The critical role of the local Sanggunian in the Annual Budget approval (part 1)

Apr 07, 2022

As the legislative body of the Local Government Unit (LGU), the Sanggunian shall enact the annual and supplemental budgets and appropriate funds for specific programs, projects, services and activities, or for other purposes not contrary to law, in order to promote the general welfare of the locality and its inhabitants. (Sections 447 (2) (ii), 458 (2)(i), and 468 (2)(i), RA No. 7160).

The Sanggunian may, by ordinance, authorize the LCE or the Presiding Officer of the Sanggunian to augment any item in the approved annual budget for their respective offices from savings in other items within the same expense class of their respective appropriations (Section 336, RA No. 7160; Article 454[b], IRR of RA No. 7160).

However, due to tense political climate or for various other reasons, the Sanggunian, as a consequence, fails to enact the Appropriation Ordinance (AO). This begs the question: does the local Sanggunian enjoy unbridled discretion in the approval or disapproval of the annual budget?  The answer may be in the negative. The Department of Budget and Management (DBM) provides the following guidelines for LGUs in budget evaluation:

The Sanggunian, with the assistance of the LFC, shall evaluate and deliberate on the LEP in terms of compliance with the budgetary requirements and general limitations.

The Receipts Portion in the LEP

  • To check the budget year’s aggregate estimated income which will be compared with the aggregate expenditure program (Section 324 [a], RA No. 7160);
  • To check if the taxes and fees identified as sources of the estimated income are in accordance with the approved Local Revenue Code;
  • To check if the estimated receipts from Real Property Taxes (RPT) correspond to the total amount of due and demandable RPT, including delinquent accounts;

The Expenditure Program

  • Determine the overall level of appropriations by department/office/unit and special purpose appropriations and the overall total;
  • To check the provisions for associated PS costs, e.g. Philhealth, GSIS premiums, Pag-IBIG, PERA, Year-end Bonus and Cash Gift, RATA, etc;
  • To check that the provision for debt services does not exceed the ceiling required by law which is 20% of the regular income of the LGU concerned (Section 324 (b), RA No. 7160);
  • To check that the provision for Local Disaster and Risk Reduction Management Fund (LDRRMF) is not less than 5% of the estimated regular income required by law (RA No. 10121);
  • To check that the provision from IRA for development projects is not less than 20% required by law (Section 287, RA No. 7160);
  • To check that the provision for discretionary expenses, if any, does not exceed 2% of the actual receipts derived from basic Real Property Tax (RPT) in the next preceding year (Section 325 (h), RA No. 7160); and
  • To verify if the projects in the budget are consistent with the AIP.

Hence, local officials including Sanggunian members are reminded to comply with the foregoing DBM guidelines. The Sanggunian must ensure that provisions on budgetary requirements and general limitations under R.A. No, 7160 and other relevant laws are strictly complied with in the proposed budget.

For queries on this topic, please send email to [email protected].