Local government units are supposed to have a better grasp of the needs in their areas of jurisdiction. On the other hand, certain government services are better carried out at the national level. Identifying which functions must remain devolved to LGUs, and which are better handled by the national government, will be studied for a year by the executive branch.
Meeting last Wednesday with municipal mayors, President Marcos said his administration is weighing the impact of the devolution of many functions to LGUs. Apart from functions devolved under Republic Act 7160 or the Local Government Code of 1991, Rodrigo Duterte during his presidency issued Executive Order 138 in June 2021, devolving additional functions. Under EO 138, the functions, services and facilities must be fully devolved by the end of 2024.
The EO was issued following a ruling of the Supreme Court in the so-called Mandanas-Garcia case, which effectively gave LGUs a larger share of national revenues. Duterte’s economic team had expressed concern about the huge chunk of revenues taken out of the hands of the national government. Even without the Mandanas ruling, devolution was already making long-term planning for big-ticket infrastructure and other development programs challenging.
While the government is reviewing the impact of EO 138, it can include a scrutiny of the role played by LGUs in ease of doing business, attracting investments and stabilizing food supply and costs. The business community has long complained about LGU red tape in opening, operating and even closing a business in this country, whether micro, small, medium or large-scale. This problem has been among the biggest disincentives to investment.
Recent reports have also cited the role of LGUs and barangays in the price surges in agricultural commodities including eggs, onions, pork and poultry meat. Producers complain about red tape and redundant fees collected, from the barangay level up to the town or city hall, at every step of production and transport from farm to market.
In the wake of the Mandanas ruling, the Duterte administration moved to put LGUs in charge of more government functions. A number of local executives have complained that the greater revenue share would not be enough for the additional functions devolved. They also complained about the lack of expertise and manpower for the devolved functions. The response of the previous administration boiled down to: you can’t have your cake and eat it, too. The review of EO 138 should help rationalize devolution.