STATUS OF THE REVIEW OF
THE 1991 LOCAL GOVERNMENT CODE
An update for the League of Cities of the Philippines
26 August 2014
Goals of the Review
Why are we reviewing the Code? Why focus on its fiscal provisions?
1. The law mandates a review of the Code every 5 years.
2. Despite recent progress in local governance reforms, various
stakeholders believe that after 23 years, changes to the Code
are long overdue.
3. Many fiscal topics are on the priority list of stakeholders.
4. It is important to conduct a review of the provisions using a
holistic framework.
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Goals of the Review (cont’d)
5. The 2011-2016 Philippine Development Plan asserts that LGUs
must contribute to attaining inclusive growth and reducing poverty
through:
 Improved delivery of decentralized services
 Greater local revenue autonomy
 Strong local fiscal governance
Hence, the underlying theme of the review process:
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
How shall the review be conducted?
1
2
3
4
5
INCLUSIVE
GOV’T-LED
TRANSPARENT
TIME-BOUND
Cabinet Cluster for
Good Governance &
Anti-Corruption >>
Wide public
dissemination via
mass media and online
channels hopes to
DEMYSTIFY and
POPULARIZE the fiscal
aspects of local
governance
EVIDENCEBASED
Congress
 Nat’l Agencies
LGU Leagues
 Civil Society
 Business Sector
 Citizens At Large
 Subject Experts
Coordinating
Committee for
Decentralization >>
Oversight Committee
for Devolution
Position papers
Existing studies
New studies
 Surveys
Complete
recommendations
for legislative
amendments
before end-2014
3 Pillars of the Review Process
1
TAKING STOCK
 Related laws passed since 1991
 Bills filed/re-filed in Congress
 Supreme Court rulings
2
FEELING THE
STAKEHOLDERS’ PULSE
Sectoral and regional consultations
Surveys
3
PROCESSING
THE EVIDENCE
 Technical studies
 Position papers
Scope of the Review – 7 Fiscal Topics
1. Expenditure assignment
 Overlapping and unclear assignment of functions among national agencies
& LGUs particularly in health, agriculture and environment & natural
resources
 Unfunded mandates result in insufficient or even non-delivery of services to
local communities
2. Revenue assignment & taxing powers




Lack of productive source of local revenues ►
High LGU dependence on transfers ►
Weak revenue autonomy ►
Weak accountability
(continued)
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
7 Fiscal Topics for the Review (cont’d)
3. Intergovernmental fiscal transfer



Is IRA sufficient for LGUs to be able to deliver devolved services?
Does IRA assist fiscal equalization by giving more to LGUs with
greater needs and less to those with a higher taxing capacity?
Is IRA a disincentive for improving local revenue generation?
4. LGU borrowing and credit finance



Low borrowings relative to financed local infrastructure
Fiscal risks arising from LGU borrowings, particularly if not utilized
for capital investment
Preferential treatment given to government financial institutions
as LGU depository banks
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
7 Fiscal Topics for the Review (cont’d)
5.Creation of LGUs
 Trend towards conversion from municipalities to cities / break-up of existing
LGUs into 2 or more units: it tends to create inefficient-sized jurisdictions
 Need to strengthen existing provisions that regulate the creation of new LGUs
6.Inter-LGU alliances
 Uncertainties about how to manage common funds, access financing
 Vague regulatory framework and legal personality for inter-LGU cooperation
7.Fiscal administration
 Some Local Government Code provisions are deemed antiquated or
inconsistent with certain laws that came after enactment of the Code in 1991
 Review provisions re: cap on personal services expenditures, procurement
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Highlights of First 3 Months
of the Local Government Code Review
June-August 2014
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
1. Presented to the 3 key committees in Congress
House Committee on Local
Government
Rep. Pedro Acharon Jr.
Senate Oversight
Select Committee on the
Local Gov’t Code
Sen. Aquilino Pimentel III
Senate Committee of
Local Government
Sen. Ferdinand Marcos Jr.
2. Gained the solidarity of LGU league presidents, Congress
and development partners
3. Completed 1-on-1 consultations with:
 Six out of 9 LGU leagues
Next round w/ barangay, vice-mayor & board members’ leagues
 Business sector
Phil Chamber of Commerce and Industry
 National government agencies
DoF
DBM
DOH
NEDA
DepEd
 Development partners w/ similar programs in local governance
AusAID
EU
USAID
WB
AFD
GIZ
CIDA
Consultation activities scheduled in Sept 2014
 Luzon
 Visayas
 Mindanao
-
Sept. 11-12
Sept. 18-19
Sept. 25-26
Quezon City
Cebu
Davao or Cagayan de Oro
Invited participants per regional consultation:
 Provincial governors
 City mayors
 Chapter presidents of League of Municipalities
 Local business, civil society, academe
Anticipated participants per regional consultation: 200
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Other consultation activities in Sept 2014
Continuing 1-on-1 meetings with sectors:
a. Civil society organizations
Nat’l officers of PRRM, CODE-NGO, LOGODEF, Galing Pook
Foundation
b. Academe
a. UP School of Economics
b. UP College of Public Administration & Governance
c. Ateneo-Benigno and Corazon Aquino School of Government
d. De La Salle-Jesse Robredo Institute of Governance
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Actions for Last Quarter of 2014
1. Inventory and processing of consultation inputs, LGU
survey results
2. Submission of position papers by fiscal experts
3. Presentation of position papers to Coordinating
Committee on Decentralization and all stakeholders
4. Drafting and review of proposed amendments
5. Submission of draft amendments to Congress
(continued)
REVIEW OF THE 1991 LOCAL GOVERNMENT CODE
Thank you
very much for
your time and
attention!