The 2022 national budget is expected to increase by 11% to P5 trillion. — PHILIPPINE STAR/MICHAEL VARCAS

By Beatrice M. Laforga, Reporter

THE BUDGET department has ordered agencies to prioritize the full devolution of certain local infrastructure projects next year to ensure continuous funding for big-ticket items.

A Supreme Court ruling that gives local governments a bigger share in national taxes will take effect in 2022.

Budget Undersecretary Laura B. Pascua told BusinessWorld a draft executive order (EO) that the economic team submitted to the Office of the President in January covers local projects worth P295 billion that can be devolved in 2022.

She said this move should prevent funds for new big-ticket infrastructure projects from being reduced under the 2022 national budget. However, these funds may still be affected by insertions during budget deliberations in Congress.

The Supreme Court (SC) ruling on the Mandanas case broadened the definition of “National Government income” eligible for distribution to local government units (LGUs) under the Internal Revenue Allotment (IRA) to include taxes collected by both the Bureaus of Internal Revenue (BIR) and Customs (BoC).

The case, Mandanas vs. Ochoa, takes its name from Hermilando I. Mandanas, a former governor and legislator from Batangas province. Mr. Mandanas in 2012 questioned the basis for determining the IRA pool, noting that LGUs were owed about P500 billion in arrears since 1992 due to a more restrictive definition of “National Government revenue.”

The government is shifting about P234.4 billion worth of programs and projects to LGUs for implementation next year to comply with the SC ruling.

“It should not (affect the budget of big-ticket infrastructure projects) if we had our way. One problem is that a lot of these small local projects in the DPWH (Department of Public Works and Highways) are Congress-initiated. So even if the Executive Branch removes them from the budget, they can bump off major projects when Congress puts back these local projects,” Ms. Pascua said via Viber on Feb. 5.

The Departments of Budget and Management (DBM), Interior and Local Government (DILG) and Finance (DoF), and the National Economic and Development Authority (NEDA) have endorsed the draft EO to the President, she added.

“We are asking the agencies with these devolved functions to no longer include these local projects in their budget proposals for 2022. Removing these from the agency budgets will fully cover the increased IRA in 2022 due to the Mandanas ruling,” Ms. Pascua said.

The biggest portion of small local projects scheduled to be devolved will be from the DPWH, according to the DBM.

The DPWH did not immediately respond to queries seeking comments.

However, DBM’s Ms. Pascua said ensuring budget allocation for priority infrastructure projects would still be in the hands of lawmakers.

“I suppose it boils down to an assessment by Congress of what projects are more advantageous for the government to pursue,” she said.

Senator Juan Edgardo M. Angara, who heads the finance committee, said big-ticket infrastructure projects that are “shovel-ready” would be the ones to be prioritized for funding next year.

“I was told there will be more devolution of government functions to the local government units along with the increased funding under the Mandanas ruling implementation so hopefully those big-ticket items are shovel-ready so to speak so they will remain priorities,” he said in a text message on Saturday.

Next year’s budget is expected to increase by 11% to P5 trillion from P4.5-trillion this year. The government is bent on completing, or kickstarting flagship infrastructure projects before the Duterte administration ends its six-year term on June 30, 2022.

The government’s list of priority projects that can be started or completed within the administration’s term has been revised several times, and includes 100 projects to date.

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