LGU budget down to P820 billion for next year

MANILA, Philippines— Budget allocation for local government units (LGUs) by next year will be slashed by 14 percent to P820 billion amid the drop in revenue collections due to the pandemic.

In its latest local budget memorandum, the Department of Budget and Management (DBM) released the final guidelines for the 2023 national tax allotment (NTA) shares of LGUs for 2023.

NTA for LGUs for 2023 will be down by 14 percent to P820.27 billion from this year’s level of P959 billion.

Even as the national budget is at a record P5.268 trillion next year, LGUs will get a lower share as the NTA is based on the 2020 revenue collection which significantly declined due to the pandemic.

In computing the NTA, the DBM uses as base period the third year prior to the distribution; in this case, the 2023 budget of LGUs is measured against the revenues raised in 2020.

During that year, government revenues slipped by nine percent to P2.68 trillion following quarantine restrictions that led to the temporary and permanent closures of business activities.

Based on the memorandum, the DBM said NTA shares of LGUs shall be apportioned among LGUs, including those created, approved, and ratified this year in accordance with the allocation formula prescribed by the Local Government Code.

“It is understood that the effect of the final 2023 NTA shares of LGUs will necessitate the prioritization in the implementation of items of appropriations by the LGUs,” the DBM said.

By level, municipalities will take the largest share in the NTA at P278.09 billion, followed by cities at P189.46 billion. Provinces will receive P188.66 billion while the smallest share of P164.05 billion will be secured by barangays.

Currently, there are 83 provinces, 148 cities, 1,486 municipalities and 41,953 barangays in the country.

For next year, Calabarzon will receive the largest budget among regions at P97.05 billion, followed by Central Luzon with P79.85 billion, Western Visayas with P64.57 billion and Central Visayas with P57.97 billion.

Lowest allocations will go to the Cordilleras at P24.56 billion, Caraga at P31.82 billion, and Zamboanga Peninsula at P33.11 billion.

Budget adjustments were made due to LGU developments this year such as the division of the province of Maguindanao into two provinces namely Maguindanao del Norte and Maguindanao del Sur.

There were also some municipalities that were converted into cities such as Calaca in Batangas and Baliuag in Bulacan.

The enactment and approval of various laws also included 18 barangays in Quezon City, Cotabato, Iligan City, Agusan del Sur, Agusan del Norte, Palawan, Negros Occidental, Davao del Norte, and Occidental Mindoro in the allocation of the 2023 NTA.

The NTA is still part of the Supreme Court ruling that increased LGU share in national tax collections.

Following the Mandanas implementation, LGUs are now getting a bigger share in the collections of national taxes, with their NTA coming from 40 percent of all national taxes collected by the Bureaus of Internal Revenue and the Bureau of Customs.

Previously, the share of LGUs came only from the taxes collected by the BIR.