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
1. The
lawprovisions?
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 (contd)

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?

INCLUSIVE

GOVT-LED

TRANSPARE
NT

EVIDENCEBASED

TIMEBOUND

Wide public
dissemination via
mass media and
online channels
hopes to
DEMYSTIFY and
POPULARIZE the
fiscal aspects of
local governance

Position papers
Existing studies
New studies
Surveys

Complete
recommendations
for legislative
amendments
before end-2014

Congress
Natl Agencies
LGU Leagues
Civil Society
Business
Sector
Citizens At
Large
Subject
Experts

Cabinet Cluster
for Good
Governance &
Anti-Corruption
>>
Coordinating
Committee for
Decentralization
>>
Oversight
Committee for
Devolution

3 Pillars of the Review Process

1 TAKING STOCK
Related laws passed since
1991
Bills filed/re-filed in
Congress

2FEELING THE
STAKEHOLDERS
PULSE
Sectoral and regional

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 (contd)

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 (contd)

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
Senate Committee
Committee on
of
the
Local Government
Local Govt Code Sen. Ferdinand Marcos Jr.
Sen. Aquilino
Pimentel III

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
USAID AFD
EU WB GIZ

CIDA

Consultation activities scheduled

in Sept 2014
Luzon - Sept. 11-12 Quezon City
Visayas - Sept. 18-19 Cebu
Mindanao - Sept. 25-26 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
Natl 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!