LGUs’ classification, revenue basis codified
The first general income reclassification would take place six months after RA 11964 goes into force, and afterward, every three years, Malacañang said.
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Daily TribuneThe first general income reclassification would take place six months after RA 11964 goes into force, and afterward, every three years, Malacañang said.
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President Ferdinand Marcos Jr. has signed into law a bill classifying local government units based on their revenues to establish a basis for their separate financial allocations and other forms of assistance.
Republic Act 11964 seeks to institutionalize the automatic income classification of LGUs as a "more responsive approach" to support the local economy and "enable LGUs to realize their full economic potential."
"In line with this, the State recognizes the need to determine the financial capability and fiscal position of local government units," the new law read in a statement released on Friday.
The government determines the level of administrative and statutory help, financial grants, and other forms of support to be given to an LGU on the LGU revenue classification system.
Likewise, the revenue categorization of LGUs is used to ascertain its financial capacity to carry out projects and programs, as well as how it would carry out administrative orders on allowances and salary regulations.
The first general income reclassification would take place six months after RA 11964 goes into force, and afterward, every three years, Malacañang said.
According to the law, municipalities are divided into five classes based on their annual average regular income for three fiscal years before the LGU's general income is reclassified.
The classifications of municipality based on annual average income are as follows: first class: P200,000,000; second class: P160,000,000 to P200,000,00; third class: P130,000,000 to P160,000,00; fourth class: P90,000,000 to P130,000,000; and fifth class: less than P90,000,000.
This will determine the "LGU capability to undertake development programs and projects" and the overall yearly supplemental appropriation for personal services for all units.
Compensation adjustments for LGU employees will also be predicated on classification following the "Salary Standardization Law of 2019."
The classification also includes the following: Minimum wages for domestic workers, bases for the creation of new local government units (LGUs), the number of elective members in Sangguniang Panlalawigan and Sangguniang Bayan, free patent titles for residential land, government service insurance system coverage for LGU properties, and the maximum percentage of agricultural land area that can be reclassified and used.
On January 1st of the year following the Finance Secretary's release of the income classification table, the provinces, cities, and municipalities will undergo their first income reclassification.
Within three months of the law's enactment, the Department of Finance will draft the rules and regulations that will carry out its provisions in collaboration with the Department of Budget and Management and after consulting with the local government leagues.
