Automatic income reclassification to improve gov’t support for LGUs, says JV Ejercito
May 2023
Senator Joseph Victor “JV” Ejercito on Wednesday said the proposed Local Government Unit (LGU) Income Classification Bill will aid the national government in assessing the financial capacity of LGUs and determine appropriate forms of assistance.
Ejercito, the principal author and sponsor of the proposed measure, said reclassifying LGUs every three years based on their latest income class will unlock their economic potential and strengthen their local autonomy.
“I trust that we understand the importance of this measure in realizing the full economic potential of LGUs. Knowing the LGUs’ financial capabilities and position will also aid the national government in determining the intervention needed to improve their situation and in order to promote and strengthen local autonomy,” he said in his sponsorship speech.
The latest income reclassification was implemented in 2008, shortly before the issuance of an adverse Opinion from the Department of Justice on the power of the Secretary of Finance to adjust the income ranges under Executive Order No. 249, dated July 26, 1987.
This means that the current income classification of LGUs is based on outdated revenue figures from their 2004-2007 Financial Statements.
Senate Bill No. 2165, which was recently included as one of President Ferdinand Marcos Jr.’s legislative priorities, seeks to set the income thresholds for provinces, cities, and municipalities and empower the Secretary of Finance to regularly reclassify LGUs and revise income ranges.
According to the proposed measure, no LGU will be downgraded under the said measure unless it falls below its income range during the next reclassification.
Once passed, the said law is also expected to serve as the basis for the minimum wage of domestic workers under Republic Act No. 10361, better known as the Domestic Workers Act or Batas Kasambahay.
The proposed measure consolidated Senate Bill No. 1530, authored by Ejercito and Senator Joel Villanueva; Senate Bill No. 1913, by Senator Ramon Bong Revilla Jr.; and Senate Bill No. 2067, by Senator Win Gatchalian.
Ejercito, who previously served as local chief executive of his hometown San Juan, said the measure will guide the national government in efficiently allocating its resources for the compensation of local government personnel and the distribution of financial grants to LGUs.
The bill also seeks to allay the concerns of more than 140 LGUs that have submitted requests to the Department of Finance for income reclassification, he said.
“It not only determines the LGUs’ financial capability to undertake developmental programs but it also has implications on compensation adjustment for LGU personnel, and the determination of administrative aids, financial grants, and other forms of assistance to local governments,” he said.