Press Release
August 3, 2006

Drilon endorses automatic appropriation
of IRA in national budgets

Senate Finance Committee Chairman Franklin Drilon today said he would endorse the approval of a provision in the proposed 2006 supplemental budget mandating the automatic appropriation of all local government shares in the national tax collection in order "to spare local officials from the ugly chore of having to play politics with Malacañang and Congress just to get what is already rightfully theirs under the Local Government Code."

Drilon said he received a copy of the proposed 2006 supplemental budget amounting to P46,426,524,000 from Budget Secretary Rolando Andaya who explained that the amount would "cover funding deficiencies of the government in the event that the 2006 National Budget is unacted upon by Congress."

Under the proposed supplemental budget, Drilon noted, Andaya had listed an amount of P14,867,000,000 as an additional Allocation for Local Government Units Internal Revenue Allotment (ALGU-IRA) with a recommendation that "all future local government shares in the national internal revenue taxes or IRA shall henceforth be automatically appropriated."

"I am certainly in favor of the automatic appropriation of the IRA of local government units not only because it follows the decision of the Supreme Court on the matter but also in fairness to local officials who are oftentimes forced to unnecessarily cater to the whims of Malacañang and Congress officials just to get what is rightfully theirs," Drilon said.

Budget Secretary Andaya told reporters that the centerpiece of the supplemental 2006 budget was the grant of the internal revenue allotment differential to local governments "in the amount of P14.867 billion, under the presidential directive that the revenue share of local government units be released to them without delay or deduction."

It will be recalled that in the General Appropriations Act of 1999 to 2001, the national government has withheld about P5 billion each year from the IRA, that was set aside for the Local Government Service Equalization Fund (LGSEF), a brainchild of the administration of former President Joseph Estrada.

Known as the Program for Devolution and Adjustment and Equalization, LGSEF is designed to facilitate the process of enhancing the capacities of LGUs in the discharge of functions devolved to them by the national government.

Upon assuming power, President Arroyo continued implementing the LGSEF in the reenacted budget of 2002. Of the accumulated P20 billion withheld portion of IRA since 1999, the national government released only P2.5 billion to the LGUs leaving a balance of P17.5 billion.

The withholding, however, was declared by the Supreme Court as unconstitutional in the case filed by Batangas Rep. (Liberal Party) Hermilando Mandanas against former Executive Secretary Alberto Romulo, Budget Secretary Emilia Boncodin and Department of the Interior and Local Governments Secretary Joey Lina.

Drilon said the High Tribunal ruled that the withholding violates Republic Act 7160 or the Local Government Code of 1991 and the decision prompted the League of Governors and Union of Local Authorities of the Philippines to request Malacañang for the release of the amount.

On Wednesday, Andaya said President Arroyo will seek a national budget of 1.137 trillion pesos in 2007 to support a massive investment program. He said the 2007 budget proposal was a pro-growth measure that increases spending in all areas except for debt service, thanks to robust tax collection.

The government has announced an infrastructure program which will cost 372.02 billion pesos over the next four years, to be spent on roads, rail systems, airports, ports, and other basic requirements, Andaya noted.

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