Lgu budgeting process

1. 2. <ul><li>SECTION 129. Power to Create Source of Revenue - Each local government unit
shall exercise its power to create its own sources of revenue and to levy taxes, fees, and
charges subject to the provisions herein, consistent with the basic policy of local autonomy.
Such taxes, fees, and charges shall accrue exclusively to the local government units.
</li></ul>LOCAL REVENUE GENERATION
2. 3. <ul><li>a. Land -based Tools </li></ul><ul><li>b. Community Activity -based Tools
</li></ul><ul><li>c. Infrastructure -based Tools </li></ul><ul><li>d. Debt-based Tools
</li></ul><ul><li>e. Revenue sharing Tools </li></ul>
3. 4. <ul><li>Basic Real Property Tax (Sec. 232) . </li></ul><ul><li>Special Education Fund –
SEF Real Property Tax ( Sec. 235 ). </li></ul><ul><li>Land Transfer Tax (Sec. 135) .
</li></ul><ul><li>Idle Land Tax (Sec. 236) . </li></ul><ul><li>Public Land Use Tax (Sec.
235a) . </li></ul><ul><li>Land Sale of Foreclosed Real Properties (Sec. 257, 258 and 260) .
</li></ul><ul><li>Land Investment </li></ul><ul><li>Land Reclassification (Sec. 20) .
</li></ul><ul><li>Land Development Permit Fee (557 and 558). </li></ul><ul><li>Tax on
Sand, Gravel and other Quarry Resources (Sec. 138). </li></ul>
4. 5. <ul><li>Business Tax (Sec. 143) </li></ul><ul><li>Community Tax (Sec. 156)
</li></ul><ul><li>Franchise Tax (Sec. 137) </li></ul><ul><li>Tax on Business of Printing and
Publication (Sec. 136) . </li></ul><ul><li>Professional Tax (Sec. 139) .
</li></ul><ul><li>Amusement Tax (Sec. 140) . </li></ul><ul><li>Annual Fixed Tax on
Delivery Trucks or Vans (Sec. 141) . </li></ul><ul><li>Fishery Rentals, Fees and Charges
(Sec. 149) . </li></ul><ul><li>Service Fees and Charges (Sec. 153). </li></ul>
5. 6. <ul><li>Special Levy (Sec 250) </li></ul><ul><li>Toll Fees or Charges (Sec. 155) .
</li></ul><ul><li>Public Utility Charges (Sec. 155) . </li></ul>
6. 7. <ul><li>Debt Financing (Sec. 297-302) . </li></ul><ul><li>Financial Investment (Sec 18
</li></ul>
7. 8. <ul><li>Share in Mining, Fishery, and Forestry Taxes (Sec. 290) . </li></ul><ul><li>Share
in the Gross Sales or Taxes of Government-Owned and Controlled Corporations (Sec. 291) .
</li></ul><ul><li>Congressional funds . </li></ul>
8. 9. <ul><li>Traditional method: </li></ul><ul><ul><li>Estimates income on the basis of
</li></ul></ul><ul><ul><ul><li>Past collections </li></ul></ul></ul><ul><ul><ul><li>Newly
 enacted tax ordinances </li></ul></ul></ul><ul><ul><ul><li>Amendments to existing tax or
revenue ordinances </li></ul></ul></ul><ul><ul><ul><li>Program of tax collection campaign
</li></ul></ul></ul>
9. 10. <ul><li>Revenue forecasting </li></ul><ul><ul><li>Estimates income based on the
average growth rate of the actual income for the last five years.
</li></ul></ul><ul><ul><ul><li>Presumptive Income Levels (PIL) – estimates tax bases for
business and amusement tax </li></ul></ul></ul><ul><ul><ul><ul><li>Firm’s electric bill
</li></ul></ul></ul></ul><ul><ul><ul><ul><li>Number of employees
</li></ul></ul></ul></ul><ul><ul><ul><ul><li>Amount of inventory
</li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>(countercheck the amount of gross
receipts declared by the tax payer) </li></ul></ul></ul></ul></ul>
10. 11. <ul><li>Collection – done mainly by the Treasurer’s office </li></ul><ul><ul><li>(all
taxes, fees and charges shall be paid within the first twenty(20) days of January and of each
subsequent quarter) </li></ul></ul>
11. 12. <ul><li>Factors affecting the collection efficiency of the local treasurer’s office
</li></ul><ul><ul><li>Limited personnel </li></ul></ul><ul><ul><li>Inadequate records-
keeping and management systems </li></ul></ul><ul><ul><li>Political mediation
</li></ul></ul><ul><ul><li>Precarious peace and order condition in the locality
</li></ul></ul><ul><ul><li>Low tax ethic </li></ul></ul><ul><ul><li>Lack logistics
</li></ul></ul><ul><ul><li>Revenue data bank </li></ul></ul>
12. 13. <ul><li>Vertically integrated planning </li></ul><ul><ul><li>Provides local governments
with the connection to the broader and longer-term framework of development
</li></ul></ul><ul><li>Local development planning </li></ul><ul><ul><li>Identification of
development programs and projects that are appropriate for credit financing
</li></ul></ul><ul><ul><li>Basis for budget proposals and reference in preparing work and
financial plans. </li></ul></ul><ul><ul><li>Basis of recommendation of spending for
economic, social and general services </li></ul></ul>
13. 14. <ul><li>Local Government Budget Process </li></ul><ul><ul><li>Legal instrument which
authorizes the expenditure of public funds </li></ul></ul><ul><ul><li>Accounting framework
for fixing the fiscal stewardship of public offers </li></ul></ul><ul><ul><li>Management tool
for planning the direction and magnitude for the utilization of government revenues and
receipts </li></ul></ul>
14. 15. <ul><li>Setting a local government budget involves three key decisions: 1) Allocation 2)
Distribution 3) Stabilization/Growth </li></ul><ul><li>The Allocation Decision is based in
three criteria: 1) Economic efficiency 2) Technical efficiency 3) Net social benefits/costs
</li></ul>
15. 16. Budgeting Cycle
16. 17. <ul><li>Executive Budget </li></ul><ul><ul><li>Local Chief Executive
</li></ul></ul><ul><ul><li>Local Finance Committee </li></ul></ul><ul><ul><li>Done
between July 15 and October 15 of the current year </li></ul></ul><ul><ul><li>Transmitted
to the Local Sanggunian not later than October 16 </li></ul></ul>
17. 21. <ul><li>Legislative discussion of proposed budget is done by the Sanggunian between
October 16 and November 17 </li></ul><ul><li>Enact annual budget by issuing an
appropriation ordinance on or before the current fiscal year </li></ul>
18. 22. <ul><li>Submission of the budget for review is required within 10 days </li></ul>
19. 25. The review action by the reviewing authority may lead to either the declaration of the
budget as to the following :
20. 26. This phase involves the release and actual disbursement of funds for the identified
functions – Work and Financial Plan and Request for Allotment
21. 30. <ul><li>Budget Preparation </li></ul><ul><ul><li>Expenditure items
</li></ul></ul><ul><ul><ul><ul><li>Mandatory contributions (required prior to the Code’s
effectivity) </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Social security and insurance
benefits of employees </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Reserve
money for earned leave credits of retiring employees
</li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Gratuities of employees that are
optionally retiring </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Personal services
</li></ul></ul></ul></ul>
22. 31. <ul><li>Budget Authorization </li></ul><ul><ul><li>Conflicts between the executive and
legislative branches of the local government cause the delay of the passage of the budget
(opposing political camps/party) </li></ul></ul>
23. 32. <ul><li>Budget Review </li></ul><ul><ul><li>Change in the process of review of
appropriation led to non-conformity of review actions and decisions
</li></ul></ul><ul><ul><ul><li>Some sanggunians would authorize anything appropriated by
lower level of local units for political purposes </li></ul></ul></ul><ul><ul><ul><li>Failure to
submit supporting documents on time </li></ul></ul></ul>
24. 33. <ul><li>Budget Execution </li></ul><ul><ul><li>Non submission of work and financial
plan and request for allotments by the heads of departments or offices
</li></ul></ul><ul><ul><li>Non submission of supporting documents for the request for
allotments. </li></ul></ul><ul><ul><li>Use of appropriated funds or savings </li></ul></ul>
25. 34. <ul><li>Budget Accountability </li></ul><ul><ul><li>Delayed submission of financial
statements to the local finance committee by the local accountant
</li></ul></ul><ul><ul><li>LGU failed to prepare development programs for the 20%
Development Plan </li></ul></ul><ul><ul><li>LGU appropriated funds for development
projects less than the level of appropriation required </li></ul></ul><ul><ul><li>LGUs failed
to implement or complete projects programmed under the fund </li></ul></ul>
26. 35. <ul><li>Budget Accountability </li></ul><ul><ul><li>Incurrence of cash drafts due to
improper use of trust funds </li></ul></ul><ul><ul><li>Disbursements which lead to
disallowances after audit </li></ul></ul><ul><ul><li>Failure by LGUs t conduct periodic
physical inventory or to maintain complete property records
</li></ul></ul><ul><ul><li>Failure to liquidate cash advances, thus making those advances
accumulate through the years.