IRA ruling appeal looms as DBM says 2019 budget priorities set

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Benjamin E. Diokno
Budget Secretary Benjamin E. Diokno

THE GOVERNMENT will ask the Supreme Court to reconsider its ruling expanding local government units’ (LGUs) share of the national government’s revenue, saying that the 2019 budget priorities have been set.

Budget Secretary Benjamin E. Diokno said that the high court’s decision was “too late to insert” after President Rodrigo R. Duterte submitted to Congress on Monday the proposed budget approved by the Cabinet.

“The DBM (Department of Budget and Management) in coordination with the Office of the Solicitor General will file a motion for reconsideration within 15 days from the receipt of the decision,” he said.

“The President’s budget reflects the administration’s budget priorities. So we feel that undue application of the ruling to the incoming fiscal year 2019 budget might distort the funding earmarked to priority programs and projects identified by the national government,” Mr. Diokno said.

He said that the DBM has yet to formally receive a copy of the Supreme Court resolution, which was released to the media on Monday.

Mr. Diokno said the DBM has insufficient time to reconfigure the 2019 budget, given the short 30-day window for the budget submission beginning with the resumption of the Congressional session on July 23.

The court in its final resolution ordered the “automatic release without further action” of LGUs’ “just share” of all national government revenue, including taxes collected by the Bureau of Customs. It also ruled that the national government should implement the ruling prospectively.

Mr. Diokno said that complying with the ruling would mean an additional P160 billion for LGUs in the form of Internal Revenue Allotments (IRAs) on top of about P600 billion initially budgeted for 2019.

Mr. Diokno has said that had the ruling been interpreted to be retroactive from 1992, it would cost the government at least P1.2 trillion.

Republic Act No. 7160, or the Local Government Code of 1991, provides for IRAs amounting to 40% of “national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year.”

Mr. Diokno said that the government will not implement the order until such time that the SC has responded to the motion for reconsideration.

“Nevertheless, the DBM will faithfully comply with the SC decision once it has become final and executory,” he said.

Mr. Diokno said that the government will devolve some functions to LGUs, especially conditional cash transfers (CCTs), farm-to-market roads, and local health care programs, as well as the corresponding budget for these functions, doing away with the need to spend more.

“There are many items there that were supposed to be performed by LGUs. CCT — that is supposed to be local but we are providing for it. So there’s a possibility that we might realign. We give that expenditure responsibility to them because the law says that’s theirs. Somewhere along the way, they got taken over by the national government,” he said.

“There’s a way of reallocating resources so LGUs will take over what they’re supposed to do. There are many things that they are not doing right now. And we’ll give it to them,” he added.

Sought for comment, the office of lead petitioner Hermilando I. Mandanas, a former Batangas governor and former representative of the province’s 2nd district and now Chairman of the Luzon Regional Development Committee, replied in a mobile phone message: “Gov. Mandanas would like to thank the SC for their wise decision.”

When asked to comment on the implications of the devolution for federalism, Mr. Diokno said: ”Let’s not complicate this with federalism. If you bring up federalism, then we will end up discussing this forever. So let’s set aside federalism. That’s a long way to go.” He added that he is still studying the draft constitution.

Finance Secretary Carlos G. Dominguez III and Socioeconomic Planning Secretary Ernesto M. Pernia have raised possible concerns about the ability of LGUs to deliver projects. — Elijah Joseph C. Tubayan