With the local government unit (LGU) allotment from national taxes to increase as a result of the Supreme Court decision in Mandanas v. Ochoa, LGUs will have access to more financial resources that they can use to fund infrastructure development, as well as services that have been devolved to LGUs from the national government.
Speaking on Thursday at the Virtual Construction Congress, Union of Local Authorities of the Philippines (ULAP) National President and Quirino Gov. Dax Cua informed members of the Construction Industry Authority of the Philippines that for the year 2022, the initial estimates of the Department of Budget and Management (DBM) peg the increase in the LGU allotment from national taxes at 234.39 billion pesos––a 27.61% increase that is equivalent to 1% of the Gross Domestic Product (GDP).
“Accordingly, the extra available LGU share can now fund the long-pending, if not the larger and more ambitious, priority local construction projects along with the existing regular mandatory allocations and expenditure items in the LGU budget.”
According to Cua, “this will generally equate to wider fiscal elbow room for LGUs to fund their programs, projects, and the provision of basic services and facilities, particularly the devolved functions on health, agriculture, social welfare, development, and the environment, among others.”
“Accordingly, the extra available LGU share can now fund the long-pending, if not the larger and more ambitious, priority local construction projects along with the existing regular mandatory allocations and expenditure items in the LGU budget,” said Cua, who is also the National Chairperson of the League of Provinces of the Philippines.
“This will give room for sustainable infrastructure, which is not only essential in providing better roads and bridges, employment and livelihood, but also needed infrastructure which has to be put in place to reduce environmental risks and vulnerabilities to hazards and disasters.”
Cua explained that with the devolution to LGUs of explicit authority and responsibility to directly undertake certain functions, the challenge now for LGUs is whether changes in governance arrangements would improve the delivery of infrastructure services.
The former legislator pointed out two essential requisites for effectively decentralizing investment: (1) the clear assumption of infrastructure responsibilities, and (2) effective local government accountability.
“National government and development partners need to continue to assist and work with LGUs to address some of the gaps, particularly in terms of capacity building.”
In light of the additional resources as a result of the Mandanas decision, Cua also said ULAP encourages LGUs to recalibrate local plans “to integrate resilience and sustainability in local development planning and budgeting.”
“National government and development partners need to continue to assist and work with LGUs to address some of the gaps, particularly in terms of capacity building,” added the University of the Philippines alumnus.
ULAP, stressed Cua, has also been pursuing initiatives designed to help LGUs shift to a Green Economy as a strategy with the end in view of building local economies back better, “infusing resilience not only in the economy but also in communities and ecosystems, especially from the impacts of the ongoing coronavirus disease (COVID-19) public health crisis.”