Nuances of our Resource allocation schemes (Part 4)

Earlier this month, we tried to illustrate by way of percentages, how the country's internal revenue collection is actually distributed in terms of national and local budgets and how these differ in terms of prioritization. Forty percent of it is given to the local government units by some criteria and formula predetermined by law, and almost always allocated with local priorities in mind. The remaining 60 percent is kept by national government to add to the national budget, usually dictated by the sectoral priorities of the national plan and development agenda.

There's another angle to the prioritization schemes at the national and local level, and this is with respect to "timeliness." As we had always stressed before, there is little difference between national budgeting or household budgeting, or the many others in between. The time element comes in the form of the question: "what shall we budget first? - the needs of the present, or the needs of the future? Since resources are almost always scarce and lacking, the question actually becomes primordial in the minds of the administration.

It's an age-old question which would probably never be answered or agreed upon. You can reason out that we should use all the present resources to address the needs of the present and let the future take care of itself. Operationally, this means all the resources generated for a year should be spent for the current problems; next year's budget will take care of next year. There are two hindrances to this. One, many issues takes time to address - a road, bridge, port, and most infrastructure takes time to build. You add all the other procedures necessary and taking into account my previous statement that multi-billion projects usually takes five to seven years to finish, at least, and if you're lucky, then we know that we can't always just address current problems as they come. Project gestation periods require forward planning.

The other pitfall stems from the fact that resources are always scarce, and there underlies the constant danger that we "borrow" from future resources to address present needs and thus actually "steal" them from future generations. This is the very issue of sustainability, which was defined by the Brundtland Commission, in 1987, as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Sustainable development cut across ages and generations, not only the present.

Some needs are current, others are futuristic, and some others also address both the present and the future. A family can use its monthly income to address the leak in the roof by repairing the entire roof, or just seal it and save the money to buy a new house in the future. It's a never-ending dilemma. A country or a province or a city/municipality has a thousand and one needs, or maybe a million and one, both today and the years to come and it needs a lot of balancing on how we allocate the meager resources to address both. Long-term solutions are more prevalent in the national level, while day-to-day services are more addressed at the local level. The use of government resources usually reflects these.

Just a footnote on the 40 percent IRA share of the LGUs - there are actually overlaps, in how these resources are applied to the local population, and land area. While the provinces, cities, municipalities, and barangays are treated as separate LGUs, barangays are actually part of a city or a municipality and all three are actually parts of a province, except for highly-urbanized cities, which are not part of a province and is composed only of barangays. More often than not, these LGUs do not harmonize their development priorities resulting in overlaps where there might be excess application of resources in some, while there are gaps in others. For example, both the province and municipality might invest in healthcare for their constituents, which is good for their people since they are doubly covered, but in other areas, both LGUs may not have the same so the people there lack healthcare.

If you introduce politics in the equation, where some resources may not be equitably distributed because of political affiliation, then you have a problem. To a certain extent, the distribution to the LGUs separate might cure it a little bit (which is why I think this was done in the first place), but in general, there are still inequalities brought about by skewed priorities.

Next, let's take a look at the concept of economic returns, and why we do have to make economic investments even if present needs are not yet fully met. (to be continued)