                   PS b/      MOOE b/     CO b/    Total a/         PS b/    MOOE b/   CO b/   Total c/   PS a/    MOOE a/       CO a/     Total a/
LEAD Munis of Davao del Norte                      75.19       23.29       1.52     85.76                                       0.00      64.48      29.78        5.74     100.00
     Asuncion                                      80.32       18.94       0.73     90.17                                       0.00      72.43      26.14        1.44     100.00
     Carmen                                        85.13       13.39       1.48     82.12                                       0.00      69.91      25.10        5.00     100.00
     Dujali                                        89.70       8.53        1.77     81.57                                       0.00      73.17      20.45        6.39     100.00
     Kapalong                                      63.56       33.40       3.04     71.16                                       0.00      45.23      40.55       14.22     100.00
     New Corella                                   86.67       13.33       0.00    100.00                                       0.00      86.67      13.33        0.00     100.00
     Santo Tomas                                   78.09       21.91       0.00     96.25                                       0.00      75.15      24.85        0.00     100.00
     Talaingod                                     50.17       45.56       4.27    100.00                                       0.00      50.17      45.56        4.27     100.00

LEAD Munis of Maguindanao                          54.42           45.58   0.00    100.00                                       0.00      54.42     45.58        0.00      100.00
   * Ampatuan
   * Barira
   * Buldon
   * Buluan
   * Datu Paglas
   * Datu Piang
   * Dinaig (Datu Sinsuat)
   * Gen. S. K. Pendatun                            0.00       100.00      0.00    100.00                                       0.00       0.00     100.00       0.00      100.00
   * Kabuntalan
   * Maganoy (Shariff Aguak)
   * Mamasapano
   * Matanog
   * Pagalungan
   * Parang
   * South Upi
   * Sultan Kudarat
   * Sultan sa Barongis                            61.50           38.50   0.00    100.00                                       0.00      61.50     38.50        0.00      100.00
   * Talayan
   * Talitay
   * Upi                                            0.00       100.00      0.00    100.00                                       0.00       0.00     100.00       0.00      100.00

LEAD Munis of Tawi-Tawi                             7.10        92.90      0.00    100.00                                       0.00       7.10      92.90       0.00      100.00
   * Balimbing                                      0.00       100.00      0.00    100.00                                       0.00       0.00     100.00       0.00      100.00
   * Bongao
   * Cagayan de Tawi-Tawi
   * Languyan
   * Sapa-Sapa
   * Simunul
   * Sitangkai
   * South Ubian                                  100.00           0.00    0.00    100.00                                       0.00      100.00     0.00        0.00      100.00
   * Tandubas
   * Turtle Islands                                 0.00       100.00      0.00    100.00                                       0.00       0.00     100.00       0.00      100.00

National Average of Cities                         77.84           20.74   1.42     68.85           63.88      31.79    4.33    24.71     70.78     26.91        2.31      100.00

LEAD Cities
    Makati                                         83.57           16.43   0.00     41.89           51.36      48.64    0.00    58.11     64.85     35.15        0.00      100.00
    Mandaluyong                                    89.10           10.90   0.00     49.47           74.99      25.01    0.00    50.53     81.97     18.03        0.00      100.00
    Marikina                                       75.94           23.50   0.57    100.00                                       0.00      75.94     23.50        0.57      100.00
 * Paranaque                                       80.95           19.05   0.00     62.05           83.04      16.96   0.00     37.63     81.64     18.36        0.00      100.00
    Pasig                                          86.10           12.48   1.42     50.86           50.62      34.18   15.20    49.11     68.65     23.17        8.18      100.00
 * Valenzuela                                      83.48           14.93   1.59     90.36           54.68      32.57   12.75    9.64      80.71     16.63        2.67      100.00
    Quezon City                                    83.96           15.57   0.48     88.33           74.20      19.43   6.37     11.67     82.82     16.02        1.17      100.00
 * Pasay                                           85.76           14.02   0.22     41.10           70.78      24.02   5.20     58.16     76.41     19.73        3.86      100.00
    Baguio City                                    59.56           31.90   8.55    100.00                                       0.00      59.56     31.90        8.55      100.00
    Angeles City                                   69.32           29.49   1.19     55.66           81.79      18.21    0.00    41.05     72.16     25.96        1.88      100.00
    Iloilo City                                    91.45           8.36    0.19     73.71           97.44      2.56     0.00    11.45     78.57     21.29        0.14      100.00
 * Cebu City                                       76.69           23.31   0.00     34.57           60.73      39.03    0.24    51.46     57.76     42.11        0.12      100.00
 * Zamboanga City                                  62.60           37.00   0.40    100.00                                       0.00      62.60     37.00        0.40      100.00
    Davao                                          72.56           26.21   1.23     78.67           49.62      50.38   0.00     5.97      60.05     38.98        0.97      100.00
    General Santos                                 92.67           7.33    0.00     63.20           78.21      0.00    21.79    22.16     75.90     17.17        6.94      100.00
    Roxas City                                     79.51           18.88   1.61    100.00                                       0.00      79.51     18.88        1.61      100.00
    Urdaneta                                       89.48           10.52   0.00    100.00                                       0.00      89.48     10.52        0.00      100.00
    Samal                                          77.83           21.93   0.24     94.97                                       0.00      73.91     20.82        5.26      100.00
    Tagum                                          62.19           37.30   0.51    100.00                                       0.00      62.19     37.30        0.51      100.00
    Panabo                                         87.05           11.71   1.24    100.00                                       0.00      87.05     11.71        1.24      100.00


 * data refers to 2001
a/ Percent share to total health expenditure
b/ Percent share to total expenditure in health sector component
                                                         Annex Table 4. Per Capita Expenditures of LEAD LGUs, 2002 (in pesos)


                                           Basic Health                              Total Health                  Aggregate Social Services             Grand Total
                                      PS   MOOE        CO    Total         PS      MOOE        CO   Total         PS     MOOE        CO Total      PS   MOOE       CO   Total
National Average of Municipalities   69     14        1       84          70        18         1     90          93       45        10      147   531   280      105     916

LEAD Munis of Metro Manila           15     1       108       123         15         1       108     124        188        1       127     316    463   329      378    1,170
   * Navotas                         15     0        95       111         16         0        95     111        201        0        95     297    496   403      321    1,221
   * Pateros                         13     2       158       173         13         2       158     173        138        3       254     395    329    35      604     968

LEAD Munis of Benguet                93    24        0        118         93        24        0      118        106       49       9       164    596   352      195    1,142
     Buguias                         89     7        1        98          89         7        1      98         89         7       1       98     495   321      106     921
     Itogon                          126   20        0        146         126       20        0      146        141       38       0       180    679   278      235    1,192
     La Trinidad                     47    30        0        78          47        30        0      78         62        81       23      166    527   488      237    1,252
     Tuba                            143   35        0        178         143       35        0      178        160       43       0       203    717   217      153    1,087

LEAD Munis of Pangasinan             61    10        0        72          61        14        0      76         79        54        14     147    490   226      164     879
     Asingan                         57    10        1        68          57        10        1      68         69        35        1      105    401   141      297     839
     Balungao                        70     6        0        76          70         6        0      76         100       141       9      251    547   276       41     864
     Binalonan                       53    19        1        72          53        23        1      76         97        83        5      185    451   251      136     838
     Laoac                           63     1        0        65          63        21        0      85         78        43        0      121    527   261       13     801
     Manaoag                         50    11        0        62          50        11        0      62         65        16        0      82     447   104      118     669
     Natividad                       78    22        0        100         78        22        0      100        98        38        0      136    645   291      142    1,078
     Pozzurubio                      50    14        0        64          50        14        0      64         60        22        1      82     418   214       51     683
     Rosales                         55     9        0        64          55         9        0      64         64        22        0      86     406   189       56     651
     San Manuel                      82    16        1        99          82        16        1      99         104       26        3      132    695   129      193    1,017
     San Nicolas                     62     2        0        64          62         2        0      64         83        15        0      98     653   486       16    1,155
     San Quintin                     72    13        0        85          72        13        0      85         86        107       67     260    509   366      157    1,032
     Santa Maria                     47     6        1        53          47         6        1      53         58        14        2      74     479   148       92     718
     Sison                           71    10        0        81          71        10        0      81         97        34        0      131    456   253      105     813
     Tayug                           63     2        0        65          63        56        0      119        74        67        0      141    523   234      182     939
     Umingan                         69     7        0        76          69         7        0      76         86        149       0      236    484   278       88     850
     Villasis                        61    12        0        73          61        12        0      73         69        67       119     256    464   200      690    1,355

LEAD Munis of Sorsogon               76    15        1        92          76        16        1      92         98        36        12     147    483   188       81     752
   * Barcelona                       101    4        0        105         101        4        0      105        127        5        0      131    710   220       20     950
     Bulan                           51     5        0        56          51         5        0      56         65        22        0      87     291   244      111     646
   * Bulusan                         118   21        0        139         118       21        0      139        138       48       123     309    645   148      320    1,112
   * Casiguran                       110   23        1        133         110       23        1      133        124       42        3      168    515   169      134     818
     Castilla                        66     8        1        75          66         8        1      75         84        21        1      106    376   115       18     509
   * Donsol                          81    17        1        100         81        17        1      100        108       22        1      131    519   176       37     732
     Gubat                           73    22        3        98          73        22        3      98         90        65        3      158    461   174       46     681
     Irosin                          74     8        0        82          74         8        0      82         126       13        0      139    488   181       97     767
     Juban                           60    17        0        77          60        17        0      77         87        26        0      113    550   115      186     850
   * Magallanes                      99     9        1        108         99         9        1      108        109       11        1      121    571   204       22     798
   * Matnog                          91    46        0        137         91        46        0      137        105       177       0      282    453   354       9      816
   * Pilar                           53    24        1        78          53        24        1      78         82        27        1      109    486   193       6      685
     Prieto Diaz                     96    10        0        106         96        10        0      106        131       13       176     321    743    63      176     982
     Santa Magdalena                 103    7        5        116         103       11        5      119        123       16        5      145    736   136      200    1,072

LEAD Munis of Iloilo                 57     9        0        66          57         9        0       66         78       28        0      106    513   199       39    752
     Ajuy                            53     5        0        58          53         5        0       58         64       19        0      84     400   101       28    529
     Balasan                         68     3        0        72          68         3        0       72         81        5        0      85     668   201       26    895
   * Batad                           60     1        0        61          60         1        0       61         98        2        0      100    686   154      146    986
     Carles                          49     3        0        52          49         3        0       52         64       69        0      133    421   234       44    699
   * Concepcion                      63    17        0        80          63        17        0       80         97       36        0      133    471   170       84    725
     Estancia                        62    12        0        74          62        12        0       74         94       22        0      116    561   189       0     751
     Lemery                          53     3        0        56          53         3        0       56         81        6        0      87     606   264       80    951
     San Dionisio                    59     2        0        61          59         2        0       61         74        7        0      81     516   168       21    705
                                                    Annex Table 4. Per Capita Expenditures of LEAD LGUs, 2002 (in pesos)


                                      Basic Health                              Total Health                  Aggregate Social Services            Grand Total
                                 PS   MOOE        CO    Total         PS      MOOE        CO   Total         PS     MOOE        CO Total     PS   MOOE       CO   Total
      Sara                      56     22        0       79          56        22         0     79          74       34         0     108   531   295        1     827

LEAD Munis of Capiz             77     6        0        83          77        12        0      89         104       37       10     151    553   207       59     820
     Cuartero                   104    3        0        107         104       20        0      124        149       46       2      197    727   185       98    1,009
     Dao                        77     4        0        81          77        42        0      119        100       98       11     209    474   249       11     734
     Dumalag                    83    29        0        112         83        29        0      112        158       76       0      233    667   163       0      830
     Dumarao                    62     5        0        67          62         5        0      67         78        26       0      104    448   345       63     856
     Ivisan                     87     2        0        89          87         2        0      89         129        7       0      136    660    94       78     832
     Jamindan                   82     6        0        88          82        36        0      118        104       158      10     271    588   376       62    1,027
     Ma-ayon                    83     5        0        87          83         5        0      87         105       19       0      124    531   157       2      689
     Mambusao                   59     3        0        61          59        25        0      83         88        47       0      135    562   138       91     791
     Panay                      70     3        0        74          70         3        0      74         89         5       0      93     526   110      116     752
   * Panitan                    75     6        0        81          75         6        0      81         98        10       0      108    510   149       47     706
     Pilar                      58     7        0        65          58         7        0      65         76        19       0      96     474   215       0      689
     Pontevedra                 75     3        0        78          75         3        0      78         90         4       0      94     570   263       0      834
     President Roxas            68     4        0        72          68         4        0      72         95         6       0      100    484   340       30     854
   * Sapian                     111    7        0        118         111        7        0      118        145       121     107     373    629   256      108     993
     Sigma                      66     3        0        68          66         3        0      68         84         6       0      90     579   152       93     823
     Tapaz                      95     8        0        103         95         8        0      103        125       11       46     182    583   123      145     851

LEAD Munis of Davao del Norte   51    16        1        68          51        24        5      80          64       59       10     133    442   393      200    1,035
     Asuncion                   64    15        1        80          64        23        1      89          79       42       3      124    403   410       44     857
     Carmen                     46     7        1        54          46        17        3      66          55       42       11     108    374   347      250     971
     Dujali                     66     6        1        74          66        18        6      90          66       55       12     133    761   424       70    1,254
     Kapalong                   53    28        3        83          53        47        17     117         81       99       30     210    480   517      147    1,144
     New Corella                56     9        0        65          56         9        0      65          66       34       0      101    452   243      161     857
     Santo Tomas                38    11        0        48          38        13        0      50          43       48       6      97     348   307      260     915
     Talaingod                  55    50        5        110         55        50        5      110         63       122      5      189    756   756      704    2,216

LEAD Munis of Maguindanao       0      0        0         1           0         0        0        1          1        8       6      14     264   369       50     683
   * Ampatuan                   0      0        0         0           0         0        0        0          0        0       0       0     327   526       30     883
   * Barira                     0      0        0         0           0         0        0        0          0        0       0       0     310   588       28     926
   * Buldon                     0      0        0         0           0         0        0        0         15        7       0      22     391   559       0      950
   * Buluan                     0      0        0         0           0         0        0        0          0        0       0       0     262   309       3      574
   * Datu Paglas                0      0        0         0           0         0        0        0          0        0       0       0     353   514       0      867
   * Datu Piang                 0      0        0         0           0         0        0        0          0        0       0       0     155   349       0      504
   * Dinaig (Datu Sinsuat)      0      0        0         0           0         0        0        0          0        0       0       0     219   397       0      616
   * Gen. S. K. Pendatun        0      1        0         1           0         1        0        1          0        1       0       1     325   336       1      662
   * Kabuntalan                 0      0        0         0           0         0        0        0          0        0       0       0     340   345       0      685
   * Maganoy (Shariff Aguak)    0      0        0         0           0         0        0        0          0        0       0       0     142   284       0      426
   * Mamasapano                 0      0        0         0           0         0        0        0          0        0       0       0     274   374       17     665
   * Matanog                    0      0        0         0           0         0        0        0          0        0       0       0     422   347       15     784
   * Pagalungan                 0      0        0         0           0         0        0        0          0        0       0       0     445   454      176    1,076
   * Parang                     0      0        0         0           0         0        0        0          0        0       0       0     331   361      146     838
   * South Upi                  0      0        0         0           0         0        0        0          0        0       0       0     396   295       0      691
   * Sultan Kudarat             0      0        0         0           0         0        0        0          4       62       49     116    139   324      187     649
   * Sultan sa Barongis         7      4        0        11           7         4        0       11          7        4       0      11     274   389       23     686
   * Talayan                    0      0        0         0           0         0        0        0          0        0       0       0     205   254       0      459
   * Talitay                    0      0        0         0           0         0        0        0          0        0       0       0     443   341       17     800
   * Upi                        0      0        0         0           0         0        0        0          0        1       0       1     251   387       48     685

LEAD Munis of Tawi-Tawi         1      7        0         8           1         7        0       8          1        17       0      18     304   199       82    585
   * Balimbing                  0      1        0         1           0         1        0       1          0        14       0      14     243   241      120    605
   * Bongao                     0      0        0         0           0         0        0       0          0         0       0       0     280   115      107    502
   * Cagayan de Tawi-Tawi       0      0        0         0           0         0        0       0          0         0       0       0     421   158      141    720
                                                 Annex Table 4. Per Capita Expenditures of LEAD LGUs, 2002 (in pesos)


                                   Basic Health                             Total Health                   Aggregate Social Services               Grand Total
                             PS    MOOE        CO    Total         PS      MOOE       CO    Total        PS      MOOE        CO Total       PS   MOOE        CO   Total
    *   Languyan             0      0         0        0           0        0         0       0          0        51         0      51    261     259       86     607
    *   Sapa-Sapa            0      0         0        0           0        0         0       0          0         0         0       0    224     172       35     430
    *   Simunul              0      0         0        0           0        0         0       0          0         0         0       0    314     143      114     571
    *   Sitangkai            0      0         0        0           0        0         0       0          0         0         0       0    249     189        0     438
    *   South Ubian          7      0         0        7           7        0         0       7          7         0         0       7    277     203        1     481
    *   Tandubas             0      0         0        0           0        0         0       0          0        19         0      19    486     164      159     809
    *   Turtle Islands       0     625        0       625          0       625        0      625         0       662         0     662   1,321   1,697     313    3,331

National Average of Cities   72    19        1        92          95        36        3      134        159       148      41     348    677     811       363    1,851

LEAD Cities
    Makati                   223   44        0        267         413      224        0      636        937       253      0     1,190   3,204   5,806    2,073   11,083
    Mandaluyong              237   29        0        266         440      97         0      537        641       595      15    1,251   1,726   2,028     397     4,151
    Marikina                 82    25        1        108         82       25         1      108        125       42       2      170     583     730      408     1,721
 * Paranaque                 114   27        0        141         185      42         0      227        290       404     124     818     869    1,285     310     2,464
    Pasig                    138   20        2        160         216      73         26     314        266       189      32     486     822    1,261     891     2,975
 * Valenzuela                116   21        2        138         124      25         4      153        167       57       17     240     535     714      267     1,516
    Quezon City              61    11        0        73          68       13         1      82         183       353      4      540     533    1,068     182     1,783
 * Pasay                     111   18        0        129         241      62         12     315        320       720      19    1,059   1,109   1,645     346     3,100
    Baguio City              118   63        17       199         118      63         17     199        151       113      51     315     935     551      658     2,144
    Angeles City             100   43        2        144         187      67         5      259        251       132      30     413     784     531      231     1,546
    Iloilo City              96     9        0        105         112      30         0      142        188       205      62     455     779     604      188     1,571
 * Cebu City                 66    20        0        86          144      105        0      249        229       217      0      447     744     764      790     2,297
 * Zamboanga City            69    41        0        110         69       41         0      110        113       75       1      190     542     375      858     1,775
    Davao                    61    22        1        84          64       42         1      107        117       196      27     340     468     984      132     1,583
    General Santos           103    8        0        111         133      30         12     176        194       58       56     309     641     354      375     1,369
    Roxas City               167   40        3        209         167      40         3      209        179       173     204     556     889     685      218     1,792
    Urdaneta                 55     7        0        62          55        7         0      62         220       27       9      256     811     721      302     1,834
    Samal                    186   52        1        239         186      52         13     252        222       77       64     363    1,297    748      445     2,489
    Tagum                    78    47        1        125         78       47         1      125        142       102      1      245     617     887       70     1,574
    Panabo                   45     6        1        51          45        6         1      51         55         8       1       64     288     520      325     1,134


* data refers to 2001
               Annex Table 5. General Fund Income of LEAD LGUs, 2002 (in million pesos)

                                             Own Source            Externally             Of which:
                                              Revenue               Source                   IRA

LEAD Munis of Metro Manila
     Navotas                                    115.57              116.30                 116.30
     Pateros                                    23.73               37.88                  37.88

LEAD Munis of Benguet
     Buguias                                     2.73                29.70                  29.70
     Itogon                                      5.72                48.57                  45.57
     La Trinidad                                 44.27               41.86                  41.86
     Tuba                                        8.02                38.03                  37.83

LEAD Munis of Pangasinan
     Asingan                                     7.53                34.79                  34.79
     Balungao                                    2.07                21.83                  21.83
     Binalonan                                   11.65               31.83                  31.83
     Laoac                                       1.71                21.53                  21.53
     Manaoag                                     10.02               34.82                  34.82
     Natividad                                   1.67                22.02                  22.02
     Pozzurubio                                  13.56               39.30                  39.30
     Rosales                                     9.61                32.37                  32.37
     San Manuel                                  18.25               30.36                  30.36
     San Nicolas                                 8.91                29.53                  29.53
     San Quintin                                 3.93                24.98                  24.98
     Santa Maria                                 3.13                21.74                  21.74
     Sison                                       5.73                29.46                  29.46
     Tayug                                       10.85               27.23                  27.23
     Umingan                                     6.53                44.09                  44.09
     Villasis                                    3.70                30.27                  30.27

LEAD Munis of Sorsogon
     Barcelona                                   0.79                19.43                  19.43
     Bulan                                       11.25               52.02                  52.02
     Bulusan                                     0.63                15.96                  15.96
     Casiguran                                   1.74                24.45                  24.45
     Castilla                                    4.08                35.26                  35.26
     Donsol                                      1.78                33.57                  33.57
     Gubat                                       5.45                37.30                  37.30
     Irosin                                      3.88                34.48                  34.48
     Juban                                       1.21                24.82                  24.82
     Magallanes                                  2.65                28.02                  28.02
     Matnog                                      3.38                29.01                  29.01
     Pilar                                       4.84                41.33                  41.33
     Prieto Diaz                                 0.97                19.52                  19.52
     Santa Magdalena                             0.85                16.71                  16.71

LEAD Munis of Iloilo
     Ajuy                                        2.11                35.08                  35.08
     Balasan                                     3.55                21.54                  21.54
     Batad                                       0.71                18.36                  18.36
     Carles                                      2.82                35.73                  35.73
     Concepcion                                  4.46                26.60                  26.60
     Estancia                                    7.82                25.66                  25.66
     Lemery                                      1.32                22.76                  22.76
     San Dionisio                                2.10                24.70                  24.70
     Sara                                        6.50                33.61                  33.61
              Annex Table 5. General Fund Income of LEAD LGUs, 2002 (in million pesos)

                                            Own Source            Externally             Of which:
                                             Revenue               Source                   IRA
LEAD Munis of Capiz
     Cuartero                                   1.86                23.45                  23.45
     Dao                                        2.00                25.22                  25.22
     Dumalag                                    2.34                23.98                  23.98
     Dumarao                                    2.42                34.55                  34.55
   * Ivisan                                     1.82                18.15                  18.15
     Jamindan                                   1.01                38.13                  38.13
     Ma-ayon                                    1.26                29.59                  29.59
     Mambusao                                   3.27                29.43                  29.43
     Panay                                      2.26                31.68                  31.68
     Panitan                                    3.01                28.74                  28.74
     Pilar                                      1.53                28.58                  28.58
     Pontevedra                                 4.16                31.63                  31.63
     President Roxas                            2.71                24.32                  24.32
   * Sapian                                     1.71                22.77                  22.77
   * Sigma                                      1.31                21.20                  21.20
     Tapaz                                      2.48                46.84                  46.84

LEAD Munis of Davao del Norte
     Asuncion                                   5.11                49.49                  49.49
     Carmen                                     8.60                40.23                  40.23
     Dujali                                     2.55                18.89                  18.89
     Kapalong                                   12.88               73.01                  73.01
     New Corella                                4.75                36.04                  36.04
     Santo Tomas                                17.43               55.57                  55.57
     Talaingod                                  0.69                38.76                  38.76

LEAD Munis of Maguindanao
   * Ampatuan                                   0.24                28.69                  28.69
   * Barira                                     0.09                16.87                  16.87
   * Buldon                                     0.02                26.22                  26.00
   * Buluan                                     3.06                28.22                  28.22
   * Datu Paglas                                17.48               15.73                  14.84
   * Datu Piang                                 1.34                34.74                  34.74
   * Dinaig (Datu Sinsuat)                      1.57                44.52                  39.73
   * Gen. S. K. Pendatun                        0.18                20.02                  19.98
   * Kabuntalan                                 1.09                17.76                  17.76
   * Maganoy (Shariff Aguak)                    1.52                30.38                  30.27
   * Mamasapano                                 0.10                12.91                  12.91
   * Matanog                                    0.01                15.38                  15.38
   * Pagalungan                                 1.56                55.87                  51.72
   * Parang                                     3.26                75.27                  45.75
   * South Upi                                  0.65                18.92                  18.92
   * Sultan Kudarat                             2.91                51.69                  50.74
   * Sultan sa Barongis                         0.10                24.17                  24.17
   * Talayan                                    0.12                23.20                  23.20
   * Talitay                                    0.93                11.71                  11.71
   * Upi                                        1.05                34.26                  34.26

LEAD Munis of Tawi-Tawi
     Balimbing                                  0.08                36.67                  36.67
     Bongao                                     2.97                39.26                  38.12
     Cagayan de Tawi-Tawi                       0.61                23.20                  23.20
     Languyan                                   1.75                47.50                  47.50
     Sapa-Sapa                                  2.33                26.94                  26.94
     Simunul                                    2.27                26.51                  26.51
     Sitangkai                                  1.52                59.42                  59.42
                Annex Table 5. General Fund Income of LEAD LGUs, 2002 (in million pesos)

                                              Own Source            Externally             Of which:
                                               Revenue               Source                   IRA
      South Ubian                                0.01                 27.68                  27.68
      Tandubas                                   0.07                 38.56                  38.56
      Turtle Islands                             0.25                 11.13                  11.13

National Average of Cities

LEAD Cities
     Makati                                     3,816.72             403.73                 403.73
     Mandaluyong                                 781.09              277.41                 277.41
     Marikina                                    382.18              318.95                 318.95
     Paranaque                                   708.35              345.15                 345.15
     Pasig                                      1,677.11             388.44                 388.44
     Valenzuela                                  434.47              375.76                 375.76
     Quezon City                                3,946.47            1,339.57               1,339.57
     Pasay                                       641.74              303.96                 301.63
     Baguio City                                 298.37              285.71                 226.41
     Angeles City                                145.70              245.93                 244.42
     Iloilo City                                 279.38              296.79                 296.79
     Cebu City                                   951.40              607.80                 607.80
     Zamboanga City                              218.96              761.08                 761.08
     Davao                                       633.52             1,335.64               1,335.58
     General Santos                              173.29              444.72                 444.72
     Roxas City                                   55.25              161.63                 161.63
     Urdaneta                                     94.30              146.24                 146.24
     Samal                                        17.53              188.77                 188.77
     Tagum                                       118.30              217.15                 217.15
     Panabo                                       53.19              203.51                 203.51


* data refers to 2001
          Annex Table 6. Composition of General Fund Income of LEAD LGUs, 2002 (in percent)

                                             Own Source           Externally          Of which:
                                              Revenue              Source                IRA

National Average of Municipalities                     17.92               82.08                  81.60

LEAD Munis of Metro Manila                             47.47               52.53                  52.53
     Navotas                                           49.84               50.16                  50.16
     Pateros                                           38.52               61.48                  61.48

LEAD Munis of Benguet                                  27.75               72.25                  70.79
     Buguias                                            8.42               91.58                  91.58
     Itogon                                            10.54               89.46                  83.93
     La Trinidad                                       51.40               48.60                  48.60
     Tuba                                              17.41               82.59                  82.17

LEAD Munis of Pangasinan                               19.98               80.02                  80.02
     Asingan                                           17.80               82.20                  82.20
     Balungao                                           8.65               91.35                  91.35
     Binalonan                                         26.80               73.20                  73.20
     Laoac                                              7.34               92.66                  92.66
     Manaoag                                           22.36               77.64                  77.64
     Natividad                                          7.07               92.93                  92.93
     Pozzurubio                                        25.65               74.35                  74.35
     Rosales                                           22.89               77.11                  77.11
     San Manuel                                        37.54               62.46                  62.46
     San Nicolas                                       23.19               76.81                  76.81
     San Quintin                                       13.60               86.40                  86.40
     Santa Maria                                       12.60               87.40                  87.40
     Sison                                             16.28               83.72                  83.72
     Tayug                                             28.50               71.50                  71.50
     Umingan                                           12.90               87.10                  87.10
     Villasis                                          10.89               89.11                  89.11

LEAD Munis of Sorsogon                                  9.55               90.45                  90.45
     Barcelona                                          3.93               96.07                  96.07
     Bulan                                             17.78               82.22                  82.22
     Bulusan                                            3.80               96.20                  96.20
     Casiguran                                          6.63               93.37                  93.37
     Castilla                                          10.36               89.64                  89.64
     Donsol                                             5.04               94.96                  94.96
     Gubat                                             12.74               87.26                  87.26
     Irosin                                            10.12               89.88                  89.88
     Juban                                              4.65               95.35                  95.35
     Magallanes                                         8.63               91.37                  91.37
     Matnog                                            10.45               89.55                  89.55
     Pilar                                             10.49               89.51                  89.51
     Prieto Diaz                                        4.75               95.25                  95.25
     Santa Magdalena                                    4.86               95.14                  95.14

LEAD Munis of Iloilo                                   11.40               88.60                  88.60
     Ajuy                                               5.68               94.32                  94.32
     Balasan                                           14.15               85.85                  85.85
     Batad                                              3.74               96.26                  96.26
     Carles                                             7.32               92.68                  92.68
     Concepcion                                        14.37               85.63                  85.63
     Estancia                                          23.36               76.64                  76.64
     Lemery                                             5.47               94.53                  94.53
     San Dionisio                                       7.82               92.18                  92.18
        Annex Table 6. Composition of General Fund Income of LEAD LGUs, 2002 (in percent)

                                           Own Source           Externally          Of which:
                                            Revenue              Source                IRA
     Sara                                           16.21                 83.79                 83.79

LEAD Munis of Capiz                                   7.11               92.89                  92.89
     Cuartero                                         7.36               92.64                  92.64
     Dao                                              7.36               92.64                  92.64
     Dumalag                                          8.89               91.11                  91.11
     Dumarao                                          6.55               93.45                  93.45
  * Ivisan                                            9.11               90.89                  90.89
     Jamindan                                         2.58               97.42                  97.42
     Ma-ayon                                          4.09               95.91                  95.91
     Mambusao                                        10.00               90.00                  90.00
     Panay                                            6.65               93.35                  93.35
     Panitan                                          9.48               90.52                  90.52
     Pilar                                            5.08               94.92                  94.92
     Pontevedra                                      11.63               88.37                  88.37
     President Roxas                                 10.02               89.98                  89.98
  * Sapian                                            6.99               93.01                  93.01
  * Sigma                                             5.80               94.20                  94.20
     Tapaz                                            5.02               94.98                  94.98

LEAD Munis of Davao del Norte                        14.29               85.71                  85.71
     Asuncion                                         9.36               90.64                  90.64
     Carmen                                          17.61               82.39                  82.39
     Dujali                                          11.88               88.12                  88.12
     Kapalong                                        15.00               85.00                  85.00
     New Corella                                     11.63               88.37                  88.37
     Santo Tomas                                     23.88               76.12                  76.12
     Talaingod                                        1.74               98.26                  98.26

LEAD Munis of Maguindanao                             5.97               94.03                  87.51
  * Ampatuan                                          0.82               99.18                  99.18
  * Barira                                            0.54               99.46                  99.46
  * Buldon                                            0.09               99.91                  99.08
  * Buluan                                            9.77               90.23                  90.23
  * Datu Paglas                                      52.65               47.35                  44.70
  * Datu Piang                                        3.72               96.28                  96.28
  * Dinaig (Datu Sinsuat)                             3.40               96.60                  86.20
  * Gen. S. K. Pendatun                               0.91               99.09                  98.92
  * Kabuntalan                                        5.79               94.21                  94.21
  * Maganoy (Shariff Aguak)                           4.76               95.24                  94.92
  * Mamasapano                                        0.75               99.25                  99.23
  * Matanog                                           0.07               99.93                  99.93
  * Pagalungan                                        2.71               97.29                  90.06
  * Parang                                            4.15               95.85                  58.26
  * South Upi                                         3.30               96.70                  96.70
  * Sultan Kudarat                                    5.32               94.68                  92.94
  * Sultan sa Barongis                                0.42               99.58                  99.58
  * Talayan                                           0.51               99.49                  99.49
  * Talitay                                           7.34               92.66                  92.66
  * Upi                                               2.97               97.03                  97.03

LEAD Munis of Tawi-Tawi                               3.40               96.60                  96.27
    Balimbing                                         0.21               99.79                  99.79
     Bongao                                           7.04               92.96                  90.26
     Cagayan de Tawi-Tawi                             2.54               97.46                  97.46
     Languyan                                         3.55               96.45                  96.45
     Sapa-Sapa                                        7.96               92.04                  92.04
          Annex Table 6. Composition of General Fund Income of LEAD LGUs, 2002 (in percent)

                                             Own Source           Externally          Of which:
                                              Revenue              Source                IRA
       Simunul                                         7.90                 92.10                 92.10
       Sitangkai                                       2.50                 97.50                 97.50
       South Ubian                                     0.04                 99.96                 99.96
       Tandubas                                        0.19                 99.81                 99.81
       Turtle Islands                                  2.20                 97.80                 97.80

National Average of Cities                              46.98               53.02                 52.76

LEAD Cities
    Makati                                      90.43                9.57                9.57
    Mandaluyong                                 73.79               26.21               26.21
    Marikina                                    54.51               45.49               45.49
    Paranaque                                   67.24               32.76               32.76
    Pasig                                       81.19               18.81               18.81
    Valenzuela                                  53.62               46.38               46.38
    Quezon City                                 74.66               25.34               25.34
    Pasay                                       67.86               32.14               31.90
    Baguio City                                 51.08               48.92               38.76
    Angeles City                                37.20               62.80               62.41
    Iloilo City                                 48.49               51.51               51.51
    Cebu City                                   61.02               38.98               38.98
    Zamboanga City                              22.34               77.66               77.66
    Davao                                       32.17               67.83               67.83
    General Santos                              28.04               71.96               71.96
    Roxas City                                  25.47               74.53               74.53
    Urdaneta                                    39.20               60.80               60.80
    Samal                                        8.50               91.50               91.50
    Tagum                                       35.27               64.73               64.73
    Panabo                                      20.72               79.28               79.28


* data refers to 2001
            Annex Table 7 . Composition of General Fund Own Resource Revenue of LEAD LGUs, 2002 (in percent)

                                             Own        Tax       Real     Business     Non Tax     Fees       Charges/
                                            Source              Property    Tax &                              Rentals
                                           Revenue                Tax      Licenses
National Average of Municipalities          100.00     57.15     16.72       31.11        42.85     11.16       17.13

LEAD Munis of Metro Manila                  100.00     77.56     35.51       37.02        22.44     12.53        5.45
     Navotas                                100.00     81.44     38.71       38.78        18.56     12.18        2.23
     Pateros                                100.00     58.67     19.96       28.46        41.33     14.26       21.12

LEAD Munis of Benguet                       100.00     56.24     11.82       32.65        43.76     18.14        8.75
     Buguias                                100.00     52.38      6.71       34.88        47.62     12.30       15.39
     Itogon                                 100.00     61.66     37.60       8.61         38.34      9.81        0.01
     La Trinidad                            100.00     54.80      7.54       38.66        45.20     19.08       10.67
     Tuba                                   100.00     61.61     18.80       15.89        38.39     20.88        2.16

LEAD Munis of Pangasinan                    100.00     48.62      9.27       29.81       51.38      12.25       26.50
     Asingan                                100.00     27.62      9.05       13.09       72.38      14.89       35.08
     Balungao                               100.00     42.71     15.72       15.20       57.29       7.79       25.67
     Binalonan                              100.00     60.47     15.89       39.76       39.53      10.74       23.44
     Laoac                                  100.00     31.24     12.77       9.05        68.76      38.29       11.88
     Manaoag                                100.00     53.04     16.54       25.96       46.96      35.27       11.68
     Natividad                              100.00     37.86     13.63       14.83       62.14      16.68       32.13
     Pozzurubio                             100.00     25.41      8.31       11.38       74.59      14.07       48.07
     Rosales                                100.00     55.42      8.24       41.35       44.58       8.36       31.56
     San Manuel                             100.00     84.33      3.50       57.19       15.67       1.72        9.88
     San Nicolas                            100.00     32.11      4.18       24.98       67.89       4.41       13.41
     San Quintin                            100.00     24.06      7.24       12.56       75.94      21.56       52.70
     Santa Maria                            100.00     30.50      7.98       5.35        69.50      13.40       20.56
     Sison                                  100.00     87.65     23.08       49.52       12.35       6.16        5.95
     Tayug                                  100.00     39.04      3.56       29.66       60.96      13.84       29.39
     Umingan                                100.00     34.44      9.96       18.39       65.56       7.29       45.74
     Villasis                               100.00     23.33      6.24       10.81       76.67      14.62       51.25

LEAD Munis of Sorsogon                      100.00     34.32      8.40       16.54       65.68      20.03       25.12
     Barcelona                              100.00     55.15     34.07       11.18       44.85      13.67        5.81
     Bulan                                  100.00     36.04      5.87       14.22       63.96      11.60       22.18
     Bulusan                                100.00     38.73     14.98       17.62       61.27      25.73       26.38
     Casiguran                              100.00     40.31     14.69       10.52       59.69      17.51       38.59
     Castilla                               100.00     44.82      4.35       39.02       55.18       0.00        0.00
     Donsol                                 100.00     37.22     15.18       13.02       62.78      12.12       22.69
     Gubat                                  100.00     38.30     11.37       21.30       61.70      11.18       37.20
     Irosin                                 100.00     41.52      9.45       22.51       58.48      16.41       32.39
     Juban                                  100.00     45.35     11.25       13.64       54.65      18.23       22.72
     Magallanes                             100.00     26.28      6.25       11.87       73.72       9.95       56.07
     Matnog                                 100.00     16.48      2.85       7.30        83.52      57.22       14.24
     Pilar                                  100.00     17.15      7.87       5.56        82.85      51.94       23.81
     Prieto Diaz                            100.00     22.17      2.86       10.81       77.83      28.09       36.35
     Santa Magdalena                        100.00     53.61     15.69       30.14       46.39      19.38       13.66

LEAD Munis of Iloilo                        100.00     40.92     12.24       19.29       59.08      10.68       28.44
     Ajuy                                   100.00     55.34     29.73       16.69       44.66      29.54       12.90
     Balasan                                100.00     41.63     21.09       12.79       58.37       9.20       24.10
     Batad                                  100.00     45.06     12.98       17.14       54.94      21.19       12.51
     Carles                                 100.00     61.23     14.74       25.69       38.77      16.44        9.98
     Concepcion                             100.00     40.77      5.91       15.63       59.23       5.14       17.07
     Estancia                               100.00     31.37      7.66       18.61       68.63       9.08       32.63
     Lemery                                 100.00     48.44     15.11       17.78       51.56      10.29       36.91
     San Dionisio                           100.00     46.27     16.50       21.82       53.73       8.64       26.65
     Sara                                   100.00     34.90      8.45       23.97       65.10       8.15       47.26

LEAD Munis of Capiz                         100.00     38.88     14.34       13.84        61.12     15.80       28.45
     Cuartero                               100.00     33.66      6.53       17.84        66.34     21.02       35.20
     Dao                                    100.00     41.81     10.99       23.72        58.19     22.10       25.88
     Dumalag                                100.00     32.73     16.63       7.86         67.27      9.25       19.59
     Dumarao                                100.00     35.21     17.44       11.56        64.79     18.24       18.79
   * Ivisan                                 100.00     38.95     14.65       14.74        61.05     23.58       28.79
             Annex Table 7 . Composition of General Fund Own Resource Revenue of LEAD LGUs, 2002 (in percent)

                                              Own        Tax       Real     Business     Non Tax     Fees       Charges/
                                             Source              Property    Tax &                              Rentals
                                            Revenue                Tax      Licenses
        Jamindan                             100.00     35.72     13.47        7.13        64.28     10.87       24.58
        Ma-ayon                              100.00     34.67     11.59       10.03        65.33     25.74       25.88
        Mambusao                             100.00     38.31     16.13       13.28        61.69     12.66       42.98
        Panay                                100.00     62.79     29.99        6.94        37.21      8.44        6.07
        Panitan                              100.00     22.83      7.41        8.82        77.17     16.49       51.16
        Pilar                                100.00     64.16     22.52       16.71        35.84     15.61       18.52
        Pontevedra                           100.00     38.54     10.27       17.22        61.46     18.00       37.52
        President Roxas                      100.00     59.03     20.67       29.60        40.97      7.65       31.22
    *   Sapian                               100.00     81.26     12.32        3.36        18.74      6.39        0.00
    *   Sigma                                100.00     32.96     11.13       11.45        67.04     23.47       42.74
        Tapaz                                100.00     14.66      6.13        3.82        85.34     22.90        7.63

LEAD Munis of Davao del Norte                100.00     51.43     14.62       29.18       48.57      15.96       17.36
     Asuncion                                100.00     39.52     13.41       15.45       60.48      29.67       17.33
     Carmen                                  100.00     70.74     20.78       41.28       29.26      18.97        6.18
     Dujali                                  100.00     86.14     27.94       54.14       13.86       6.81        0.00
     Kapalong                                100.00     40.84     13.16       22.25       59.16      22.37       14.94
     New Corella                             100.00     44.84     12.68       23.70       55.16      10.25       15.02
     Santo Tomas                             100.00     50.74     11.97       31.00       49.26       7.91       28.29
     Talaingod                               100.00     31.14      5.20       9.35        68.86      33.92        5.93

LEAD Munis of Maguindanao                    100.00     73.82     52.32       10.33       26.18       3.30       14.21
   * Ampatuan                                100.00     77.29     24.47       31.87       22.71      18.87        3.40
   * Barira                                  100.00     97.40     85.42       0.00        2.60        2.60        0.00
   * Buldon                                  100.00     98.28     36.18       53.52       1.72        1.72        0.00
   * Buluan                                  100.00     36.98     13.20       20.54       63.02       2.09       49.18
   * Datu Paglas                             100.00     99.23     97.71       0.00        0.77        0.05        0.72
   * Datu Piang                              100.00     49.26     18.44       18.20       50.74       5.19       43.76
   * Dinaig (Datu Sinsuat)                   100.00     81.50      3.67       60.67       18.50       5.79       12.48
   * Gen. S. K. Pendatun                     100.00     40.08      3.70       21.79       59.92       6.88       53.03
   * Kabuntalan                              100.00     94.36      1.73       0.15        5.64        0.08        0.32
   * Maganoy (Shariff Aguak)                 100.00     22.59     13.66       6.47        77.41       6.91       57.33
   * Mamasapano                              100.00     47.70     40.56       3.48        52.30      24.69       26.65
   * Matanog                                 100.00     79.03     -31.34      0.00        20.97      20.97        0.00
   * Pagalungan                              100.00      6.75      0.86       1.28        93.25       2.99       16.96
   * Parang                                  100.00     33.02     16.05       11.82       66.98       3.81       29.71
   * South Upi                               100.00     90.13      0.17       7.06        9.87        1.01        8.60
   * Sultan Kudarat                          100.00     66.19     15.08       39.57       33.81      18.31       10.13
   * Sultan sa Barongis                      100.00     80.47     17.83       27.70       19.53       9.85        9.68
   * Talayan                                 100.00     82.57     58.23       2.12        17.43      14.27        3.16
   * Talitay                                 100.00     99.55      0.76       0.00        0.45        0.29        0.15
   * Upi                                     100.00     48.14     20.96       15.67       51.86       6.28       27.00

LEAD Munis of Tawi-Tawi                      100.00     27.51      4.65       16.88       72.49       3.62       15.06
    Balimbing                                100.00     63.53     14.94       22.50       36.47      10.70       25.77
     Bongao                                  100.00     41.08      6.08       24.02       58.92       9.23       40.33
     Cagayan de Tawi-Tawi                    100.00     51.97     39.50       0.00        48.03       4.54       43.49
     Languyan                                100.00      1.40      0.48       0.00        98.60       0.79        2.57
     Sapa-Sapa                               100.00      1.30      0.00       0.00        98.70       0.00        0.00
     Simunul                                 100.00      3.41      0.71       0.13        96.59       2.39        0.00
     Sitangkai                               100.00     93.96      3.04       82.80       6.04        2.76        3.28
     South Ubian                             100.00     61.13      0.00       61.13       38.87      38.87        0.00
     Tandubas                                100.00     97.17     48.95       0.00        2.83        0.00        0.00
     Turtle Islands                          100.00     14.40      5.20       0.00        85.60       1.60       84.00

National Average of Cities                   100.00     79.29     23.65       44.44        20.71      9.16        5.89

LEAD Cities
    Makati                                   100.00     92.31     30.10       52.41       7.69        5.34        0.56
    Mandaluyong                              100.00     91.37     26.04       51.33       8.63        4.98        1.25
    Marikina                                 100.00     76.63     26.27       37.00       23.37       8.01        5.81
    Paranaque                                100.00     95.16     31.52       56.31       4.84        3.73        0.45
    Pasig                                    100.00     85.91     31.04       48.30       14.09       6.86        3.77
    Valenzuela                               100.00     77.78     27.55       44.77       22.22      15.96        1.29
             Annex Table 7 . Composition of General Fund Own Resource Revenue of LEAD LGUs, 2002 (in percent)

                                              Own        Tax       Real     Business     Non Tax     Fees       Charges/
                                             Source              Property    Tax &                              Rentals
                                            Revenue                Tax      Licenses
      Quezon City                            100.00     90.88     20.62       57.12        9.12       6.52        0.64
      Pasay                                  100.00     82.99     37.08       36.09        17.01     11.34        2.64
      Baguio City                            100.00     65.68     16.93       31.13        34.32      9.72        9.53
      Angeles City                           100.00     64.49     27.27       22.67        35.51     11.43        7.97
      Iloilo City                            100.00     82.13     20.23       42.09        17.87      4.26        7.99
      Cebu City                              100.00     78.27     18.89       29.18        21.73      7.01        4.38
      Zamboanga City                         100.00     59.45      7.91       40.41        40.55      8.62        8.29
      Davao                                  100.00     74.51     18.98       39.33        25.49      9.29        8.91
      General Santos                         100.00     61.64     12.58       36.19        38.36     12.00       10.70
      Roxas City                             100.00     57.84     16.58       32.05        42.16      7.66       19.70
      Urdaneta                               100.00     34.52      5.37       19.46        65.48     34.87       30.11
      Samal                                  100.00     37.75     14.58       14.58        62.25     18.26       30.95
      Tagum                                  100.00     44.62     12.06       25.99        55.38     13.98       30.74
      Panabo                                 100.00     52.37     15.66       31.13        47.63     13.87       15.42


* data refers to 2001

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:1
posted:8/20/2012
language:
pages:101