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Sunday, April 21, 2024

Higher NTA can’t cover full devolution–LGUs

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A LAWMAKER who served as mayor has taken up the cudgels for local governments now fretting over the undue burden imposed on them to shoulder all costs of fully devolved services, a responsibility they deem cannot be covered even with the increase of their national tax allotments (NTA) as a result of the Mandanas ruling.

Leyte Rep. Richard Gomez urged Congress to look into the “misalignment” in the NTAs of local government units and the funding requirements for full devolution of specific national public services mandated under the Local Government Code (RA 7160). 

In House Resolution 599, Gomez said the calculation of the NTA, as mandated under RA 7160, is not aligned with the costing of devolved functions under RA 7160 and Executive Order No.138, which was issued on June 1, 2021 following the Supreme Court’s Mandanas-Garcia decision. 

In 2019, the SC ruled in favor of then Batangas Gov. Hermilando Mandanas and Bataan Gov. Enrique Garcia Jr. and granted substantial, additional, and proportional increases in the NTA of LGUs. 

Following the allocation of higher national taxes to LGUs, EO 138 was issued mandating the full devolution of specific functions of the Executive branch to LGUs, not later than the end of fiscal year 2024. 

However, in filing  HR 599, Gomez said “the increase in national tax allotment for LGUs, as a result of the Mandanas-Garcia ruling, is not guaranteed to fully cover all devolved functions” under EO 138 and RA 7160. 

Citing the lack of a clear devolution plan and the misalignment in source funding for the full transfer of services, Gomez urged his colleagues to echo his call for President Marcos Jr. to repeal EO 138. 

“I am appealing to President Marcos to nullify EO 138 as Congress and the Executive thresh out the various issues that have cropped up related to the implementation of the full devolution of services. Let us first resolve all issues and then we can talk about full devolution,” Gomez said, partly in Filipino. 

In a separate House Bill 6414, the lawmaker said: “This representation maintains that we have not yet attained the optimal conditions for full devolution. Much as it seems that additional, yet proportional NTAs for each LGU would solve the budget gaps in each LGU, it is not as simple as that. At the onset of the full devolution process, various issues have arisen that signal a fiscal crisis among LGUs, especially in the next two years.” 

To address the funding issues related to fully devolving national functions to LGUs, the lawmaker filed House Bill No. 6414 seeking the creation of a fund that would provide gap financing for LGUs that have incurred deficits in the years leading to full devolution. 

The proposed Local Government Units Full Devolution Gap Financing Fund is aimed at servicing all LGUs regardless of income brackets. 

Aside from providing gap financing, HBN 6414 proposes the conversion of the Growth Equity Fund, which was created under EO 138, as initial funding component for the Fund. The bill also allows LGUs with budget surpluses to invest in the Fund as capital for soft loans to LGUs in deficits, thus giving LGUs “an opportunity to help one another.” 

“With the enactment of this bill, this representation hopes that all LGUs will be able to achieve full devolution with ample funding,” Gomez said.

Image credits: Richard Goma Gomez/Facebook

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