Mindanao Development Authority (MinDA) Deputy Executive Director Assistant Secretary Romeo Montenegro has cited MinDA’s initial assessment of the impact of the Mandanas Ruling implementation in Mindanao on Tuesday (November 23) during the virtual Mindanao Affairs Committee Hearing.
Montenegro stressed that while it’s inevitable that the local government units (LGU) need to leverage on wider fiscal space starting next year with increased Internal Revenue Allotment (IRA) share owing to Supreme Court’s landmark ruling on the Mandanas-Garcia petition, but the challenges of full devolution and expected increase in LGU deliverables present a rather challenging trade-off, especially on whether or not these LGUs are ready and capable to deal not just with higher share but with bigger roles.
“Overall, in Mindanao, we have 27 provinces, 33 cities, and 422 municipalities will be covered by this landmark ruling in terms of its implementation. We would like to look at this on the province, city, and municipality impact. Based on the quick assessment done by MinDA between 2010, 2019, and perhaps, same with other LGUs all across the country, there is definitely an increase in IRA share at varying levels, however, depending on the LGU,” Montenegro said.
He also conveyed that generally reflective of the national picture, the IRA accounts for around 80 to 90 percent of the total revenues of Mindanao LGUs – municipalities and provinces. However, for cities that have better sources of local revenues on account of being an urban setup, IRA accounts for 70% of most cities in Mindanao.
“But there is, however, very one important item that needs to be reckoned in discussing the impact of Mandanas ruling and increase of IRA to Mindanao – an issue or may not be an issue but would still need to be reckoned,” Montenegro said.
Most LGUs consistently have surpluses and therefore might not have maximized the use of their budget allocations per figures of the BLGF (Bureau of Local Government Finance), he added.
He cited some data from BLGF. For instance, in 2012 and 2016, there was an average of 14.5 percent for provinces in Mindanao, while one region had the highest of 29 percent surplus.
“For municipalities, that’s about 20 percent of the municipalities in Mindanao having an average of 20 percent surplus, and with one region having 37 percent average surplus. For cities in Mindanao, that’s about 10.85 percent average, but. Still, with the region having cities that have an average of 20 percent surplus in their budget allocation,” he added. Based on the BLGF scorecard, the local revenue should be increased by greater than 5 percent, and dependency on local source income for cities should be greater than 14 percent, and for municipalities and provinces should be greater than 20 percent. “But if we look at the case of Mindanao, most of the LGUs have not yet reached these parameters,” Montenegro further stated. (PR)