Lgu budgeting process


Published on

Fiscal Management report in Ph.D.Class

Published in: Education, Business, Technology
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Strengthening Provincial/ Local Planning and Expenditure Management April 2006 Investment Programming and Revenue Generation
  • Strengthening Provincial/ Local Planning and Expenditure Management April 2006 Investment Programming and Revenue Generation
  • Strengthening Provincial/ Local Planning and Expenditure Management April 2006 Investment Programming and Revenue Generation
  • Strengthening Provincial/ Local Planning and Expenditure Management April 2006 Investment Programming and Revenue Generation
  • Lgu budgeting process

    1. 2. <ul><li>SECTION 129. Power to Create Source of Revenue - Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units. </li></ul>LOCAL REVENUE GENERATION
    2. 3. <ul><li>a. Land -based Tools </li></ul><ul><li>b. Community Activity -based Tools </li></ul><ul><li>c. Infrastructure -based Tools </li></ul><ul><li>d. Debt-based Tools </li></ul><ul><li>e. Revenue sharing Tools </li></ul>
    3. 4. <ul><li>Basic Real Property Tax (Sec. 232) . </li></ul><ul><li>Special Education Fund – SEF Real Property Tax ( Sec. 235 ). </li></ul><ul><li>Land Transfer Tax (Sec. 135) . </li></ul><ul><li>Idle Land Tax (Sec. 236) . </li></ul><ul><li>Public Land Use Tax (Sec. 235a) . </li></ul><ul><li>Land Sale of Foreclosed Real Properties (Sec. 257, 258 and 260) . </li></ul><ul><li>Land Investment </li></ul><ul><li>Land Reclassification (Sec. 20) . </li></ul><ul><li>Land Development Permit Fee (557 and 558). </li></ul><ul><li>Tax on Sand, Gravel and other Quarry Resources (Sec. 138). </li></ul>
    4. 5. <ul><li>Business Tax (Sec. 143) </li></ul><ul><li>Community Tax (Sec. 156) </li></ul><ul><li>Franchise Tax (Sec. 137) </li></ul><ul><li>Tax on Business of Printing and Publication (Sec. 136) . </li></ul><ul><li>Professional Tax (Sec. 139) . </li></ul><ul><li>Amusement Tax (Sec. 140) . </li></ul><ul><li>Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141) . </li></ul><ul><li>Fishery Rentals, Fees and Charges (Sec. 149) . </li></ul><ul><li>Service Fees and Charges (Sec. 153). </li></ul>
    5. 6. <ul><li>Special Levy (Sec 250) </li></ul><ul><li>Toll Fees or Charges (Sec. 155) . </li></ul><ul><li>Public Utility Charges (Sec. 155) . </li></ul>
    6. 7. <ul><li>Debt Financing (Sec. 297-302) . </li></ul><ul><li>Financial Investment (Sec 18 </li></ul>
    7. 8. <ul><li>Share in Mining, Fishery, and Forestry Taxes (Sec. 290) . </li></ul><ul><li>Share in the Gross Sales or Taxes of Government-Owned and Controlled Corporations (Sec. 291) . </li></ul><ul><li>Congressional funds . </li></ul>
    8. 9. <ul><li>Traditional method: </li></ul><ul><ul><li>Estimates income on the basis of </li></ul></ul><ul><ul><ul><li>Past collections </li></ul></ul></ul><ul><ul><ul><li>Newly enacted tax ordinances </li></ul></ul></ul><ul><ul><ul><li>Amendments to existing tax or revenue ordinances </li></ul></ul></ul><ul><ul><ul><li>Program of tax collection campaign </li></ul></ul></ul>
    9. 10. <ul><li>Revenue forecasting </li></ul><ul><ul><li>Estimates income based on the average growth rate of the actual income for the last five years. </li></ul></ul><ul><ul><ul><li>Presumptive Income Levels (PIL) – estimates tax bases for business and amusement tax </li></ul></ul></ul><ul><ul><ul><ul><li>Firm’s electric bill </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Number of employees </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Amount of inventory </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>(countercheck the amount of gross receipts declared by the tax payer) </li></ul></ul></ul></ul></ul>
    10. 11. <ul><li>Collection – done mainly by the Treasurer’s office </li></ul><ul><ul><li>(all taxes, fees and charges shall be paid within the first twenty(20) days of January and of each subsequent quarter) </li></ul></ul>
    11. 12. <ul><li>Factors affecting the collection efficiency of the local treasurer’s office </li></ul><ul><ul><li>Limited personnel </li></ul></ul><ul><ul><li>Inadequate records-keeping and management systems </li></ul></ul><ul><ul><li>Political mediation </li></ul></ul><ul><ul><li>Precarious peace and order condition in the locality </li></ul></ul><ul><ul><li>Low tax ethic </li></ul></ul><ul><ul><li>Lack logistics </li></ul></ul><ul><ul><li>Revenue data bank </li></ul></ul>
    12. 13. <ul><li>Vertically integrated planning </li></ul><ul><ul><li>Provides local governments with the connection to the broader and longer-term framework of development </li></ul></ul><ul><li>Local development planning </li></ul><ul><ul><li>Identification of development programs and projects that are appropriate for credit financing </li></ul></ul><ul><ul><li>Basis for budget proposals and reference in preparing work and financial plans. </li></ul></ul><ul><ul><li>Basis of recommendation of spending for economic, social and general services </li></ul></ul>
    13. 14. <ul><li>Local Government Budget Process </li></ul><ul><ul><li>Legal instrument which authorizes the expenditure of public funds </li></ul></ul><ul><ul><li>Accounting framework for fixing the fiscal stewardship of public offers </li></ul></ul><ul><ul><li>Management tool for planning the direction and magnitude for the utilization of government revenues and receipts </li></ul></ul>
    14. 15. <ul><li>Setting a local government budget involves three key decisions: 1) Allocation 2) Distribution 3) Stabilization/Growth </li></ul><ul><li>The Allocation Decision is based in three criteria: 1) Economic efficiency 2) Technical efficiency 3) Net social benefits/costs </li></ul>
    15. 16. Budgeting Cycle
    16. 17. <ul><li>Executive Budget </li></ul><ul><ul><li>Local Chief Executive </li></ul></ul><ul><ul><li>Local Finance Committee </li></ul></ul><ul><ul><li>Done between July 15 and October 15 of the current year </li></ul></ul><ul><ul><li>Transmitted to the Local Sanggunian not later than October 16 </li></ul></ul>
    17. 21. <ul><li>Legislative discussion of proposed budget is done by the Sanggunian between October 16 and November 17 </li></ul><ul><li>Enact annual budget by issuing an appropriation ordinance on or before the current fiscal year </li></ul>
    18. 22. <ul><li>Submission of the budget for review is required within 10 days </li></ul>
    19. 25. The review action by the reviewing authority may lead to either the declaration of the budget as to the following :
    20. 26. This phase involves the release and actual disbursement of funds for the identified functions – Work and Financial Plan and Request for Allotment
    21. 30. <ul><li>Budget Preparation </li></ul><ul><ul><li>Expenditure items </li></ul></ul><ul><ul><ul><ul><li>Mandatory contributions (required prior to the Code’s effectivity) </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Social security and insurance benefits of employees </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Reserve money for earned leave credits of retiring employees </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Gratuities of employees that are optionally retiring </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Personal services </li></ul></ul></ul></ul>
    22. 31. <ul><li>Budget Authorization </li></ul><ul><ul><li>Conflicts between the executive and legislative branches of the local government cause the delay of the passage of the budget (opposing political camps/party) </li></ul></ul>
    23. 32. <ul><li>Budget Review </li></ul><ul><ul><li>Change in the process of review of appropriation led to non-conformity of review actions and decisions </li></ul></ul><ul><ul><ul><li>Some sanggunians would authorize anything appropriated by lower level of local units for political purposes </li></ul></ul></ul><ul><ul><ul><li>Failure to submit supporting documents on time </li></ul></ul></ul>
    24. 33. <ul><li>Budget Execution </li></ul><ul><ul><li>Non submission of work and financial plan and request for allotments by the heads of departments or offices </li></ul></ul><ul><ul><li>Non submission of supporting documents for the request for allotments. </li></ul></ul><ul><ul><li>Use of appropriated funds or savings </li></ul></ul>
    25. 34. <ul><li>Budget Accountability </li></ul><ul><ul><li>Delayed submission of financial statements to the local finance committee by the local accountant </li></ul></ul><ul><ul><li>LGU failed to prepare development programs for the 20% Development Plan </li></ul></ul><ul><ul><li>LGU appropriated funds for development projects less than the level of appropriation required </li></ul></ul><ul><ul><li>LGUs failed to implement or complete projects programmed under the fund </li></ul></ul>
    26. 35. <ul><li>Budget Accountability </li></ul><ul><ul><li>Incurrence of cash drafts due to improper use of trust funds </li></ul></ul><ul><ul><li>Disbursements which lead to disallowances after audit </li></ul></ul><ul><ul><li>Failure by LGUs t conduct periodic physical inventory or to maintain complete property records </li></ul></ul><ul><ul><li>Failure to liquidate cash advances, thus making those advances accumulate through the years. </li></ul></ul>