FY 2016 Internal Revenue Allotment (IRA) Level and Other Local Budget Preparation Matters

June 15, 2015 DBM LOCAL BUDGET MEMORANDUM NO. 070-15 TO : The Provincial Governors, City and Municipal Mayors, Barangay Chairmen, Members of Local Sangguniang Panlungsod/Bayan/Panlalawigan and Local Finance Committees and All Others Concerned SUBJECT : FY 2016 Internal Revenue Allotment (IRA) Level and Other Local Budget Preparation Matters 1.0 Purpose 1.1 To inform local government units (LGUs) of their IRA level for FY 2016 based on the certification of the Bureau of the Internal Revenue (BIR) on the computation of the share of LGUs from the actual collection of national internal revenue taxes in FY 2013 pursuant to Article 409 of the Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 7160, the Local Government Code of 1991 (LGC); and HTcADC 1.2 To prescribe the guidelines in the preparation of the FY 2016 local budgets. 2.0 General Guidelines 2.1 Allocation of the FY 2016 IRA 2.1.1 In the computation of IRA allocation of LGUs, the following circumstances are taken into consideration: 2.1.1.1 The FY 2010 NSO Census of Population per Proclamation Order No. 362 dated March 30, 2012. 2.1.1.2 The FY 2001 Masterlist of Land Area certified and submitted to this Department by the Land Management Bureau (LMB) pursuant to Section 88 of the General Provisions of the R.A. No. 10651, the FY 2015 General Appropriations Act (GAA). The Continued adoption of the FY 2001 Masterlist of Land Area is likewise anchored on Oversight Committee on Devolution Resolution No. 1, s. 2005 dated September 12, 2005. 2.1.1.3 The creation of the Province of Davao Occidental which shall commence its corporate existence upon the election and qualification of the Provincial Governor, Provincial Vice Governor, and majority of the members of the Sangguniang Panlalawigan, pursuant to R.A. No. 10360 which was ratified in a plebiscite held on October 28, 2013. 2.1.2 Any valid adjustments, changes, modifications or alterations in any of the factors affecting the computation of the IRA that occurred or happened during the year, including final and executory court decisions, shall be governed by the applicable General Provisions in the FY 2016 GAA. 2.2 Preparation of FY 2016 Local Budgets 2.2.1 For the purpose of preparing the FY 2016 local budgets, the IRA shares of LGUs shall be P428.619 Billion per the certification of the BIR on the actual national internal revenue taxes collected in FY 2013. The FY 2016 IRA level is P38.759 Billion or 9.94% higher than the FY 2015 IRA level. 2.2.2 Pursuant to Section 284 of R.A. No. 7160, summarized below are the total share by level of LGU in the FY 2016 IRA of P428,619,518,000: Share Equivalent to the Cost of Devolved Share Determined Level of No. of LGUs Functions/City- on the Basis of Total IRA Shares LGU Funded Hospitals, as Section 285 of RA of December 31, No. 7160 1992 Provinces 82 2,845,490,826 97,092,917,343 99,938,408,169 Cities 144 1,028,782,874 97,092,917,343 98,121,700,217 Municipalities 1,478 2,602,125,420 143,528,660,419 146,130,785,839 Barangays 41,889 - 84,428,623,775 84,428,623,775 Total 43,593 6,476,399,120 422,143,118,880 428,619,518,000 ====== =========== ============ ============ Details by region and level of LGU are reflected in the attached Annex A. 2.2.3 The LGUs shall be notified of their IRA allocation by the concerned Department of Budget and Management (DBM) Regional Offices (ROs). 2.2.4 Pursuant to Executive Order No. 43 dated May 13, 2011, LGUs are encouraged to align their programs, projects and activities (PPAs) to the following five (5) priority areas: Anti-Corruption/Transparent, Accountable and Participatory Governance; Poverty Reduction and Empowerment of the Poor and Vulnerable; Rapid, Inclusive and Sustained Economic Growth; Just and Lasting Peace and the Rule of Law; and Integrity of the Environment and Climate Change Mitigation. aScITE 2.2.5 The FY 2016 Annual Budgets of LGUs shall be prepared in accordance with the procedures, schedules and the following local budget preparation forms prescribed under the FY 2008 Edition of the Budget Operations Manual (BOM) for LGUs, which is anchored on Section 354 of the LGC: LBP Form No. 1 Statement of Receipts (Annex B) LBP Form No. 2 Statement of Receipts and Expenditures, as revised (Annex C). The actual or past year shall be based on the Treasurer's report of the actual revenue collections and expenditures as submitted to the Department of Finance-Bureau of Local Government Finance (DOF-BLGF), while the current year shall be based on the reports of the Accountant. LBP Form No. 3 Programmed Appropriation and Obligation by Object of Expenditure (Annex D) LBP Form No. 3A Consolidated Programmed Appropriation and Obligation by Object of Expenditure (Annex E) LBP Form No. 4 Personnel Schedule (Annex F) LBP Form No. 5 Functional Statements, Objectives and Expected Results (Annex G) LBP Form No. 6 Statement of Debt Service (Annex H) LBP Form No. 7 Statement of Statutory and Contractual Obligations and Budgetary Requirements (Annex I) LBP Form No. 8 Statement of Fund Operation (Annex J) 2.2.6 LGUs shall prepare the total resource Annual Investment Program (AIP) hereto attached as Annex K, for the budget year comprising of the annual slice of the Local Development Investment Program (LDIP) and the regular operational budget items broken down into Personal Services, Maintenance and Other Operating Expenses and Capital Outlay. 2.2.7 Further, LGUs shall identify, tag and prioritize their respective climate change PPAs in accordance with DBM-CCC-DILG 1 Joint Memorandum Circular (JMC) No. 2014-01 dated August 7, 2014 (Tagging/Tracking Expenditure for Climate Change in the Local Budget Process). 2.2.8 Together with the Annual Budget, LGUs shall prepare and submit their respective Local Disaster Risk Reduction Management Plans (LDRRMPs) and Local Climate Change Action Plans. 2.2.9 Finally, the FY 2016 Annual Budget of LGUs shall likewise include PPAs that can be attributed and built-in within the budget level for the following: Gender and Development (GAD) pursuant to R.A. No. 7192, R.A. No. 9710 and PCW-DILG-NEDA-DBM 2 JMC No. 2013-01 dated July 5, 2013 (Guidelines on the Localization of the Magna Carta of Women); Senior Citizens and Persons with Disabilities pursuant to R.A. No. 9994 amending R.A. No. 7432, and R.A. No. 9442 amending R.A. No. 7277; Acquired Immune Deficiency Syndrome (AIDS) pursuant to R.A. No. 8504; and Implementation of the programs of the Local Councils for the Protection of Children (LCPC) pursuant to R.A. No. 9344. HEITAD 2.3 Priorities in the Use of the IRA and Other Local Resources 2.3.1 Pursuant to Section 17 (g) of the LGC, the IRA and other local resources shall first cover the cost of providing basic services and facilities enumerated under Section 17 (b) thereof, particularly those devolved by the Department of Health, Department of Social Welfare and Development, Department of Agriculture and the Department of Environment and Natural Resources, as well as other agencies of the National Government, before applying the same for the other purposes. 2.3.2 Moreover, LGUs shall appropriate in its Annual Budget no less than twenty percent (20%) of its annual IRA for development projects as mandated under Section 287 of the LGC. The same shall be utilized in accordance with DILG-DBM JMC No. 2011-1 dated April 13, 2011. 2.3.3 As provided under Section 21 of R.A. No. 10121, the Philippine Disaster Risk Reduction and Management Act of 2010, and Rule 18 of its IRR, not less than 5% of the estimated revenue of LGUs from regular sources shall be set aside as the Local Disaster Risk Reduction and Management Fund (LDRRMF) and shall be utilized in accordance with the pertinent provisions of laws, rules and regulations. 2.4 Special Shares 2.4.1 In addition to the IRA, some LGUs are entitled to the following revenue shares: Share in the proceeds from the utilization and development of national wealth within their territorial jurisdiction pursuant to Sections 289 to 291 of R.A. No. 7160; Excise tax on Virginia Tobacco cigarettes pursuant to R.A. No. 7171; Excise tax on Burley and Native Tobacco products pursuant to R.A. No. 8240; Gross income taxes paid by all businesses and enterprises within the ECOZONES pursuant to R.A. No. 7922, as amended by R.A. No. 9400; Value Added Tax pursuant to R.A. No. 7643; and Value-Added Tax in lieu of Franchise Tax pursuant to R.A. Nos. 7953 and 8407. 2.4.2 LGUs are advised to coordinate with the appropriate revenue collecting agencies and government corporations to reconcile their records with that of the collecting agencies to determine the amount of their shares from the above-mentioned taxes. 3.0 LGUs may coordinate with the DBM ROs for the necessary technical assistance in the preparation of their respective FY 2016 Annual Budgets. 4.0 All procurements shall be made in accordance with the provision of R.A. No. 9184, the Government Procurement Reform Act, and its IRR. 5.0 It is understood that the disbursement of funds shall be in accordance with the pertinent budgeting, accounting and auditing rules and regulations. ATICcS 6.0 Please be guided accordingly. (SGD.) FLORENCIO B. ABAD Secretary Footnotes 1. DBM-Climate Change Commission-DILG. 2. Philippine Commission on Women-DILG-National Economic and Development Authority-DBM. Annexes available upon request.