RISING TIDE

Understanding the Fiscal Capacity of 75 Philippine Local Government Units

for Sustainable Coastal Fisheries Financing

PREPARED BY SUPPORTED BY
 RISING TIDE
Understanding the Fiscal Capacity of 75 Philippine Local Government Units
for Sustainable Coastal Fisheries Financing

TABLE OF CONTENTS
02
Preface

03
Executive Summary

04
Chapter 1. Government Revenue

10
Chapter 2. Government Spending

15
Chapter 3. Debt Capacity

18
Chapter 4. Loans and Grants History

19
Chapter 5. Regulatory Fee Structure

20
Chapter 6. Funding for Small-Scale Fisheries

21
Chapter 7. Capacity-Building Opportunities

22
Conclusion

23
References
2 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

Preface

M
ore than 1.8 million improve the ecological and social resilience of
Filipinos rely on fishing coastal communities.
for their livelihood, and To guide more effective interventions, PREFACE DOF-
fish and fish products BLGF
More thanand Rare jointly conducted
1.8 million Filipinos rely a study to for their livelihood,
on fishing
comprise almost 12% facilitate
comprisebetteralmostunderstanding
12% of the average of the current
Filipino diet, a proportion tha
of the average Filipino meat and
fiscal chicken.
capacity Unfortunately,
including borrowing the fish catch necessary to prov
capacity,
diet, a proportion that been steadily declining since the
regulatory fee structure and ability to manage 1970s and has resulted in a vici
other unsustainable fishing practices. If left unaddressed, a colla
is significantly higher than meat and chicken. loans of 75 coastal LGUs in the Philippines. This
inevitable, posing a serious threat to both the livelihoods of coastal co
Unfortunately, the fish catch necessary to provide report has been prepared solely for informational
of the nation. The huge disparity that exists in terms of the financ
for Filipino families have been steadily declining purposes,
what is providedwith data gathered
for the Philippinefrom 2011-2018
fishing sector has further exacerb
since the 1970s and has resulted in a vicious Statement of Receiptsand
the natural ecosystem andofExpenditures (SRE)
coastal communities.
cycle of overfishing and other unsustainable reports, complemented by responses from
The Department of Finance- Bureau of Local Government Finance
fishing practices. If left unaddressed, a collapse municipal
agreed to treasurers
work together to atosurvey, without any
help strengthen the fishing sector of co
in fisheries resource is inevitable, posing a independent
(LGUs), through verification.
activitiesAs such
that arethe report with their individua
consistent
serious threat to both the livelihoods of coastal Pursuant
does not to ExecutiveorOrder
guarantee warrantNo.the127,accuracy,
the DOF-BLGF is mandated to
communities and food security of the nation. The reliability, adequacy and completeness of the revenue administra
implementation of policies on local government
This includes the development of plans and programs for the
huge disparity that exists in terms of the financial information. Some of the information may
management systems, collection enforcement mechanisms, and c
resources needed versus what is provided for the also
LGUs. beOnsuperseded by political
the other hand, Rare isand an economic
international non–governmenta
Philippine fishing sector has further exacerbated conditions beyond 2018.
the use of behavior change to address environmental challen
the vulnerability of both the natural ecosystem governments
DOF-BLGFand and other partners
Rare would liketoto implement
thank programs for ma
and of coastal communities. management to improve the ecological
the LGUs who have participated in the data and social resilience of coas
The Department of Finance- Bureau of Local gathering
To guide more process. LGU-related
effective data presented
interventions, DOF-BLGF and Rare jointly c
Government Finance (DOF-BLGF) and Rare have in this understanding
better report are shared not current
of the to pit LGUs fiscalagainst
capacity including borrow
agreed to work together to help strengthen the each other or discriminate LGUs based oncoastal
structure and ability to manage loans of 75 their LGUs in the Phili
fishing sector of coastal local government units prepared solely for informational
performance related to the financial indicators purposes, with data gathered fro
Receipts and Expenditures (SRE) reports, complemented by
(LGUs), through activities that are consistent with considered in the study. The financial and survey
treasurers to a survey, without any independent verification. As
their individual and collective mandates. Pursuant data gathered
guarantee from the
or warrant study
the will instead
accuracy, be used
reliability, adequacy and comp
to Executive Order No. 127, the DOF-BLGF as
Somebasisof for
theidentifying
informationopportunities
may also be for capacity by political and
superseded
is mandated to assist in the formulation and 2018.
building, fiscal growth and inter-LGU cooperation
implementation of policies on local government which
DOF-BLGF are essential
and Rare towould
breaking
like down
to thank barriers
the LGUs who have partic
revenue administration and fund management. that impede
process. the flow data
LGU-related of financing
presented to the fisheries
in this report are shared not to
This includes the development of plans and or discriminate
sector. LGUs based on their performance related to the fina
programs for the improvement of resource the study. The financial and survey data gathered from the study will
management systems, collection enforcement identifying opportunities for capacity building, fiscal growth and inter
essential to breaking down barriers that impede the flow of financing
mechanisms, and credit utilizations schemes of
LGUs. On the other hand, Rare is an international
non–governmental organization specializing in the
use of behavior change to address environmental
Nino Raymond B. Alvina Rocky Sanchez Tirona
challenges, that works with local governments Niño Raymond B. Alvina Rocky Sanchez Tirona
Executive Director Vice President
and other partners to implement programs for Executive
DOF-BLGF Director Vice President
Rare, Inc.
marine resource and fisheries management to DOF-BLGF Rare, Inc.
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 3
Executive Summary
T
his report compares the
financial performance of 75 local
government units (LGUs) with
coastal and fishing communities
in the Philippines. The report
uses financial indicators compiled
from Statement of Receipts and Expenditures
(SRE) reports as well as responses from
municipal treasurers to a survey conducted via
the Department of Finance Bureau of Local
Government Finance (DOF BLGF). This report
is part of a feasibility analysis aimed at better
understanding the capacity of coastal LGUs to
raise and manage financing for their fisheries
programs. Data collection and analysis was
conducted by Rare, in cooperation with BLGF.
Rare is an international conservation NGO that
works in the Philippines with fishing villages and
LGUs to build and strengthen community-based
coastal fisheries management of municipal
waters, and is now developing innovative
blended finance structures to expand solutions to
meet the scale of the challenge.
With fishing and farming as their main source
of livelihood, all 75 LGUs have the internal
revenue allotment (IRA) from the national
government as their main revenue source. This
allocation is currently determined by the Local
Government Code and expected to increase
by 2022. However, a steadily increasing trend
emerged for their self-income ratios alongside
increasing trends in revenue growth rates and
revenues per household. Wide variation is seen
in all revenue indicators though, including in their
mix of tax and non-tax revenue. Similar variation
is noticeable in all spending indicators but most
LGUs reported increasing cash balance ratios.
Where DOF had set benchmarks, most LGUs
achieved favorable marks.
Most LGUs have credit financing experience,
but there is wide disparity in loan amounts. Most
of these loans funded traditional projects such
as government buildings and equipment. A few
LGUs expressed disinterest in credit financing
and even fewer were familiar with other financing
modalities, such as joint venture agreements
and public private partnerships. There is greater
interest in grants, but among those that had
grant financing, these went mostly to traditional
projects also.
Most LGUs have existing ordinances for
coastal and fisheries resource management
(CFRM) but many have yet to update their
comprehensive land use plans and their local
revenue codes to integrate CFRM plans. Most
LGUs have done projects for their fisheries
sector, such as livelihood development initiatives
that were funded by the national government.
They have also engaged local stakeholders and
cooperated with other LGUs to advance their
CFRM plans. There is not enough data, however,
as regards outcomes and impact of said projects.
Certain LGUs are better able to balance
their budgets, generate revenue, and manage
expenses. Some LGUs have also prioritized the
fisheries sector more highly than others, and
this has led to different inputs and activities
being downloaded to their constituents. Several
opportunities for building capacity and digging
deeper were therefore raised: for generating
revenue and managing expenses, for external
financing, for regulatory best practices, for
generating evidence, for clustering similarly
situated LGUs, and for creative confidence and
design thinking. Facilitating regular dialogue
across local leaders will generate insights that
will help lift constituents out of subsistence
fishing and into more sustainable jobs. Despite
climate risks and other constraints, struggling
LGUs have similarly situated counterparts that
can help them chart paths out of poverty for
their citizens.
4 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS
CHAPTER 1
GOVERNMENT
REVENUE
T
o understand the financial profile of
select coastal cities and municipalities,
this report draws from the Statement of
Receipts and Expenditures (SRE) reports
by the 75 LGUs from the years 2011 to
2018. The 75 LGUs comprised of 8 cities
and 67 municipalities. The DOF further
classifies municipalities into income class levels depending
on their average annual income from the previous four
years, seen in Table 1. This report also draws from a
survey conducted by the DOF BLGF that were sent to
the municipal treasurers of these LGUs. As of September
2019, 72 of the 75 LGUs responded to the survey.
The BLGF survey responses reveal that 65% of LGUs
surveyed considered fishing as their main source of
livelihood. All 72 respondents did report that they had
constituents engaging in fishing. On average, 22.5%
of households engaged in fishing, and 15% engaged
in subsistence fishing. The Municipalities of Malimono,
Concepcion, and Libertad were in the extreme in that at
least two thirds of their households engaged in fishing.
Meanwhile, farming was considered as the other major
source of livelihood for 96% of LGUs (69 of 72). Other
major sources of livelihood mentioned were mining and
quarrying, logging, manufacturing, mat weaving, trading,
tourism, and construction services.
IRA remains as the primary revenue source for LGUs
The Local Government Code of 1991 (LGC) formally
transferred the principal responsibility for providing
and financing a longer list of public services from the
National Government to LGUs. Municipalities and cities
TABLE 01: Distribution of LGUs in Sample
Out of 75
Cities: Income > Php100M 08
1st Class Municipalities: Income > Php55M 11
2nd Class Municipalities: Income > Php45M 14
3rd Class Municipalities: Income > Php35M 12
4th Class Municipalities: Income > Php25M 14
5th Class Municipalities: Income > Php15M 14
6th Class Municipalities: Income < Php15M 02
were assigned the primary responsibility for the frontline
delivery of local public services. However, to this day,
municipalities and cities do not have equal access to the
same range of taxing tools, as seen in Table 2. Provinces
and cities have more taxing tools at their disposal and
can impose their own rates within certain parameters
prescribed in the LGC. For example, Section 151 of the
LGC states that: “The rates of taxes that the city may
levy may exceed the maximum rates allowed for the
province or municipality by not more than fifty percent
(50%) except the rates of professional and amusement
taxes.” Further, some LGUs are better able to tap the
funds of national government agencies because of their
mayor’s personal connections to national officials or
through more aggressive lobbying efforts. These have
resulted in disparities in locally sourced and total income,
and a high dependence on the internal revenue allotment
(IRA).
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 5

TABLE 02: Taxes that different LGUs can collect

Local Tax Provinces Cities Municipalities Barangays

On real property transfers √ √

On business of printing and publication √ √

On franchises √ √

On sand, gravel, and other quarry resources √ √ * *

On amusement places √ √ *

On professionals √ √

On delivery vans and trucks √ √

On real property √ √ * *

On idle lands √ √

On businesses √ √ √

On community tax √ √

*Share in the proceeds of levy of province

TABLE 03: IRA Distribution under the LGC
First Stage: Among LGUs (number as of June 2019)
Share
Provinces (81) 23%
Cities (145) 23%
Municipalities (1,489) 34%
Barangays (42, 045) 20%
Second Stage: Weighted Criteria
Population 50%
Land Area 25%
Equal Sharing 25%
The IRA is currently 40% of the Bureau of Internal
Revenue (BIR) collection and is distributed to LGUs
following a formula from the LGC: first according to
LGU type and then according to a predetermined set of
criteria.
In its latest summary of financial performance for fiscal
year 2018, the DOF finds that cities are generally self-
sufficient with only 42% of their income contributed by the
IRA. Meanwhile, the IRA contributed 74% of the income
of municipalities. A recent Supreme Court ruling though
will change these IRA allocations. In 2018, the Court ruled
that the just share of LGUs should be based on all national
taxes, and not just from the BIR, starting in the 2022
budget cycle. This will increase the amount of IRA each
LGU will be collecting and augment their budgets.
Revenue per household and average revenue growth
generally improved
All LGUs in the sample had higher revenue per household
for 2018 than their average for 2011 to 2018, except
for Bayawan City and Hamtic, and because we do not
have 2018 data for Bindoy. This indicates that overall,
locally sourced income per household had been
increasing in recent years, and especially so for those
at the top: Claver, Moalboal, San Carlos City, Bogo City,
and Tagana-an. This reflects a similar trend in financial
performance among all LGUs in the Philippines with an
average revenue growth rate of 10% from 2012 to 2018,
according to the DOF.
Beyond the top five, the following LGUs also have
significantly higher revenues per household among
their income class level: San Jose, Daet, and Bantayan
among the first-class municipalities; Cantilan and
Manapla among the second-class municipalities; Badian
among the third-class municipalities; Dauin among the
fourth-class municipalities; and General Luna among the
fifth-class municipalities. A closer look into their revenue-
generating activities might yield models that others in
their class level can study and replicate. As for average
revenue growth, 95% of LGUs (70 of 75) exceeded
the DOF benchmark, which was at greater than 0%.
This indicates that on average, there had been positive
growth in locally sourced income among the LGUs in
our sample. This list was led by: Bayawan City, Claver,
Badian, Manapla, and General Luna. LGUs that did not
meet the DOF benchmark were: Bais City, Sebaste,
Bindoy, and Hamtic.
6 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

GRAPH 01: Revenue per Household¹

■ 2018 ■ Average

Claver P39,394 Gigaquit P1,861

Moalboal P29,081 Buenavista P1,304
San Carlos City P19,432 Lawaan P2,094
Bogo City P10,825 Calatrava P1,357
Tagana-an P6,700 Hamtic P814
Bais City P6,298 Daanbatayan P1,305
Cantilan P8,683 Aloguinsan P1,400
San Jose P5,398 Tayasan P1,463
Bayawan City P2,881 Binalbagan P920
Dauin P5,979 Santa Catalina P1,157
General Luna P7,931 Tinambac P1,015
Daet P4,272 San Isidro P1,995
Santander P4,881 Bindoy P0
Ginatilan P4,252 Santa Monica P1,581
Sagay City P3,540 Quinapondan P1,168
Sebaste P4,925 Nueva Valencia P1,181
Cadiz City P6,596 Malimono P1,472
Dapa P3,498 Libertad P931
Escalante City P2,405 Sibunag P987
Manapla P6,141 Cauayan P700
Zamboanguita P2,708 San Francisco P1,033
Samboan P3,021 Siaton P880
Badian P5,704 Pinamungahan P1,160
Bantayan P2,955 Carles P1,312
Jordan P2,648 Ajuy P701
Concepcion P2,121 Ayungon P854
Alegria P2,731 Barotac Nuevo P610
Medellin P1,937 Barotac Viejo P288
Lanuza P2,460 Basay P180
Burgos P2,402
Cortes P2,093
Malabuyoc P1,910
Estancia P1,926
Enrique B. Magalona P1,864
Sipalay City P1,900
Guiuan P1,518
San Remegio P2,306
Pilar P4,031
Mercedes P1,742
Pandan P2,000
Patnongon P1,586
Del Carmen P3,626
La Libertad P1,430
San Benito P1,749
Calabanga P1,785
Culasi P1,260
*Ranked according to average revenue per household

1 Revenue figures used refer to locally sourced income, including Other Receipts
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 7

GRAPH 02: Average Revenue Growth2

Bayawan City 93% Daanbantayan 10%

Claver 54% Buenavista 9%
Badian 45% Daet 9%
Manapla 40% Siaton 9%
General Luna 40% Enrique B. Magalona 9%
Pilar 39% Lanuza 9%
Del Carmen 37% Libertad 8%
Cantilan 32% Concepcion 8%
Carles 30% Culasi 8%
Cadiz City 28% Calatrava 8%
Cauayan 28% Estancia 8%
San Isidro 27% Santa Catalina 8%
Tagana-an 26% Zamboanguita 7%
Lawaan 26% Ginatilan 7%
San Remegio 25% Nueva Valencia 7%
Malimono 22% Sibunag 7%
Moalboal 22% Barotac Viejo 7%
Gigaquit 20% Sagay City 6%
Santa Monica 20% Escalante City 6%
Dauin 20% Ajuy 5%
San Carlos City 19% Guiuan 5%
Pinamungahan 18% Basay 4%
Aloguinsan 18% Medellin 4%
Quinapondan 17% Bogo City 4%
San Benito 17% La Libertad 3%
Pandan 16% Bais City 0%
Barotac Nuevo 14% Sebaste -4%
Cortes 14% Bindoy -6%
San Francisco 13% Hamtic -90%
Mercedes 13%
Alegria 13%
Ayungon 12%
Calabanga 12%
Tinambac 12%
Tayasan 11%
Bantayan 11%
Burgos 11%
Dapa 11%
Binalbagan 11%
Santander 10%
Patnongon 10%
Samboan 10%
San Jose 10%
Malabuyoc 10%
Sipalay City 10%
Jordan 10%

2 Revenue figures used refer to locally sourced income, including Other Receipts
8 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

GRAPH 03: Average Self-Income Ratio3

San Jose 41% Pinamungahan 9%

Claver 38% Tinambac 8%
Daet 37% Nueva Valencia 8%
Binalbagan 33% Carles 8%
San Carlos City 32% Ginatilan 8%
Moalboal 32% Aloguinsan 8%
Estancia 26% Siaton 8%
Dauin 24% Ajuy 8%
Medellin 23% Tayasan 8%
Cantilan 23% Cortes 7%
Bantayan 21% Cauayan 7%
Concepcion 21% Gigaquit 7%
Sebaste 21% Del Carmen 7%
Tagana-an 20% Santa Monica 6%
Manapla 20% Lanuza 6%
Zamboanguita 19% Santa Catalina 6%
Santander 19% Sibunag 6%
Barotac Nuevo 19% Basay 6%
Bogo City 19% Pilar 6%
Jordan 18% San Isidro 5%
General Luna 18% Ayungon 5%
Enrique B. Magalona 17% Quinapondan 5%
Sagay City 17% Burgos 5%
Dapa 17% San Francisco 5%
Daanbantayan 17% Libertad 5%
San Remegio 17% Lawaan 5%
Samboan 16% Malimono 4%
Bais City 16% Sipalay City 4%
Guiuan 15% San Benito 4%
Badian 15%
Alegria 15%
Buenavista 13%
Calabanga 13%
Barotac Viejo 12%
Escalante City 12%
Mercedes 12%
Patnongon 12%
Pandan 12%
Cadiz City 11%
Culasi 11%
La Libertad 11%
Malabuyoc 10%
Bayawan City 10%
Calatrava 10%
Hamtic 10%
Bindoy 10%

3 Locally sourced income figures include Other Receipts

 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 9

But self-income ratio remained low
A majority in the sample had low ratios of locally sourced
income relative to total current operating income,
with 59% of the 75 LGUs averaging a self-income
ratio lower than 15%. This was the national average
in 2014, according to the latest available DOF report.
Malimono, Sipalay City, and San Benito obtained the
lowest average self-income ratio of 4%. LGUs with the
highest proportion of income from local sources were:
San Jose, Claver, Daet, Binalbagan, and San Carlos City.
These generally low self-income ratios match with their
high IRA dependency, consistent with the DOF report.
The overall average for all LGUs in the sample was that
their IRA contributed up to 84% of their total income.
However, 52% (39 of the 75 LGUs in the sample) did
report a lower IRA dependency in 2018 compared to
their average since 2011, which suggests a favorable
trend for these LGUs.
There is wide variation in revenue mix even within
income class level
Different LGUs will have varying sources of local income
depending on their specific circumstances and so it
is difficult to determine an ideal ratio of tax to non-tax
revenue. A comparison, as seen in Table 4, can illuminate
the potential for new revenue sources for similarly
situated LGUs. Here, Claver generated PhP8 of tax
revenue for every peso of non-tax revenue generated,
while Malabuyoc generated 24 centavos of tax revenue
for every peso of non-tax revenue generated.
Only 39% of the 75 LGUs sourced a majority of
their local income from local tax revenues. This means
that 61% sourced most of their local income from
non-tax revenues, such as regulatory fees, service
and user charges, and other receipts. LGUs may also
incorporate development enterprises where income from
investments may be derived. These non-tax revenues
are usually regarded as less politically costly and more
feasible unlike a new tax ordinance. Generating them
sustainably though requires more innovative thinking
from local leaders. The variety in local revenue mix seen
in our sample, therefore, is an opportunity for learning
from each other’s financial management practices. As
an example, some LGUs reported that they imposed
fishery rentals, fees, and charges, and at different levels
of success.

TABLE 04: LGUs per class level with the highest and lowest 2011-2018 average revenue mix

LGU Class Level Ratio of Tax to Non-Tax Revenue

Daet First 1.64

Bantayan First 0.58

Claver Second 8.80

Mercedes Second 0.49

Nueva Valencia Third 1.39

La Libertad Third 0.29

Sibunag Fourth 2.11

Sebaste Fourth 0.13

Tagana-an Fifth 4.96

Malabuyoc Fifth 0.24

Burgos Sixth 1.66

San Benito Sixth 1.17

Cadiz City 3.87

San Carlos City 0.47

10 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS
CHAPTER 2
GOVERNMENT
SPENDING
F
or fiscal year 2018, 70 of the 75 LGUs
ended with an operating surplus.
Moreover, 85% ended with an operating
surplus larger than their average operating
surplus from 2011 to 2018. This increasing
and favorable trend is consistent with
the DOF report that LGUs in total had a
growing surplus since 2009. The cities of San Carlos,
Cadiz, and Bais were able double their operating surplus
between 2011 and 2018.
Most LGUs ended 2018 with a surplus
Cities dominate the ranking for operating surplus. But a
slightly different picture emerges when we rank the LGUs
according to operating surplus per household. This other
ranking helps illustrate the ability of the LGU to maintain
services at the quality required to ensure the safety and
welfare of its citizens. Here, 85% of the 75 LGUs also had
a 2018 per household operating surplus that was larger
than their average from 2011.
But expenses kept increasing
The expenses per household indicator suggests a wide
disparity in the amount of spending that citizens can
expect from their LGU, with the highest registering 30
times greater expenses than the lowest in the sample.
Expenses are also generally increasing across LGUs in
the sample, consistent again with the DOF report for
all LGUs. Only Barotac Nuevo and Manapla had lower
expenses per household in 2018 than their average from
2011 to 2018. Higher expenses per household reveal
a more expensive government and suggest a lower
solvency to sustain that expense level, but the adequate
level is difficult to ascertain without set benchmarks.
According to the DOF summary, this rise in expenses can
be attributed to greater social service and general public
service spending, including personnel.
In 2018, the DOF reported further that 64% of
the expenses of municipalities went to general
public services, officially defined as services that are
indispensable to the existence of an organized LGU,
including executive and legislative services; overall
financial and fiscal services; the civil service; planning;
conduct of foreign affairs; general research; public order
and safety; and centralized services. This was followed
by economic services at 16% for activities directed in
the attainment of desired economic growth. Below
were health services at 9%, other social services at 7%,
education at 2%, housing at 1%, and debt services at 1%.
Most had an increasing cash balance
The uncommitted cash balance to total expenses ratio
indicates whether the LGU can ensure a balanced budget
even in the face of financial uncertainty. This augments
the study of operating surplus because a fiscally stressed
fund may appear to be healthy due to loans or transfers
from other funds. This ratio discounts the contribution of
these transfers and loans. It is thus favorable to have an
increasing trend for this ratio.
Consistent with the spending indicators mentioned, a
wide range of ratios is evident. Manapla even ended 2018
with a cash balance 4 times greater than its expenses.
Studying their trends since 2011, 79% of the studied
LGUs had increasing cash balance to total expenses
ratios. For 2018, 77% of the LGUs had a healthier ratio
than their average since 2011. While the LGC mandates
a calamity fund of 5% of estimated revenues, these
favorable trends suggest that the ability of most LGUs
to respond to emergencies and uncertainties is steadily
improving.
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 11

GRAPH 04: Operating Surplus⁴

■ 2018 ■ Average

San Carlos City 543M Jordan 26M

Cadiz City 493M Ayungon 25M
Bais City 418M Zamboanguita 24M
Bayawan City 376M Sebaste 23M
Claver 356M Pandan 23M
Sagay City 233M Ginatilan 21M
Bogo City 197M Carles 21M
Sipalay City 188M Libertad 20M
Manapla 157M Lanuza 18M
Escalante City 153M Guiuan 16M
Daanbatayan 102M Malimono 16M
Calatrava 99M General Luna 15M
Badian 98M Medellin 14M
Daet 90M San Benito 14M
Santa Catalina 80M Binalbagan 11M
Siaton 77M San Isidro 10M
Cauayan 76M Santa Monica 9M
Tinambac 73M San Francisco 9M
Barotac Nuevo 72M San Remegio 5M
Moalboal 68M Nueva Valencia 5M
Santander 65M Sibunag 4M
Tayasan 65M Quinapondan 3M
Calabanga 64M Burgos 3M
Barotac Viejo 63M Cortes 2M
Pinamungahan 61M Bindoy
Cantilan 55M Gigaquit
Tagana-an 53M Basay
Bantayan 53M Mercedes
Dauin 47M Hamtic
San Jose 46M
Buenavista 41M
Culasi 41M
Samboan 40M
Patnongon 40M
Ajuy 39M
Malabuyoc 38M
Dapa 35M
Enrique B. Magalona 34M
La Libertad 34M
Aloguinsan 32M
Estancia 32M
Alegria 30M
Lawaan 28M
Concepcion 26M
Del Carmen 26M
Pilar 26M

4 Operating surplus figures refer to Total Current Operating Income less Total Current Operating Expenditures
12 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

GRAPH 05: Operating Surplus per Household

■ 2018 ■ Average

Claver P44,415 Buenavista P3,243

Moalboal P30,393 Bantayan P3,210
Bogo City P29,429 Santa Monica P3,060
Bais City P23,598 Pandan P2,908
San Carlos City P22,349 Jordan P2,907
Santander P15,559 Ajuy P2,850
Ginatilan P15,315 San Jose P2,767
Bayawan City P14,651 Burgos P2,733
Tagana-an P14,053 Concepcion P2,522
Cadiz City P13,820 Ayungon P2,394
Sipalay City P12,840 Enrique B. Magalona P2,260
Manapla P11,882 San Francisco P1,767
Pilar P11,702 Estancia P1,751
Badian P11,391 Barotac Viejo P1,373
San Benito P10,577 Carles P1,287
Malabuyoc P10,037 Guiuan P1,277
Lawaan P9,406 Barotac Nuevo P1,182
Tayasan P9,197 Medellin P1,031
Samboan P8,961 Quinapondan P985
Cantilan P7,721 Sibunag P847
Dauin P7,570 Cortes P585
Dapa P7,287 Nueva Valencia P563
Lanuza P6,742 San Remegio P381
Sagay City P6,472 Binalbagan P159
Escalante City P6,445 Bindoy
Santa Catalina P6,358 Basay
Del Carmen P6,278 Gigaquit
Libertad P6,055 Mercedes
Alegria P5,921 Hamtic
Aloguinsan P5,857
Sebaste P5,626
Tinambac P5,488
Calatrava P5,398
Malimono P4,810
General Luna P4,664
Patnongon P4,545
Siaton P4,319
San Isidro P3,921
Culasi P3,991
Daanbantayan P3,921
La Libertad P3,860
Pinamungahan P3,749
Daet P3,745
Zamboanguita P3,659
Calabanga P3,551
Cauayan P3,492
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 13

GRAPH 06: Expenses per Household⁵

■ 2018 ■ Average

Moalboal P46,820 Malabuyoc P10,144

Bogo City P43,590 La Libertad P9,998
Burgos P42,930 Medellin P9,853
Ginatilan P40,191 Concepcion P9,841
Lanuza P30,424 Patnongon P9,754
Sipalay City P29,723 Bantayan P9,533
Cortes P28,323 Culasi P9,433
San Carlos City P27,975 Samboan P9,369
Claver P27,859 Tinambac P9,252
San Benito P26,558 Cauayan P9,225
Lawaan P25,059 Enrique B. Magalona P8,976
General Luna P24,505 Carles P8,895
Bayawan City P23,733 Daet P8,639
Tagana-an P21,334 Calatrava P8,236
Gigaquit P20,643 Calabanga P8,205
Quinapondan P20,070 Buenavista P7,981
Cadiz City P19,095 Ajuy P7,796
Pilar P18,293 Siaton P7,529
San Isidro P17,926 Tayasan P7,254
Malimono P17,891 Badian P6,331
San Francisco P17,630 Pinamungahan P6,312
Cantilan P17,348 Estancia P6,090
Escalante City P17,172 Manapla P4,183
Sebaste P17,102 Daanbantayan P3,940
Del Carmen P17,061 Basay P3,702
Hamtic P16,991 Binalbagan P3,165
Libertad P16,343 Barotac Viejo P1,672
Sagay City P16,323 Barotac Nuevo P1,498
Sibunag P16,293 Bindoy
Bais City P15,534
Mercedes P14,758
Santa Monica P14,549
Santander P13,686
Nueva Valencia P12,867
Dapa P12,741
Dauin P12,646
Santa Catalina P12,379
Alegria P12,200
Zamboanguita P11,898
Pandan P11,739
Jordan P11,663
Ayungon P11,587
Aloguinsan P11,307
Guiuan P11,181
San Remegio P11,139
San Jose P10,470

5 Expense figures refer to Current Operating Expenditures only, excludes non-operating expenditures
14 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

GRAPH 07: Cash Balance to Total Expenses6

■ 2018 ■ Average

Manapla 4.96 Enrique B. Magalona 0.50

Bais City 3.47 Mercedes 0.48
Badian 3.38 San Benito 0.47
Barotac Nuevo 2.75 Guiuan 0.47
Claver 2.67 Hamtic 0.45
La Libertad 2.39 San Francisco 0.40
Tayasan 2.24 Zamboanguita 0.40
Malabuyoc 2.19 Alegria 0.39
Daanbantayan 2.15 Lanuza 0.36
Calatrava 1.95 Sagay City 0.33
Barotac Viejo 1.84 Quinapondan 0.33
Santa Catalina 1.80 Del Carmen 0.31
Aloguinsan 1.74 Sipalay City 0.29
Dauin 1.64 Tinambac 0.28
Pinamungahan 1.59 Basay 0.26
Bayawan City 1.52 Daet 0.25
Samboan 1.48 Nueva Valencia 0.25
Cauayan 1.36 Malimono 0.19
San Carlos City 1.35 Burgos 0.18
Ajuy 1.33 Binalbagan 0.17
Tagana-an 1.30 San Isidro 0.16
Siaton 1.28 San Remegio 0.13
Pilar 1.22 Lawaan 0.12
Culasi 1.22 Carles 0.11
Dapa 1.21 Gigaquit 0.11
Bogo City 1.11 Cortes 0.10
Ayungon 1.07 General Luna 0.09
Libertad 1.02 Medellin 0.00
Santander 0.95 Bindoy 0.00
San Jose 0.85
Buenavista 0.85
Cadiz City 0.81
Calabanga 0.79
Sebaste 0.75
Cantilan 0.75
Moalboal 0.71
Estancia 0.71
Concepcion 0.70
Jordan 0.69
Patnongon 0.68
Pandan 0.68
Bantayan 0.63
Santa Monica 0.59
Escalante City 0.53
Sibunag 0.53
Ginatilan 0.51

6 Figures computed based on Fund/Cash Balance divided by Total Current Operating Expenditures
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 15
CHAPTER 3
DEBT CAPACITY
O
f the 75 LGUs in our sample, an average
of 37 (around 50%) LGUs had outstanding
loan balance between 2011-2017. Based
on the 2018 Statement of Receipts and
Expenditures report, a total of 47 LGUs
(63%) have reflected outstanding loan balances.
Based on municipalities with outstanding loans as of
2018, Daet and San Jose acquired significantly greater
loan amounts among first-class municipalities. As for
second-class municipalities, Mercedes and Claver,
emerged as top 2. Hamtic and Nueva Valencia led the
list for third-class municipalities. Lanuza and Gigaquit
borrowed significantly large amounts among fourth-class
municipalities. Malabuyoc and Lawaan did the same
among fifth-class municipalities. Of the two sixth-class
municipalities in the sample, Burgos registered a higher
approved loan amount.
There is wide disparity in loan amounts
Cities in the sample had significantly greater loan
amounts compared to the municipalities. Perhaps their
access to more revenue-generating tools open them
up to more options from financial institutions. Based on
LGUs with outstanding balances as of 2018, the cities of
Escalante, Sagay and led the list of LGUs with the biggest
loan amounts.
Liabilities per household, meanwhile, represents
the LGU’s relative indebtedness with regard to future
taxpayers. High or increasing liabilities can be a cause for
concern and so a lower ratio and decreasing trend are
considered favorable. In our sample, 59% of LGUs had
less liabilities per household in 2018 than their average
since 2011.
It is widely regarded that LGUs first approach
government financial institutions, such as the
Development Bank of the Philippines and Land Bank
of the Philippines, for their debt financing needs, but
it would be useful to probe and confirm this for the 75
LGUs in our sample.
Favorable trends in debt service expense ratios and
debt service ratios
To assess the impact of their debt, we study their debt
service expense ratio. This helps assess service flexibility
by determining the amount of expenses committed to
annual debt service. If a larger portion of expenses is
being allocated to debt service, then a smaller portion
goes to regular government services. Hence, a lower
ratio and a decreasing trend are considered favorable.
In our sample, 59 of LGUs had a lower debt service
expense ratio in 2018 than their average since 2011.
These 59 include the 22 LGUs that did not acquire a loan
since 2011. The LGC indicated that appropriations for debt
servicing shall not exceed 20% of the regular income of
the LGU. All the LGUs in our sample have complied with
this LGC provision.
Another helpful indicator for our purposes is the debt
service ratio, which is the proportion of debt service
expense to total income. This defines the extent to which
an LGU could engage additional debt. Other than the
seven LGUs listed in Table 3, the LGUs in our sample had
a debt service ratio less than 2%. This suggests that all
75 LGUs still have room to engage additional debt, even
for two of the LGUs with incomplete data.
TABLE 05: LGUs with highest debt service ratios
LGU Average Debt Service Ratio
Lawaan 4.46%
Sagay City 3.37%
Bogo City 3.29%
Escalante City 3.15%
Pilar 2.96%
Basay 2.43%
Daet 2.20%
Bais City 2.07%
16 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

GRAPH 08: Liabilities per Household⁷

■ 2018 ■ Average

Bogo City P3,091 Dapa P250

Escalante City P2,192 San Benito P0
Moalboal P2,111 Burgos P0
Sagay City P1,957 Dauin P0
Lanuza P1,789 Bindoy P136
Sipalay City P1,432 La Libertad P75
Bayawan City P1,134 Tayasan P122
San Isidro P1,048 Cauayan P28
Cadiz City P931 San Carlos City P0
Cortes P909 Enrique B. Magalona P0
Lawaan P886 Manapla P0
Bais City P803 Concepcion P0
Tinambac P785 Ajuy P0
Mercedes P777 Barotac Nuevo P0
Daet P683 Barotac Viejo P0
Alegria P663 Estancia P0
Pilar P628 Buenavista P85
Claver P577 Sibunag P0
Hamtic P502 Bantayan P0
Zamboanguita P482 San Remegio P16
Nueva Valencia P467 Santander P44
Sebaste P438 Pinamungahan P20
Del Carmen P375 Aloguinsan P291
Siaton P339 Samboan P0
Gigaquit P336 Badian P14
Guiuan P311 Ginatilan P0
Malabuyoc P309 Culasi P0
San Francisco P302 Libertad P6
Jordan P250 Patnongon P87
Pandan P196
Basay P167
Ayungon P149
Calatrava P118
San Jose P99
Carles P83
Santa Catalina P80
Medellin P63
Santa Monica P50
Binalbagan P47
Daanbantayan P20
Quinapondan P219
Calabanga P116
Cantilan P557
General Luna P0
Malimono P0
Tagana-an P0

7 Refers to Debt Service (Principal Cost) divided by number of households

 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 17

GRAPH 09: Debt Service Expense to Total Expense

■ 2018 ■ Average

Burgos 6.54% Tagana-an 0.00%

Escalante City 3.39% Dapa 0.60%
Gigaquit 3.39% San Benito 0.00%
San Isidro 3.33% Dauin 0.00%
Lanuza 2.98% Bindoy 0.16%
Bogo City 2.83% La Libertad 0.18%
Sipalay City 2.31% Tayasan 0.14%
Sagay City 2.25% Cauayan 0.00%
Bayawan City 2.12% San Carlos City 0.00%
Mercedes 2.11% Enrique B. Magalon 0.00%
Daet 2.10% Manapla 0.00%
Lawaan 2.10% Concepcion 0.00%
Malabuyoc 2.03% Ajuy 0.00%
Del Carmen 1.60% Barotac Nuevo 0.00%
Sebaste 1.56% Barotac Viejo 0.00%
Bais City 1.54% Estancia 0.00%
Cadiz City 1.37% Buenavista 0.49%
Pilar 1.34% Sibunag 0.00%
Binalbagan 1.33% Bantayan 0.00%
Hamtic 1.30% San Remegio 0.00%
Basay 1.18% Santander 0.00%
Siaton 1.17% Pinamungahan 0.04%
Moalboal 1.08% Aloguinsan 0.67%
Jordan 0.80% Samboan 0.00%
Claver 0.76% Badian 0.00%
Carles 0.63% Ginatilan 0.00%
Zamboanguita 0.59% Culasi 0.00%
Pandan 0.50% Libertad 0.01%
San Francisco 0.43% Patnongon 0.02%
Nueva Valencia 0.39%
Guiuan 0.38%
Medellin 0.38%
Ayungon 0.36%
Calatrava 0.28%
Santa Monica 0.28%
Santa Catalina 0.24%
Daanbantayan 0.20%
San Jose 0.13%
Alegria 0.11%
Quinapondan 0.00%
Calabanga 0.48%
Tinambac 1.89%
Cortes 0.05%
Cantilan 0.23%
General Luna 0.00%
Malimono 0.29%
18 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS

CHAPTER 4

LOANS AND GRANTS HISTORY

A
side from the financial statements funded via loans were economic enterprise activities,
analyzed in Chapter 3, the BLGF water systems, and public roads. A majority of these
survey also included questions loans were less than P50 million in size.
about the experience of different Among the 33 LGUs that did not acquire loans in recent
LGUs regarding debt financing. years, 10 mentioned that they had adequate budgets to
Of the 72 LGUs that responded, continue their operations and implement their projects.
33 (44%) mentioned that they Meanwhile, 11 other respondents stated that their LGU
have incurred a loan in the past had no interest in incurring loans. Libertad responded that
ten years. Of these, 14 (19%) LGUs mentioned that they they do not have a fund source to pay loans, while San
had acquired at least 2 or more loans. Meanwhile, 46 Remegio reported that there are no lending centers within
(61%) LGUs responded that they were paying their loan their vicinity. Barotac Viejo meanwhile, aired that their
amortizations on time, which is more LGUs than the 33 LGU does not know the process involving credit financing.
that have reported having incurred a loan. Perhaps this
included loans acquired more than ten years ago. Based There is interest in grant financing but still limited
on financial statements though, 53 (71%) LGUs had project types
acquired loans since 2011. Probing these disparities may 78% of studied LGUs have received grants in the
illuminate needs for better financial management training. past 5 years. Most of these grants went to livelihood,
infrastructure such as ports and landing centers, and
marine conservation projects. Almost half of them were
GRAPH 10: Projects Funded by Loans at least Php5 million each. Only 7 LGUs had experience
Roads 5 with public private partnerships, and only 3 LGUs had
Water Systems 5 experience with joint venture agreements. When asked
Enterprise 6 whether their LGU is willing to access additional sources
Equipment 13 of funding, 71 responded affirmatively.
Buildings 15

GRAPH 11: Loan Sizes GRAPH 12: Projects Funded by Grants

P100M and more 5 Relief 3
6
Roads 4
P20M to less P50M 8 Conservation 14
5
Infastructure 14
Less than P50M 9 Livelihood 19

GRAPH 13: Grant Sizes

There are varying levels of interest in credit P5M and more 27
11
financing, and limited project types
Loans generally went to traditional projects, according to P1M to less P2M 7
7
the survey responses. A majority of these loans funded
the construction of government buildings, and the Less than P0.5M 5
purchase of heavy equipment. Other projects that were
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 19
CHAPTER 5
REGULATORY FEE
STRUCTURE
L
GUs exercise their powers differently over
their regulatory affairs. According to the BLGF
survey, 88% of LGUs have existing ordinances
on coastal and fisheries resource management.
Some respondents shared specific ordinances
too, beyond the typical locally adopted fisheries or
coastal resource management codes. For example, 12
LGUs mentioned ordinances formally declaring marine
protected areas and sanctuaries. A few shared ordinances
that regulated fishing vessels or regulated the fishing of
specific marine species. Two LGUs sought to prohibit
deep sea fishing or commercial fishing.
Mostly aging CLUPs and LRCs but signs of
cooperation among stakeholders
Variation can also be found in the Comprehensive Land
Use Plans (CLUP) of the LGUs in our sample. Only 51
existing CLUPs involved plans for municipal waters. This
despite most LGUs having passed their CLUPs for a long
time now, at 11 years on average. Three LGUs passed
their CLUPs in the early 1980s and still have not involved
plans for municipal waters. Eight LGUs passed theirs only
in the last 3 years and so a comparison of CLUPs across
the decades might be an opportunity for learning and
innovation.
As a positive sign of cooperation among LGUs, 69%
of the respondents stated that agreements with other
LGUs exist as regards the control of municipal waters and
the utilization of coastal resources. There is cooperation
among other stakeholders too as 67 of the respondents
stated that there are agencies and organizations assisting
in Coastal and Fisheries Resource Management
(CFRM) in their LGU. The agencies and organizations
mentioned were: the Municipal Environment and Natural
Resources Office, the Fisheries and Aquatic Resources
Management Council, the Municipal Aquatic Fisheries
Council, the Bureau of Fisheries and Aquatic Resources,
the Department of Environment And Natural Resources,
the Provincial Government, RARE, CCEF, World Renew,
Sikat, Rural Improvement Clubs, 4-H Clubs, People’s
Organizations, Fisherfolk Associations, Farmers
Associations, Women’s Organization, TAMPA, TAJODA,
and the academe.
However, not all respondents agree that their LGU is
providing enough support to fisherfolk and the fisheries
sector. This is a good question to probe for the 31% of
respondents that disagreed. Opportunities to address
this may come from their current regulatory environment.
For example, only 35 of the respondents mentioned that
their LGU has updated their Local Revenue Code (LRC)
in the past three years. The rest have not done so for 9
years on average. One LGU has not updated its LRC for
22 years. Only 9 LGUs have enacted ordinances granting
tax exemptions, tax incentives or tax reliefs, and only
6 of these LGUs find that these tax exemptions affect
the operations and management of coastal and fisheries
resources.
Huge disparity in fisheries revenue
As for fishery rentals, fees and charges, 50% of the LGUs
responded that they engaged in this type of revenue-
generating activity. Guiuan and Buenavista reported the
largest revenues from this, at Php152 million and Php141
million respectively. The huge disparity here is yet another
sign that there is a clear opportunity for sharing of best
practices for similarly situated LGUs.
20 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS
CHAPTER 6
FUNDING
FOR SMALL-SCALE
FISHERIES
L
GUs also serve their fisheries sector in
different ways. Of the 72 respondents
in the BLGF survey, 47 stated that they
have an approved Coastal and Fisheries
Resource Management (CFRM) Plan.
Meanwhile, 49 responded that their
CFRM Plan is reflected in the LGU
Comprehensive Development Plan, and 55 responded
that this has been reflected in their LGU’s Annual
Investment Plan for the past 3 years.
GRAPH 14: Number of LGUs per CFRM
Spending Level
P5M and more 10
P2M to less than P5M 11
P1M to less than P2M 7 sector
P0.5M to less than P1M 11
Less than P0.5M 30
Positively, 57 LGUs responded that they had funds to
continuously finance their sustainable CFRM Plan. Of
those that reported their CFRM spending level in the last
5 years, a majority spent less than Php1 million. Those
that did not respond in the affirmative simply cited that
they had limited resources, while 2 LGUs expressed lack
of knowledge or updating as regards their CFRM Plans.
The respondent for Malimono, meanwhile, raised the
issue of changes in DBM guidelines as a reason for why
they no longer had adequate funds for their CFRM Plan.
There were 57 LGUs that reported receiving external
funds for projects related to their CFRM Plan. External
funding sources included the national government, their
provincial government, international organizations, and
non-government organizations.
In focus group discussions with the LGUs of Bayawan
City and Santa Catalina, participants raised several issues
with their CFRM Plans: limited data sharing with BFAR,
limited manpower resources for the fisheries sector,
limited technical and management capacity of existing
manpower within government and among fisherfolk
leaders. Participants also suggest that this limited
absorptive capacity within LGUs is one reason why they
do not access debt financing even when it is available.
Most LGUs had projects for their local fisheries
Of the 64 that had projects for their fisheries sector,
a large majority conducted livelihood-related projects
followed by marine conservation projects, and a few
infrastructure projects. Among those that did not have
fisheries sector projects, 3 responded that the fisherfolk
in their LGU were doing well on their own while 2 LGUs
responded that they had other priorities.
A smaller subset of LGUs reported that they engaged
in economic activities utilizing CFRM. Of the 36 that
engaged in these activities, a large majority also
conducted livelihood-related projects similar to those
already mentioned. Different from these was the conduct
of tourism-related activities, which was reported by 7
LGUs.
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 21
CHAPTER 7
CAPACITY-BUILDING
OPPORTUNITIES
L
GUs typically participate in capacity
building through the national government,
and a comprehensive assessment of the
trainings and activities that they have been
required to attend from multiple organizers
on a wide range of topics is unavailable.
This assessment is necessary to identify
target learning outcomes and to determine the best
approach to deliver the training given time and bandwidth
constraints. But from the analysis in the preceding
chapters, we can determine initial opportunities for
capacity-building that can then be tested and validated.
We can group the capacity-building opportunities by
two themes: improvements in current systems and the
creation of new systems.
IMPROVEMENTS IN CURRENT SYSTEMS:
01. Modules on Generating Revenue and Managing
Expenses: A few LGUs in the sample are more
successful at budget management than the rest. A closer
look into how they sustained key financial indicators,
plus how they identified, recruited, and trained the kind
of personnel needed to execute their strategies, can
be a useful resource for other LGUs. BLGF or other
government agencies may already provide trainings
on this topic for LGUS that could incorporate these
lessons learned. Opportunities for regular interaction
between LGU leaders facing similar constraints can
augment these trainings. Topics may include how they
can diversify their revenue sources and lower their
dependence on the IRA.
02. Modules on Regulatory Best Practices: While
more LGUs reported that they have existing CFRM
ordinances and plans, an opportunity exists for sharing
which regulations and strategies proved effective and
efficient. Most LGUs can benefit from training on how
best to use tax incentives and other taxing tools to
influence behavior, especially towards better CFRM
practices. Some LGUs can also benefit from revisiting
and updating their current CFRM policies. A comparison,
therefore, of old and new CFRM plans can yield insights
and can serve as rallying points for deeper dialogue with
local stakeholders.
Within the fisheries sector, the survey responses
suggest that multiple stakeholders are already engaged
and so new ways of facilitating them can strengthen
existing bonds. These modules can include collective
impact practices, liberating structures, and systems
thinking.
03. Modules on Generating Evidence. To increase
demand for innovative financing and project design, LGUs
that have delivered successful projects can be taught how
to better generate evidence for what works. This evidence
base can then be used to attract more financing for similar
projects, and also to inspire other LGUs to replicate or
localize these initiatives. Much of the survey captured
inputs and activities that LGUs poured onto their citizens
but not enough data on outputs, outcomes, and impact
were reported. A deeper dive into the concrete results of
reported activities can be a launching pad for this equally
important conversation on generating evidence.
22 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS
CREATION OF NEW SYSTEMS:
04. Modules on designing new strategic initiatives
and developing new project ideas: Some LGUs
have significant room in their budgets for new strategic
initiatives. Grouping them separately and assisting them
in project design and management can help them achieve
more development goals without undermining their cash
balance ratios.
A missing element in this analysis is the degree to
which constituents are familiar with the financial health of
their LGUs. Building the capacity of other stakeholders,
such as local fisherfolk associations and people’s
associations, can also be an opportunity to increase the
demand for better strategies and projects relevant to their
context. Survey responses revealed some experience
with the previous DILG administration’s Bottom-Up
Budgeting program and a similar system can be organized
that builds on this history.
Multiple survey responses also show a limited range
of project ideas, with LGUs reverting to traditional
livelihood and local infrastructure projects. Exposing local
stakeholders to more innovative projects elsewhere can
help address this, especially as they are empowered with
greater awareness of their local financial situation.
05. Modules on External Financing: Especially for
municipalities in the sample, there is a lot of room
for capacity-building as regards knowledge, skills,
and attitudes on credit financing and other financing
modalities such as joint venture agreements and public
private partnerships. It is also necessary to conduct this
with multiple stakeholders so that expectations of risks
and returns are clearly managed. This also ensures that
real checks and balances are in place, so LGUs avoid
borrowing for the wrong reasons. A few LGUs reported
zero credit histories while others see no need for credit
financing. It is necessary to probe this further and unpack
the real reasons why these LGUs hesitate to engage
in external financing, especially when they face urgent
problems and have clear opportunities for positive social
impact.
06. Modules on Creative Confidence and Design
Thinking: As can be observed in several data points,
there are huge disparities in how similarly situated LGUs
provide and finance services for the fisheries sector in
their jurisdiction. This suggests that some LGUs are
more willing to explore innovative ways of delivering
public services, and that they can learn significantly
even from each other. Equipping career bureaucrats with
design thinking skills and mindsets can help equalize
creative confidence among LGUs and counter some of
the powerlessness that can be sensed from the survey
responses. Training formats beyond workshops and
classroom types can be explored, such as a weekly
mentor-buddy system among similarly situated LGU
leaders, or a collaborative format where LGUs take turns
presenting a specific problem they face, with the rest
of the team helping the assigned LGU dive deeper into
the problem and identify potential solutions. Behavioral
design competitions can also be organized to inspire
LGUs in developing innovative programs that change
citizen behavior and improve CFRM practice.
Conclusion
T
he wide disparities in financial performance
and service delivery among LGUs are
opportunities for learning and innovation in
coastal and fisheries resource management.
Certain cities and municipalities clearly are
better at balancing their budget, generating revenue, and
managing expenses. Some LGUs have also prioritized
the fisheries sector more highly than others, and this has
led to different inputs and activities being downloaded
to their constituents. A closer look into how these have
resulted into clear outcomes will help strengthen the
case as to why the fisheries sector ought to be better
prioritized.
To build further on this analysis, it will be helpful to
understand the local dynamics of similarly situated LGUs
and reveal why many have significant operating surpluses
and cash balances, and yet many are still unable to deliver
on key development outcomes or to do so without
requiring grant and debt financing. Clustering the LGUs
into those with similar financial profiles and opportunities
will help build a portfolio of interventions that would
better respond to the wide variation in circumstances
among the 75 in the sample. A few municipal treasurers
also revealed that their LGU is not providing enough
support for the fisheries sector. Some also reported
 RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 23
different loan histories from their official financial
statements. Probing into these sentiments and disparities
will clarify the real needs of these LGUs and the right
financing interventions that will help improve the lives of
those in coastal communities.
Facilitating regular dialogue across local leaders will
generate insights that will help lift constituents out of
subsistence fishing and into more sustainable jobs. But
first, local stakeholders need a deeper awareness of
local financial health and opportunities. Empowering
them and their leaders with creative confidence and
References
1. Aceron, Joy. 2019. Pitfalls of Aiming to Empower the
Bottom from the Top: The Case of Philippine Participatory
Budgeting. Accountability Research Center.
https://accountabilityresearch.org/wp-content/
uploads/2019/05/WorkingPaper-4-Philippines-Bottom-Up-
Budgeting-web-May-9-2019.pdf
2. Amatong, Juanita D. 2005. Local Government Fiscal and
Financial Management: Best Practices. Manila, Philippines:
Department of Finance.
http://www.pdf.ph/downloads/decentralization/LGU%20 Development Studies.
Best%20Practices.pdf
3. Asia-Pacific Economic Cooperation. 2015. Local
Government Units Fiscal Sustainability Scorecard: Financial
Management Performance Review of All Local
Government Units. Bagac, Philippines: APEC Philippines.
http://mddb.apec.org/Documents/2015/FMP/WKSP1/15_
fmp_wksp1_029.pdf
4. Cruz-Sta. Rita, Ma. Gladys, Cielo Magno, Leilani Galvez,
and Jessica Reyes-Cantos. 2013. Towards an Informed
Citizens’ Participation in Local Governance: Sourcebook
on Local Public Finance. Manila, Philippines: Social Watch
Philippines.
http://www.ombudsman.gov.ph/UNDP4/wp-content/
uploads/2013/02/ Sourcebook-on-Local-Public-Finance-
Final-E-Copy.pdf
5. Department of Finance. 2014. 67% of municipalities still
poor in raising own revenues in 2014. Manila, Philippines:
Department of Finance.
https://www.dof.gov.ph/index.php/tax_watch/67-of-
municipalities-still-poor-in-raising-own-revenues-in-2014/
financial knowledge will further increase demand for
innovative and sustainable coastal and fisheries resource
management programs. This will also expand the types of
initiatives that LGUs will pursue so they may go beyond
traditional projects. For a few LGUs, they already have
adequate financing for this. Still others can benefit from
knowledge on external financing and revenue generation
so they can then design and implement more sustainable
projects. Despite climate risks and other constraints,
struggling LGUs have similarly situated counterparts that
can help them chart paths out of poverty for their citizens.
6. Department of Finance Bureau of Local Government
Finance. 2017. LGU Financial Performance. Manila,
Philippines: Department of Finance.
7. Llanto, Gilberto M. April 2009. Fiscal Decentralization and
Local Finance Reforms in the Philippines. Manila,
Philippines: Philippine Institute for Development Studies.
https://dirp4.pids.gov.ph/ris/dps/pidsdps0910.pdf
8. Manasan, Rosario. December 2007. IRA design issues
and challenges. Manila, Philippines: Philippine Institute for
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/
pidspn0709.pdf
9. The Civic Federation. 2015. Indicators of Financial
Condition: A Comparison of the City of Chicago to 12 Other
U.S. Cities from FY2009 through FY2013. Chicago, IL: The
Civic Federation.
https://www.civicfed.org/civic-federation/publications/
FinancialIndicatorsFY09-FY13
10. Villegas, Vann Marlo M. April 2019. “SC rules expanded
IRA payments to start in 2022.” Manila, Philippines:
BusinessWorld.
https://www.bworldonline.com/sc-rules-expanded-ira-
payments-to-start-in-2022/
11. World Bank. 2011. Philippines - Study on local service
delivery. Washington, DC: World Bank. http://documents.
worldbank.org/curated/en/206241468108547333/
Philippines-Study-on-local-service-delivery