Bill on automatic income classification of LGUs reaches Senate plenary

The proposed Automatic Income Classification of Local Government Units (LGUS) Act—one of the priority measures of the Marcos administration—has reached the Senate plenary on Wednesday.

This after Senator JV Ejercito, chairman of the committee on local government, sponsored Senate Bill 2165 under Committee Report No. 64.

According to Ejercito, this bill aims to institutionalize the automatic classification of the LGUs where provinces, cities, and municipalities shall be classified into six income classes that will truly reflect their financial capability and position.

The salient points of the bill include:

-Fixing of the reclassification of LGUs every three years to synchronize with the term of local elective officials. This is aimed at fostering accountability and promoting competitiveness and creativity to improve local revenues.

-Setting the income threshold for provinces, cities, and municipalities to ensure that the income ranges are equitably set by Congress and is not left entirely to the discretion of the implementing agency.

-Defining the power of the Finance Secretary to regularly reclassify the LGUs and to review and revise the income ranges.

-Empowering the Finance secretary to classify an LGU which is created before the regular reclassification

-Providing a transitory provision to ensure that during the first reclassification, no LGU will be downgraded, provided that the concerned LGU will not continue to fall below its income range during the next reclassification.

-Ensuring that no official or employee in the concerned LGU shall suffer any diminution of salary and benefits during the first income reclassification

Ejercito said the income classification not only determines the LGUs’ financial capability to undertake developmental programs, it also has implications on compensation adjustment for LGU personnel and the determination of administrative aids, financial grants, and other forms of assistance to local governments.

The income classification likewise serves as a basis for the minimum wage of domestic workers under the Kasambahay Law, among other purposes, he added.

According to Ejercito, the last income reclassification of LGUs was made in 2008 and that the current classification of our LGUs is based on an outdated revenue figures or more specifically, on their 2004-2007 Financial Statements due to an adverse opinion of the Department of Justice regarding the power of the Finance secretary to adjust the income ranges under Executive Order No. 249, dated July 26,1987.

He mentioned that there are 141 outstanding requests from various LGUs submitted to the Department of Finance asking the secretary for income classification.

The DOF, on the other hand, said that there was an LGU that wanted to self-classify though a local ordinance.

“[The bill] intends to resolve this predicament where the LGUs are left with no recourse because of an outdated law on income classification,” Ejercito said.

Over the weekend, Speaker Ferdinand Martin Romualdez revealed 11 additional bills as part of the Legislative-Executive Development Advisory Council (LEDAC), including the measure on Local Government Unit Income Classification.—LDF, GMA Integrated News