CEBU, Philippines - The Cebu City government will continue to subsidize payment for the personal services of the City Traffic Operations and Management and Cebu City Medical Center in 2015 since they were not classified as local economic enterprises and public utilities.
Local economic enterprises, as defined earlier by Cebu Business Center executive director Aniceto Canturias, are money-making and self-sustaining enterprises, such as the Fort San Pedro, Carbon market, city abattoir and City Resource Management and Development Center.
City Legal Office assistant department head lawyer Lyndon Bernardo Basan said CCMC and CITOM are not established for “profit,” but rather for public services.
“They cannot be considered to have financial viability over the long term while delivering quality goods and services to the public,” he said.
CCMC has been dropped from the city’s list of enterprises, according to Canturias, because “it failed to live up to the guidelines of the practicability that was imposed by the Department of Interior and Local Government and the Department of Budget and Management.”
In a legal opinion, Basan said that once an entity is classified as local economic enterprises and public utilities, “the salaries, wages and representation and transportation allowances of the LEEs and Pus shall be excluded in the computation of the personal services expenses of the LGUs which has a ceiling of fifty-five percent.”
“This Office believes that these entities are created necessary for the delivery of basic services, efficient traffic management for CITOM and appropriate medical and hospital care for CCMC, to the residents of Cebu City,” the opinion read.
Local government units’ offices, which are classified as local economic enterprises and public utilities, “shall not be included in the annual budget or in the computation of the maximum amount for personal services. The appropriations for the personal services of such economic enterprises shall be charged to their respective budgets” provided for under the Local Government Code.
Basan, however, said that nothing prevents the city from reclassifying CITOM and CCMC as LEEs and Pus based on the Local Budget Circular No. 100 dated October 1, 2012.
Once the two departments become financially and economically viable, they can be reclassified as LEEs with “no proscription” for further reclassification in the future, he explained.
Under the circular, Basan said, the classification as LEEs is neither “permanent nor absolute” since the LGUs are given the discretion to declassify and reintegrate the functions of the entities in the regular LGU operations when the income of the LEE cannot fully fund their personal services requirements.
“This office believes that CITOM and CCMC are not really operating as local economic enterprise. However, granting that they were previously classified as LEEs, the city has the authority to declassify the same and reintegrate its function as organic agencies of the city,” the opinion further read.
The opinion stemmed from City Budget Officer Marietta Gumia’s request for the city’s continued provision of subsidy to CCMC and CITOM under this year’s annual budget.
“This can assist us in the final drafting of the proposed 2015 Annual Budget for the Economic Enterprise,” said Gumia. — (FREEMAN)