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,

Budget preparation is the first phase of the local budget process. It involves cost estimation per PPA,
preparation of budget proposals, executive review of budget proposals, and preparation of the LEP and
the Budget Message. This phase starts with the issuance of the Budget Call, and ends with submission of
the Executive Budget to the Sanggunian on or before October 16 of each year.

Upon receipt of the statements of income and expenditures from the treasurer, the budget proposals of
the heads of departments and offices and the estimates of income and budgetary ceilings from the local
finance committee, the local chief executive shall prepare the executive budget for the ensuing year in
accordance with the provisions of [Title V, Book II of RA No. 7160] (Section 318, RA No. 7160).

Key Players in Budget Preparation

Local Chief Executive (LCE) - The LCE shall prepare the executive budget for the ensuing fiscal year upon
receipt of the statements of income and expenditure from the treasurer, the budget proposals from the
heads of various departments and offices and the estimates of revenue and budgetary ceilings from
theLocal Finance Committee. He shall submit said Executive Budget to the Sanggunian concerned not
later than the 16th of October of the current fiscal year (Section 318, RA No. 7160).

Local Finance Committee (LFC) - The LFC composed of the Local Planning and Development Coordinator,
Local Budget Officer and the Local Treasurer shall have, among others, the following functions, as
defined in Section 316 of RA No. 7160:

l Determine the income reasonably projected as collectible for the ensuing fiscal year;

l Recommend the appropriate tax and other revenue measures or borrowings considered realistic and
feasible to support the budget;

l Recommend to the LCE the level of annual expenditures and ceilings of spending for economic, social,
and general public services based on the approved local development plan;

l Recommend to the LCE the proper allocation of expenditures for each development project/activity
and between current operating expenditures and capital outlays; and

l Recommend to the LCE the amount to be allocated for capital outlay.

Local Treasurer - The Local Treasurer shall submit to the LCE a certified statement covering the income
and expenditures of the preceding fiscal year, the actual income and expenditures of the first two (2)
quarters of the current year, and the estimated income and expenditures for the last two (2) quarters of
the current year (Section 315, RA No. 7160).

Local Budget Officer (LBO) – The LBO shall review and consolidate the budget proposals of different
departments and offices of the LGU. The LBO shall also assist the LCE in the preparation of the budget
and during consultation meetings with stakeholders (Section 475, [b 2-3], RA No. 7160).

He/she shall prepare the draft Budget Message and the LEP, in coordination with other members of the
LFC prior to the submission of said documents to the LCE.
Local Planning and Development Coordinator (LPDC) – The LPDC shall analyze the income and
expenditure patterns, and recommend fiscal plan and policies for consideration of the local finance
committee of the LGU (Section 476 [6], RA No. 7160).

Local Accountant – The Local Accountant, jointly with the Local Treasurer, shall certify all statement of
income and expenditure of the preceding fiscal year, the actual income and expenditures of the first two
(2) quarters of the current year and the estimated income and expenditure for the last two (2) quarters
of the current year (Article 411, IRR of RA No. 7160).

Heads of Departments and Offices/Heads of LEEs/PUs – The Heads of Departments and Offices/LEEs/PUs
shall submit budget proposals for their respective departments or offices to the LCE thru the LFC on or
before the 15th of July of each year. Said budget proposal shall be prepared in accordance with the
approved AIP, guidelines and spending ceilings as specified in the Budget Call, and the other general
requirements prescribed under Section 317 of RA No. 7160.

The Sanggunian is considered a separate office for purposes of Budget Preparation. Thus, the Vice-LCE
shall prepare and submit to the LCE the budget proposal of the office of the Sanggunian.

CSOs and the Private Sector Group - The CSOs shall have the following functions based on the Handbook
on the Participation of Civil Society Organizations in the Local Budget Process:

Table 1. Emerging Roles of CSOs in the Budget Preparation

1.5 Steps in the Budget Preparation Phase.

Step 1. Issue the Budget Call.

The Budget Call signals the start of the budget preparation period. This executive directive is issued
based on the approved AIP, Local Government Code and this Manual.

What is a Budget Call?

A budget call is a directive from the LCE specifying the objectives, policy decisions strategies, financing
requirements and prioritized PPAs by sector/office as reflected in the AIP. It provides clear guidelines in
the preparation of individual budget proposals. This directive shall be disseminated not later than June
16 to allow more time for the Department Heads to submit reasonable proposals for the budget year.

What are found in the Budget Call?

1. Spending ceilings by major expenditure (PS, MOOE and CO);

2. Resource allocation scheme or fiscal policy decisions;

3. Objectives, strategies and priority PAPs;

4. Expected results;

5. Budget Calendar and budget preparation forms; and

6. Other administrative guidelines.

All these elements are explained in Budget Preparation workshops prior to the preparation of budget
proposals for the Budget Year. Departments and offices of the LGU shall be guided by the policies,
ceilings and targets embodied in the Budget Call. Budget proposals are reviewed as to their consistency
with the AIP and Budget Call policies.

Why is the Budget Call Important?

l It emphasizes the policy objectives of the budget.

l It emphasizes the guidelines to be observed in the preparation of budget proposals.

l It focuses on the outputs aimed to be produced during the budget year.

l It firms up policy decisions on how the budget shall be financed; and

l It prescribes the budget preparation schedule and forms.

How is the budget forum conducted?

1. Invite all stakeholders to a one-day Budget Forum to explain and discuss the following:

¤ objectives for the budget year, major thrusts and policy decisions;

¤ sources of income for the past three (3) years;

¤ income estimates and corresponding assumptions;

¤ spending ceilings and budget strategies.

¤ timelines of activities; and

¤ forms to be used.

2. Use focused group discussion (FGD) to engender group participation.

3. Close the forum by summarizing all issues raised