Local Finance Committee

A must for every province, municipality and city, the local finance committee is

composed of the local planning and development officer, local budget officer and treasurer. The

committee:

a. determines projected income for the following year;

b. recommends revenue measures or borrowings;

c. recommends expenditure levels and spending ceilings to the local chief executive;

d. recommends proper allocation of expenditures between current operating expenditures

and capital outlays;

e. recommends amount allocation for capital outlay;

f. assists sanggunian in review and evaluation of budgets of component local units;

g. assists sanggunian in analysis and review of own budget; and

h. conducts semi-annual review and examination of cost and accomplishments vs.

performance standards.

B. Budgeting and Fiscal Management

The following is an overview of local government budgeting.

1. Form and Content

The local government budget is primarily composed of estimates of income and total

appropriations covering current operating expenditures and capital outlays.

The budget document contains three major elements:

1. budget message of the local chief executive setting forth the significance of the budget

in relation to the local development plan;

2. summary of functions, projects and activities to be accomplished; and

3. a set of financial statements indicating:

a. actual income and expenditures of preceding year,

b. actual income and expenditures of first two quarters and estimates of the last

two quarters

c. estimates of income for succeeding year;

d. estimated expenditures for succeeding year,

e. essential facts regarding the local government's obligations and indebtedness;

f. summary of statutory and contractual obligations; and

g. other data disclosing the financial condition of the local government unit.

Public Finance Adviser: Prof. Ragrciel Grafil Manalo FOR READING PURPOSES ONLY

2. Local Budget Process

The budget process in LGUs is divided into five (5) phases: (1) Budget Preparation; (2)

Budget Authorization; (3) Budget Review; (4) Budget Execution and (5) Budget Accountability.

These phases are interrelated and sequential, as can be seen below:

1) Budget Preparation

2) The Budget Preparation Flow Chart

The budget preparation flow chart is shown below. The sequence of activities in

preparing the LEP should be synchronized with the mandated deadline for its submission to the

Local Sanggunian.

Public Finance Adviser: Prof. Ragrciel Grafil Manalo FOR READING PURPOSES ONLY

Not later than July 15 of every year, local treasurers must submit to local chief executives

detailed income and expenditure statements which shall be made the basis of the budget for the

following year.

July 15 is also the deadline set for department or office heads of the local government to

submit respective budget proposals. These proposals must be in accord, among others, with the

policy and program guidelines issued by the local chief executive to conform with the local

development plan, budgetary ceilings, and other requirements of law. They must set forth (1)

objectives, functions and projects, and their costs (2) organizational charts, staffing patterns

indicating list of plantilla positions with corresponding salaries, (3) description of functions,

projects and activities, and expected results therefor, (4) relation of work and financial proposal to

local development plan, (5) estimated current operating expenditures and capital outlays compared

with last two preceding, current and ensuing fiscal years, (6) accomplishment reports for the last

two preceding and current fiscal years.

After receipt of the income and expenditure statements from the treasurer, the budget

proposals of department and office heads, the income estimates and budgetary ceilings set by the
local finance committee, the local chief executive prepares the local government budget which is

then submitted to the sanggunian not later than October 16 of the same year. The local chief

executive may be held criminally and administratively liable in case of delay in the submission.